Amendment

Executive Severance Plan

 

Exhibit 10

 

April 25, 2006

Mr.  John F. Brock

            Re: Terms of Employment

Dear John:

I am pleased to confirm that, subject to Board of Directors approval, Coca-Cola Enterprises Inc. (the “Company”) offers employment to you as its President and Chief Executive Officer (“CEO”) based on the following terms.

1.     Starting Date. You will commence employment with the Company on April 25, 2006 (the “Starting Date”). However, consistent with Company policy for all employees, your employment will be at-will, allowing you or the Company to terminate your employment at any time and for any reason. In the event of any such termination, the rights and obligations of the parties will be determined in accordance with Section 7 below.

2.     Position. You will be the President and CEO of the Company, with all duties, responsibilities, and authority of that position as provided in the Company’s Certificate of Incorporation, By-Laws, and written policies. You will report solely and directly to the Board of Directors. In addition, you will be elected to the Board of Directors upon commencement of employment, with an initial term through 2008. Thereafter, assuming you continue to be employed as the CEO, you will be nominated for reelection by the shareholders. All employees shall report to you either directly or through other employees as determined by you.

3.     Base Salary. Your starting Base Salary will be $1,100,000 per year. The Board will review your Base Salary annually, beginning in February 2007, with any adjustment effective in April of each year. Following each adjustment, the term Base Salary shall thereafter refer to the adjusted amount.

4.     Annual Bonus. You will be eligible for participation in the Executive Management Incentive Plan (the “MIP”) for 2006 and every year thereafter during your employment. For 2006, your MIP bonus, if any, will be calculated as if you were employed for the full year. Your target annual bonus under the MIP for 2006 will be 125% of your Base Salary, with a maximum bonus opportunity of 175% of your target bonus, all subject to the Company meeting or exceeding its performance goals. The Compensation Committee of the Board of Directors will determine the extent to which the CEO’s performance goals will include a personal performance element. The performance goals for the 2006 MIP have been approved by the Compensation Committee at its February and April meetings. Performance goals for future MIP awards will be determined by the Compensation Committee.

5.     Equity Compensation. You will receive a one-time grant of stock options on your employment Starting Date exercisable for a total of nine hundred thousand (900,000) shares of Company common stock (“Inducement Option”). This option grant will have an exercise price equal to Company stock market value on the date of grant and a 10-year term pursuant to the 2004 Stock Award Plan.

In addition to a graduated, three-year continued-service condition to vesting, the Inducement Option will be exercisable only upon the achievement of share-price performance hurdles. Specifically, the market value of the Company’s stock must reach 125% of the option’s exercise price for the option to be exercisable for one-half of the option shares, and the market value must reach 150% of the option’s exercise price for the option to be exercisable for the remaining one-half of the option shares. The terms of the Inducement Option grant are set forth in the form of agreement attached hereto as Attachment A and made a part hereof.

In addition, for 2006 you will receive an annual equity grant with a value of approximately $6 million based on the “Fair Value” methodology that the Company uses for financial reporting purposes. This grant is anticipated to occur in July 2006 and will be in the same form, and subject to the same terms and conditions, as contemporaneous grants to the other executive officers. Following 2006, annual equity grants will be determined by the Compensation Committee, provided that all service conditions contained in future annual equity grants will be waived on Retirement (as defined in Attachment A hereto).

6.     Employee Benefits. You will be eligible for the benefits provided generally from time to time to the Company’s executive officers, including, to the extent they exist from time to time, a qualified defined benefit pension plan, 401(k) plan, nonqualified supplemental matched employee savings and investment plan, medical, dental, life, disability coverage, and other benefits, all in accordance with the terms and conditions of such plans. Additionally, the Company shall provide to you, as soon as practicable following the Starting Date, medical insurance for the period up to the time you are eligible for coverage in accordance with the Company’s medical plan. You also will be eligible to immediately participate in the Company’s nonqualified defined benefit pension plan (“Executive Pension Plan”). Provided that you complete five years of actual Benefit Service, you will be awarded two additional years of Benefit Service for each of the first five years of actual Benefit Service which accrue during your employment. If you fail to complete five years of actual Benefit Service as a result of the termination of your employment under conditions that make you eligible for severance payments pursuant to Section 7 hereof or as a result of your death or Disability, you will be awarded two additional months of Benefit Service for each of month of actual Benefit Service which accrue during your employment and you will be vested in such benefit at such time. The Executive Pension Plan applicable to you may be modified from time to time by the Board of Directors, so long as such modifications affect the plan’s participants or potential participants generally and not solely the CEO.

        The Company will reimburse you for relocation costs in accordance with normal Company policy for executive relocation. Further, the Company will provide you with a one-time reimbursement of up to $50,000 of legal and other professional expenses incurred in connection with negotiating the initial terms of your employment with the Company.

7.     Severance Provisions. In the event your employment is terminated and the requirements for eligibility for severance as listed on Attachment B hereto are met, your eligibility for severance payments related to salary and annual bonus and equity awards granted through December 31, 2007 will be determined solely and exclusively under the severance provisions set forth in Attachment B, which is made a part hereof. In addition, any severance benefit with respect to the Inducement Option shall be as set forth in the 2006 Special Stock Option Grant attached hereto as Attachment A. In addition, you shall be eligible for all benefits, if any, pursuant to any Company benefit plan or welfare plan for which you qualify in accordance with the terms of such plans at that time (including, with respect to the Executive Pension Plan, the modification set forth in Section 6 above). Vesting and exercise of long-term incentive awards (including any stock options or restricted stock) granted after 2007 will be subject to the provisions of the grant documents and the applicable plans.

8.     Prior Discussions. The terms of employment contained in this letter supersede all prior discussions, documents, and agreements concerning your employment with the Company and, with the Attachments, constitute the entire terms of employment offered to you by the Company. In the event of any inconsistency between any provision of this letter agreement and any provision of any plan, program, policy, arrangement or other agreement of the Company or any affiliate, the provisions of this letter agreement will control.

9.     Indemnification and Liability Insurance. During your employment and thereafter for the period during which you may be subject to liability relating to your services as an officer of the Company, you will be covered by the Company’s directors and officers liability policy at the same level as applicable to the Company’s other directors and officers, and you will be indemnified to the fullest extent permitted by the Company’s Certificate of Incorporation and By-Laws.

10.     Change in Control. In the event of a Change in Control of the Company (as defined in the Company’s 2004 Stock Award Plan) during your employment, and your involuntary termination without Cause or voluntary termination for Good Reason within two years of the Change in Control (Cause and Good Reason as defined in Attachment B hereto), any unvested stock options shall vest immediately and become fully exercisable for the lesser of five (5) years following the Change in Control or expiration of the option by its terms, without regard to any performance conditions and without regard to your continued employment, and any unvested restricted stock shall vest immediately and any performance restrictions shall immediately expire.

11.     Governing Law. This letter agreement will be governed by and construed and interpreted in accordance with the laws of Georgia without reference to the principles of conflicts of law.

12.     Arbitration. Any dispute regarding the terms of this offer letter will be resolved through binding arbitration before a sole arbitrator in Atlanta, Georgia, administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules. Judgment upon any award rendered by the arbitrator, including any injunctive relief, may be entered in any court having jurisdiction thereof. Each party will pay its own expenses. Notwithstanding the foregoing, any dispute regarding the terms of a plan or arrangement referenced in this offer letter shall be resolved as specified in such plan or arrangement. For the avoidance of doubt, any dispute regarding the noncompetition requirements of the executive severance guidelines shall not be subject to arbitration, but shall be brought in a court of competent jurisdiction.

13.     Amendment or Waiver. No provision in this letter agreement may be amended unless such amendment is agreed to in writing and signed by you and an authorized officer of the Company. No waiver by either party of any breach by the other party of any condition or provision contained in this letter agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by you or an authorized officer of the Company, as the case may be, whichever is the waiving party. This letter agreement, as distinguished from your employment (which is at-will as provided above), shall not be terminated except by the written consent of both parties.

14.     Delay in Payments on account of IRC Section 409A. It is expressly contemplated that this letter agreement will conform to, and be interpreted to comply with, Section 409A of the Internal Revenue Code and the Department of Treasury Regulations and other interpretive guidance issued thereunder. If, under Section 409A of the Code any payments must be delayed to conform with the applicable tax rules, the Company will defer any such payment until as soon as practicable following the first date upon which such payment may be made without incurring the tax imposed thereunder and shall make such payment at that time.

15.     Survivorship. The respective rights and obligations of the parties under Section 5 (Equity Compensation), Section 6 (Employee Benefits), Section 7 (Severance Provisions), Section 9 (Indemnification and Liability Insurance), Section 10 (Change in Control), Section 11 (Governing Law), Section 12 (Arbitration), Section 14 (Application of Section 409A) and Section 15 (Survivorship) hereof shall survive any termination or expiration of this letter agreement.

        On behalf of myself and the Board of Directors, we welcome you to the Company and look forward to working with you to ensure the Company’s continued success. If this letter accurately reflects our understanding on this matter, please sign below and return a signed copy of this letter to me.

Sincerely,

/S/ Lowry F. Kline

Acknowledged and Agreed:

/S/ J. F. Brock


Attachment A

http://www.sec.gov/Archives/edgar/data/804055/000080405506000096/ccelogo.jpg

2006 Special Stock Option Grant

TO:   John F. Brock

Upon your acceptance of the position of President and Chief Executive Officer of Coca-Cola Enterprises Inc., the Board of Directors is pleased to award you this special grant of stock options. The terms and conditions applicable to this grant are described below.

1.

 

Grant of Options. For 2006, you have been granted 900,000 options to purchase shares of the common stock of Coca-Cola Enterprises Inc. (also referred to as the “Company”).



 

 

The exercise price for these stock options is $20.69, the average of the high and low trading prices of the Company’s stock on April 25, 2006, the date of this grant.

 

2.

 

Vesting of Options.
 

 

a.

 

Conditions to Vesting.Options will vest as of the date both the service condition and applicable performance condition are satisfied, which are as follows:
 

 

 

(i)   The service conditions to vesting are continuous employment with the Company or an Affiliated Company, as follows:
 

 

 

 

• One-third of this grant on April 25, 2007
• One-third of this grant on April 25, 2008
• One-third of this grant on April 25, 2009

 

 

 

 

 

 

(ii)   The performance conditions to vesting are:

 

  •

One-half of this grant will satisfy the performance condition to vesting on the date the market value of the Company’s stock has averaged $25.8625 over 20 or more consecutive trading days, which average market value represents a 25% increase from $20.69, the market value of the Company’s stock on April 25, 2006.
 

 

 •

The other half of this grant will satisfy the performance condition to vesting on the date the market value of the Company’s stock has averaged $31.0350 over 20 consecutive trading days, which average market value represents a 50% increase from $20.69, the market value of the Company’s stock on April 25, 2006.



 b.

 

 Schedule of Vesting. In accordance with subparagraph a. above, the specified number of options will become exercisable when the conditions in Column A and Column B are both satisfied.



# of Options

Column A--Continued Service through ...

 Column B--Share Market Value of

150,000

April 25, 2007

$25.8625

150,000

April 25, 2007

$31.0350

150,000

April 25, 2008

$25.8625

150,000

April 25, 2008

$31.0350

150,000

April 25, 2009

$25.8625

150,000

April 25, 2009

$31.0350



3.

 

Duration of Options During Employment. You have until April 25, 2016, ten years from the date of grant, to exercise any vested options, as long as you have been continuously employed by Coca-Cola Enterprises or an Affiliated Company at the time of exercise, all except as provided in Section 4 and Section 5 below.



4.

 

Effect of Termination of Employment.

 

 a.

 

Death or Disability. If your employment terminates on account of your death or Disability,

 

 

(i)

 

 The service condition to vesting will be immediately waived and any unvested options will remain outstanding for a period of five years from the date of termination, during which period the performance conditions may still be met; and



 

 

(ii)

Thereafter, the options that are at the date of termination, or later become within the 5 year period, vested as to both service and performance conditions may then be exercised until April 25, 2016.



 b.

 

Retirement after Five Years of Service. If you Retire after five years of employment with the Company,

 

 

(i)

 Any unvested options will remain outstanding for five years from the date of Retirement, during which period the performance conditions may still be met; and



 

(ii)

 The options that are, or later become, vested may be exercised until April 25, 2016.



c.

 

Involuntary Termination without Cause or Voluntary Termination for Good Reason Prior to Your Retirement. If you are involuntarily terminated without Cause or if you voluntarily terminate for Good Reason,



 

(i)

The service condition to vesting will be waived and any unvested options will remain outstanding until the later of (i) three years from your termination date, or (ii) five years from the date of grant, during which period the performance conditions may still be met; and 



 

(ii)

The options that are, or later become, vested may be exercised until the earlier of (a) five years from your termination date or (b) April 25, 2016.



d.

 

Termination due to Voluntary Termination Prior to Your Retirement. If, prior to your Retirement, you voluntarily terminate your employment without Good Reason,



 

(i)

Any options for which the service condition has not been met will be forfeited.



 

(ii)

The unvested options for which the service condition has been met as of the date of your termination will remain outstanding as described below, during which period the performance conditions may still be met:
 

 

 

  1)        For options subject to the $25.8625 performance condition, for one year; and
 

 

 

  2)        For options subject to the $31.0350 performance condition, for two years.
 

 

 

(iii)

The options that are, or later become, vested may be exercised until the earlier of (a) three years from your termination date or (b) April 25, 2016.



e.

 

Involuntary Termination for Cause. If you are terminated for Cause, any unvested options will be forfeited and vested options will expire as of the date of your termination.



5.

 

Effect of Change in Control of the Company. In the event of a Change in Control of the Company (as defined in the 2004 Stock Award Plan) and your involuntary termination without Cause or voluntary termination for Good Reason within two years of the Change in Control, any unvested options shall vest immediately. All options that are, or become, vested at the time of a Change in Control may be exercised up to five years from the Change in Control.



6.

 

Definitions. For purposes of this grant, the following definitions apply:
 

 

a.

 

An “Affiliated Company” includes The Coca-Cola Company and any company of which the Company or The Coca-Cola Company owns at least 20% of the voting stock or capital if (1) such company is a party to an agreement that provides for continuation of certain employee benefits upon immediate employment with such company and (2) the Company agrees to this subsequent employment.



b.

 

“Cause” means (i) willful or gross misconduct by you that is materially detrimental to the Company, (ii) a willful act of (x) personal dishonesty or (y) fraud in either event committed against the Company, or (iii) conviction of a felony, except for a conviction related to vicarious liability based solely on your position with the Company, provided that you had no involvement in actions leading to such liability or had acted upon the advice of the Company’s counsel. For purposes of this definition of Cause, no act or failure to act by you shall be considered “willful” unless it occurs without your good faith belief that such act or failure to act was in, or not contrary to, the best interests of the Company.



c.

 

“Disability” means your inability, by reason of a medically determinable physical or mental impairment, to engage in your duties as Chief Executive Officer, which condition, in the opinion of a physician approved of by the Company, is expected to have a duration of not less than one year.



d.

 

“Good Reason” means your (i) demotion or diminution of duties, responsibilities and status; (ii) a material reduction in base salary or annual cash bonus incentive opportunities (whether in one reduction or cumulatively); or (iii) relocation of your principal office more than 50 miles from Atlanta, unless such relocation is closer to your primary residence, or outside the Company’s corporate headquarters. You must give written notice to the Company within 60 days of the date on which you are notified of such circumstances, and the Company will have one month to remedy the matter.



e.

 

“Market value” means the average of the high and low trading prices of a share of the Company’s stock on the applicable trading day or on the next preceding trading day, if such date is not a trading day, as reported on the New York Stock Exchange Composite Transactions listing.



f.

 

“Retirement” and “Retire” means your termination of employment on or following April 25, 2011, provided such termination is not for Cause.



7.

 

Exercise of Options. You may exercise your vested options by following the procedures established from time to time by the Company.



8.

 

Section 409A of the Internal Revenue Code. This option grant is intended to comply with the requirements of Section 409A of the Internal Revenue Code and shall be administered and interpreted accordingly. If the IRS issues final regulations or other guidance causing you or the Company adverse tax consequences under Section 409A in connection with this option, you agree that the Company may amend the option as appropriate to comply with Section 409A and/or provide an economically equivalent opportunity that does comply.



9.

 

Plan Administration. The terms of the Coca-Cola Enterprises Inc. 2004 Stock Award Plan (the “Plan”) are incorporated by reference into this document. The Company is the administrator of the Plan, whose function is to ensure the Plan is managed according to its respective terms and conditions. A request for a copy of the Plan and any questions pertaining to the Plan should be directed to:

 

 

STOCK PLAN ADMINISTRATOR
P. O. BOX 723040
USA, ATLANTA, GA 31139-0040
770-989-3000

 

 




SUPPLEMENTAL INFORMATION

REGARDING YOUR 2006 STOCK OPTION GRANT

        Federal Income Tax Consequences. The following is a summary of certain significant federal income tax consequences associated with options to acquire shares of the stock of the Company (“Stock”) granted under the Coca-Cola Enterprises Inc. Stock Option Program (the “Option Program”) and is based upon the Internal Revenue Code of 1986, as amended (the “Code”).

 

        This summary is based on the tax laws in effect in the U.S. as of May 2006. Tax laws are often complex and can change frequently. As a result, the information contained in the summary may be out of date at the time you purchase shares under the Plan or subsequently sell them. Please note that this summary is general in nature and that it may not apply to your particular situation. Coca-Cola Enterprises is not in a position to assure you of any particular tax result. If you are a citizen or resident of another country for local law purposes, the information contained in the summary may not be applicable to you. Therefore, you are encouraged to seek appropriate professional advice as to how the tax or other laws in your country apply to your specific situation.


        The options granted under the Option Program are “nonqualified” stock options under the federal income tax laws, so there will be no federal income tax consequences for the optionee upon the grant of options. Upon exercise of the options, the optionee recognizes ordinary income in the amount by which the value of the shares exceeds the exercise price for such shares.

        The amount of income recognized by the optionee upon the exercise of options will be taxed at ordinary income tax rates and will be added to the basis of the shares for computation of gain or loss realized upon the ultimate disposition of the shares. If the optionee sells the shares, any amount realized in excess of the optionee’s basis will be taxed as capital gain, and any loss realized will be capital loss. The capital gain or loss will be treated as a short- or long-term capital gain or loss, depending on the optionee’s holding period (measured from the date the option is exercised).

        Tax Withholding. The Company is required to withhold federal income and Medicare taxes (and FICA taxes, if applicable) on the taxable income resulting from the exercise of options under the Option Program at the time the options are exercised. Withholding of state and local income taxes also may be required at the same time.

    ERISA.        The Option Program is not, and is not intended to be, a qualified retirement plan. The Option Program therefore is not subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or to Section 401(a) of the Code.

    Restrictions on Resales of Stock. The following is a summary of certain restrictions that apply to the resale of Stock by persons who are “affiliates” of the Company. An “affiliate” of the Company is defined generally to include all of the directors, executive officers and any principal share owners of the Company and may include directors and executive officers of the Company’s subsidiaries if they play a policy-making role at the Company level.

        An affiliate of the Company generally may resell shares of Stock only in compliance with the registration provisions of the Securities Act of 1933, as amended (the “1933 Act”), or the exemptive provisions of Rule 144 promulgated by the Securities and Exchange Commission (the “Commission”) under the 1933 Act. Under Rule 144, any affiliate selling registered securities is entitled to sell in brokers’ transactions, within any three-month period, a number of shares of Stock that does not exceed the greater of (i) 1% of the then outstanding Stock or (ii) the average weekly trading volume of the Stock during the four weeks preceding the sale. In addition, for sales of shares in reliance on Rule 144 during any three-month period which exceed 500 shares or which have an aggregate sale price of $10,000, the seller is required to file a notice of sale with the Commission.

        A person who, at the time of resale of Stock acquired pursuant to the Option Program and registered under the 1933 Act, is not an affiliate of the Company generally may resell shares acquired by him or her pursuant to the Option Program without restriction.

        Incorporation of Certain Documents by Reference. The following documents filed by the Company with the Commission are incorporated herein by reference:

 

    (a)        The Company’s Annual Report on Form 10-K filed pursuant to Section 13 of the Securities Exchange Act of 1934 for its fiscal year ended December 31, 2005;



 

    (b)        all other reports filed by the Company pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 since December 31, 2005;



 

    (c)        the description of the Company’s common stock which is contained in the registration statement on Form 8-A (Registration No. 1-9300) filed under Section 12 of the Securities Exchange Act of 1934, including any amendments or reports filed for the purposes of updating such description.

        All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 prior to the filing of a post-effective amendment that indicates that all securities offered hereby have been sold, or that deregisters all securities then remaining unsold, shall be deemed to be incorporated herein by reference and to be a part hereof from the date of filing of such documents.

        The Company will provide without charge to each person to whom this document is delivered, at the written or oral request of such person, a copy of any or all of the foregoing documents incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into the foregoing documents). The Company also will provide without charge upon request a copy of the Company’s latest Annual Report to Share Owners. Written or telephone requests should be directed to Share Owner Relations at (770) 989-3796, Coca-Cola Enterprises Inc., 2500 Windy Ridge Parkway, Atlanta, Georgia 30339 or P.O. Box 723040, Atlanta, Georgia 31139-0040.


Attachment B

Severance Provisions Applicable to Chief Executive Officer

I.     Eligibility. The Chief Executive Officer (“CEO”) will become eligible to receive severance pay and/or severance benefits in the event that both of the following conditions are satisfied:  

 •

 

The officer’s involuntary termination without Cause, or the officer voluntarily terminates employment for Good Reason; and
 

 

 

The officer executes and delivers an agreement incorporating the mutual release of claims and the non-competition provisions set forth below.

II.     Severance Provisions. If, but only if, the conditions of Section I above are satisfied, the CEO shall receive the following:

    A.        Annual Salary and Bonus. The CEO will receive an amount equal to the lesser of: (i) 24 months of base salary and two Annual Bonus Awards, payable in equal monthly amounts, and (ii) that number of months of base salary and prorated Annual Bonus Awards resulting between the CEO’s date of termination and the date that is the 7 year anniversary of the CEO’s initial employment date with the Company, payable in equal monthly amounts. The CEO also shall receive a payment equal to the annual bonus that would have been payable for the year of termination, which amount shall be based on actual performance results and prorated for his actual period of service during such year.

        Notwithstanding the preceding paragraph, monthly severance benefits may be offset by the amount of the CEO’s monthly benefit under the Executive Pension Plan in the event such pension benefits commence during the CEO’s severance period.

    B.        Medical Coverage. The CEO will receive additional severance payments intended to mitigate the additional cost of continuing medical coverage under COBRA until CEO is no longer eligible for COBRA. Such payments would approximate the difference in the required contributions towards COBRA coverage and the contributions for coverage of an active employee.

    C.        Severance Equity Benefits. The CEO’s 2006 and 2007 annual equity grants will be treated as follows:

 •

 

Restricted stock for which the performance goals have been met at the termination date will be vested on the termination date on a pro rata basis (in the same ratio as the months of employment since the grant date bears to the number of months in that grant’s original service vesting period), plus that additional service condition vesting that would have occurred within 24 months immediately following the termination date.



 •

 

Restricted stock for which the performance goals have not been met at the termination date will be vested on a pro rata basis (in the same ratio as the months of employment since the grant date bears to the number of months in that grant’s original service vesting period), plus that additional service condition vesting that would have occurred within 24 months immediately following the termination date, and the performance goals may still be met with respect to such shares during the original period of service vesting for the grant.



 •

 

Unvested stock options will be vested on the termination date to the extent they would have met the service vesting conditions within 24 months from the termination date. Stock options that are vested (or become vested upon the CEO’s termination) will remain exercisable for 24 months from the termination date.


III.     Definitions
 

   •

 

 "Annual Bonus Award” means the amount payable to the officer under the executive management incentive plan in effect for executive officers on his or her termination date, which amount shall be calculated as if the “target” performance results were attained. If there is no executive management incentive plan in place at the time of the officer’s termination or if the employment is terminated by the officer for Good Reason and the Good Reason is a material reduction in base salary or annual cash bonus incentive opportunity, then the Annual Bonus Award means an amount equal to the last such award received by the officer prior to his termination date.



 •  

 

 "Cause” means (i) willful or gross misconduct by the officer that is materially detrimental to the Company, (ii) a willful act of (x) personal dishonesty or (y) fraud in either case committed against the Company, or (iii) conviction of a felony, except for a conviction related to vicarious liability based solely on his position with the Company, provided that the officer had no involvement in actions leading to such liability or had acted upon the advice of the Company’s counsel. For purposes of this definition of Cause, no act or failure to act by the officer shall be considered “willful” unless it occurs without his good faith belief that such act or failure to act was in, or not contrary to, the best interests of the Company.



  • 

 

 “Good Reason” means the officer’s (i) demotion or diminution of duties, responsibilities and status; (ii) a material reduction in base salary or annual cash bonus incentive opportunities (whether in one reduction or cumulatively); or (iii) relocation of his principal office more than 50 miles from Atlanta, unless such relocation is closer to his primary residence, or outside the Company’s corporate headquarters. The officer must give written notice to the Company within 60 days of the date on which he is notified of such circumstances, and the Company will have one month to remedy the matter.



IV.     Mutual Release and Non-Competition. The CEO shall execute and deliver an agreement incorporating the following provisions.

A.      Mutual Release.

Executive Release. The CEO agrees, for himself, his spouse, heirs, executor or administrator, assigns, insurers, attorneys and other persons or entities acting or purporting to act on his behalf, to irrevocably and unconditionally release, acquit and forever discharge the Company, its affiliates, subsidiaries, directors, officers, employees, shareholders, partners, agents, representatives, predecessors, successors, assigns, insurers, attorneys, benefit plans sponsored by the Company and said plans’ fiduciaries, agents and trustees (collectively “Company Parties”), from any and all actions, cause of action, suits, claims, obligations, liabilities, debts, demands, contentions, damages, judgments, levies and executions of any kind, whether in law or in equity, known or unknown, which the CEO has, or has had, against any of the Company Parties as of the date of execution of this Release arising out of or relating to the CEO’s employment or the termination of employment with the Company. This Release specifically includes without limitation any claims arising in tort or contract, any claim based on wrongful discharge, any claim based on breach of contract, any claim arising under federal, state or local law prohibiting race, sex, age, religion, national origin, handicap, disability or other forms of discrimination, any claim arising under federal, state or local law concerning employment practices, and any claim relating to compensation or benefits. This specifically includes, without limitation, any claim which the CEO has or has had under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, the Americans with Disabilities Act, as amended, and the Employee Retirement Income Security Act of 1974, as amended. Nothing herein shall release the Company from any claims or damages based on (i) any right the CEO may have to enforce this Release or the employment letter agreement dated April 25, 2006, (ii) any right or claim that arises after the date of this Release, (iii) any right the CEO may have to benefits or entitlements under any applicable plan, agreement, program, award, policy or arrangement of the Company, (iv) the CEO’s eligibility for indemnification in accordance with the certificate of incorporation and by-laws of the Company, or any applicable insurance policy, with respect to any liability the CEO incurs or incurred as an employee or officer of the Company or (v) any right the CEO may have to obtain contribution as permitted by law in the event of entry of judgment against the CEO as a result of any act or failure to act for which the CEO and the Company are jointly liable.



 Company Release. The Company agrees, for itself and its successors and assigns, to irrevocably and unconditionally release, acquit and forever discharge the CEO, his spouse, heirs, executor or administrator (collectively “Executive Parties”), from any and all actions, cause of action, suits, claims, obligations, liabilities, debts, demands, contentions, damages, judgments, levies and executions of any kind, whether in law or in equity, known or unknown, which the Company has, or has had, against the Executive Parties as of the date of execution of this Release arising out of or relating to the CEO’s employment or the termination of employment with the Company including but not limited to any claim, demand, obligation, liability or cause of action arising under any federal, state, or local employment law or ordinance, tort, contract, or breach of public policy theory, or alleged violation of any other legal obligation. Nothing herein shall release the CEO from any claims or damages based on (i) any right Company may have to enforce this Release or the employment letter agreement dated April 25, 2006, (ii) any right or claim that arises after the date of this Release or (iii) any right Company may have to obtain contribution as permitted by law in the event of entry of judgment against it as a result of any act or failure to act for which Company and the CEO are jointly liable.



B.        Non-Competition.

 The CEO acknowledges that as the Chief Executive Officer of the Company he has had ultimate responsibility for the Company and chief financial responsibility throughout the United States and internationally, and that it is reasonable and necessary for the Company to protect itself on such basis. Accordingly, the CEO covenants and agrees that, during the period beginning on the date of termination of his employment and ending two (2) years thereafter, he will not directly or indirectly, on his own behalf or on behalf of any person or entity, compete with the Company by performing activities or duties substantially similar to the activities or duties performed by the CEO for the Company for any business entity that is a Direct Competitor of the Company within the Restricted Area, as defined below.



 A “Direct Competitor” of the Company is any business or operation within the Restricted Area owned or operated by PepsiCo, Inc., The Pepsi Bottling Group, Inc., and Cadbury Schweppes plc. Further, the Board of Directors shall have the right to modify the definition of Direct Competitor by including other manufacturers, bottlers, or distributors of non-alcoholic beverages at the time of CEO’s termination of employment. The “Restricted Area” is any state in the United States in which the Company sold or distributed products or services of the Company as of the Effective Date. CEO expressly acknowledges and agrees that, because of the nature of the services he has provided as Chief Executive Officer of the Company under this Agreement, he provided such services throughout the Restricted Area and, therefore, the Restricted Area is reasonably defined to protect the Company’s legitimate business interests.


The CEO acknowledges and agrees:
 

(i)         The knowledge and experience the CEO acquired while an employee, officer and executive of the Company are of a special, unique and extraordinary character and that his position with the Company placed him in a position of confidence and trust with the Company’s customers and employees.



(ii)         The CEO’s experience and capabilities are such that he can obtain subsequent employment without breaching the terms and conditions of this Agreement and his obligations under this Agreement will not prevent him from earning a livelihood.



(iii)         The CEO has special knowledge, contacts and expertise with respect to the operations of the Company and its Subsidiaries, and the Company would not enter into this Agreement without obtaining the covenants and agreements of the CEO as set forth in this Agreement.

 

 

 

 

 

AMENDMENT TO ATTACHMENT B OF LETTER TO JOHN F. BROCK

Exhibit 10.7.2

Amendment to Attachment B of Letter dated

April 25, 2006 from Coca-Cola Enterprises Inc. to John F. Brock

(Effective December 15, 2008)

I. Eligibility. The Chief Executive Officer (“CEO”) will become eligible to receive severance pay and/or severance benefits in the event that both of the following conditions are satisfied:

 

 

 

The officer’s involuntary separation from service without Cause, or the officer voluntarily terminates employment for Good Reason; and

 

 

 

The officer executes and delivers an agreement incorporating the mutual release of claims and the non-competition provisions set forth below.

II. Severance Provisions. If, but only if, the conditions of Section I above are satisfied, the CEO shall receive the following:

A. Annual Salary and Bonus. The CEO will receive an amount equal to the lesser of: (i) 24 months of base salary and two Annual Bonus Awards, and (ii) that number of months of base salary and prorated Annual Bonus Awards resulting between the date of the CEO’s separation from service and the date that is the 7 year anniversary of the CEO’s initial employment date with the Company. Such amount shall be paid upon the CEO’s separation from service in equal monthly installments. Each installment shall be considered a separate payment for purposes of Section 409A of the Code.

The CEO shall also receive a payment equal to the annual bonus that would have been payable for the year of his separation from service, which amount shall be based on actual performance results and prorated for his actual period of service during such year. Such amount shall be paid in a lump sum in the year following the CEO’s separation from service, and no later than June 30 of such year.

B. Medical Coverage. The CEO will receive an additional payment intended to mitigate the additional cost of continuing medical coverage under COBRA until the CEO is no longer eligible for COBRA. Such payment shall be made upon the CEO’s separation from service and shall be equal to the difference between the monthly contributions required for COBRA coverage and active employee coverage at the level and type of coverage in place for the CEO on the date of the CEO’s separation from service, multiplied by the number of months of COBRA coverage for which the CEO is eligible as of the date of his separation from service.

C. Severance Equity Benefits. The CEO’s 2006 and 2007 annual equity grants will be treated as follows:

 

 

 

Restricted stock for which the performance goals have been met at the separation from service date will be vested on such date on a pro rata basis (in the same ratio as the months of employment since the grant date bears to the number of months in that grant’s original service vesting period), plus that additional service condition vesting that would have occurred within 24 months immediately following the separation from service date.

 

 

 

Restricted stock for which the performance goals have not been met at the separation from service date will be vested on a pro rata basis (in the same ratio as the months of employment since the grant date bears to the number of months in that grant’s original service vesting period), plus that additional service condition vesting that would have occurred within 24 months immediately following the separation from service date, and the performance goals may still be met with respect to such shares during the original period of service vesting for the grant.

 

B-1


 

 

Unvested stock options will be vested on the separation from service date to the extent they would have met the service vesting conditions within 24 months from the separation from service date. Stock options that are vested (or become vested upon the CEO’s separation from service) will remain exercisable for 24 months from the separation from service date.

D. Six-Month Delay in Payment. Notwithstanding the foregoing, if any of the monthly installments or other payments provided for in this Section II are subject to Section 409A of the Code, then any such installments or payments that would be paid during the six-month period following the CEO’s separation from service shall instead be paid in a lump sum upon the six-month anniversary of the CEO’s separation from service, and the remaining installments shall be paid as originally scheduled.

III. Definitions

 

 

 

“Annual Bonus Award” means the amount payable to the officer under the executive management incentive plan in effect for executive officers on his or her separation from service date, which amount shall be calculated as if the “target” performance results were attained. If there is no executive management incentive plan in place at the time of the officer’s separation from service or if the employment is terminated by the officer for Good Reason and the Good Reason is a material reduction in base salary or annual cash bonus incentive opportunity, then the Annual Bonus Award means an amount equal to the last such award received by the officer prior to his separation from service date.

 

 

 

“Cause” means (i) willful or gross misconduct by the officer that is materially detrimental to the Company, (ii) a willful act of (x) personal dishonesty or (y) fraud in either case committed against the Company, or (iii) conviction of a felony, except for a conviction related to vicarious liability based solely on his position with the Company, provided that the officer had no involvement in actions leading to such liability or had acted upon the advice of the Company’s counsel. For purposes of this definition of Cause, no act or failure to act by the officer shall be considered “willful” unless it occurs without his good faith belief that such act or failure to act was in, or not contrary to, the best interests of the Company.

 

 

 

“Good Reason” means, without the officer’s prior written consent, the officer’s (i) material demotion or material diminution of duties, responsibilities or authority; (ii) a material reduction in base salary or annual cash bonus incentive opportunities (whether in one reduction or cumulatively); or (iii) relocation of his principal office more than 50 miles from Atlanta, unless such relocation is closer to his primary residence, or outside the Company’s corporate headquarters. The officer must give written notice to the Company within 60 days of the date on which the Board of Directors takes action on the circumstances described in (i), (ii), or (iii) and the officer becomes aware of such action, and the Company will have 30 days to remedy the matter, and, if the matter is not remedied within that time, the officer must actually separate from service within two years of the initial existence of such circumstances.

 

 

 

“Separation from service” shall mean the CEO’s separation from service, within the meaning of Section 409A of the Code and the regulations thereunder, from the Company and all entities required to be treated as a single employer with the Company under Section 409A and the regulations thereunder. In determining whether a separation from service has occurred, an anticipated permanent reduction to less than 50% of the average level of bona fide services provided in the immediately preceding 12 months shall be used rather than the 20% default rule set forth in the regulations under Section 409A.

IV. Mutual Release and Non-Competition. The CEO shall execute and deliver an agreement incorporating the following provisions.

A. Mutual Release.

Executive Release. The CEO agrees, for himself, his spouse, heirs, executor or administrator, assigns, insurers, attorneys and other persons or entities acting or purporting to act on his behalf, to irrevocably and unconditionally release, acquit and forever discharge the Company, its affiliates, subsidiaries, directors, officers,

 

B-2


employees, shareholders, partners, agents, representatives, predecessors, successors, assigns, insurers, attorneys, benefit plans sponsored by the Company and said plans’ fiduciaries, agents and trustees (collectively “Company Parties”), from any and all actions, cause of action, suits, claims, obligations, liabilities, debts, demands, contentions, damages, judgments, levies and executions of any kind, whether in law or in equity, known or unknown, which the CEO has, or has had, against any of the Company Parties as of the date of execution of this Release arising out of or relating to the CEO’s employment or separation from service with the Company. This Release specifically includes without limitation any claims arising in tort or contract, any claim based on wrongful discharge, any claim based on breach of contract, any claim arising under federal, state or local law prohibiting race, sex, age, religion, national origin, handicap, disability or other forms of discrimination, any claim arising under federal, state or local law concerning employment practices, and any claim relating to compensation or benefits. This specifically includes, without limitation, any claim which the CEO has or has had under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, the Americans with Disabilities Act, as amended, and the Employee Retirement Income Security Act of 1974, as amended. Nothing herein shall release the Company from any claims or damages based on (i) any right the CEO may have to enforce this Release or the employment letter agreement dated April 25, 2006, (ii) any right or claim that arises after the date of this Release, (iii) any right the CEO may have to benefits or entitlements under any applicable plan, agreement, program, award, policy or arrangement of the Company, (iv) the CEO’s eligibility for indemnification in accordance with the certificate of incorporation and by-laws of the Company, or any applicable insurance policy, with respect to any liability the CEO incurs or incurred as an employee or officer of the Company or (v) any right the CEO may have to obtain contribution as permitted by law in the event of entry of judgment against the CEO as a result of any act or failure to act for which the CEO and the Company are jointly liable.

Company Release. The Company agrees, for itself and its successors and assigns, to irrevocably and unconditionally release, acquit and forever discharge the CEO, his spouse, heirs, executor or administrator (collectively “Executive Parties”), from any and all actions, cause of action, suits, claims, obligations, liabilities, debts, demands, contentions, damages, judgments, levies and executions of any kind, whether in law or in equity, known or unknown, which the Company has, or has had, against the Executive Parties as of the date of execution of this Release arising out of or relating to the CEO’s employment or separation from service with the Company including but not limited to any claim, demand, obligation, liability or cause of action arising under any federal, state, or local employment law or ordinance, tort, contract, or breach of public policy theory, or alleged violation of any other legal obligation. Nothing herein shall release the CEO from any claims or damages based on (i) any right Company may have to enforce this Release or the employment letter agreement dated April 25, 2006, (ii) any right or claim that arises after the date of this Release or (iii) any right Company may have to obtain contribution as permitted by law in the event of entry of judgment against it as a result of any act or failure to act for which Company and the CEO are jointly liable.

B. Non-Competition.

The CEO acknowledges that as the Chief Executive Officer of the Company he has had ultimate responsibility for the Company and chief financial responsibility throughout the United States and internationally, and that it is reasonable and necessary for the Company to protect itself on such basis. Accordingly, the CEO covenants and agrees that, during the period beginning on the date of his separation from service and ending two (2) years thereafter, he will not directly or indirectly, on his own behalf or on behalf of any person or entity, compete with the Company by performing activities or duties substantially similar to the activities or duties performed by the CEO for the Company for any business entity that is a Direct Competitor of the Company within the Restricted Area, as defined below.

A “Direct Competitor” of the Company is any business or operation within the Restricted Area owned or operated by PepsiCo, Inc., The Pepsi Bottling Group, Inc., and Cadbury Schweppes plc. Further, the Board of Directors shall have the right to modify the definition of Direct Competitor by including other manufacturers, bottlers, or distributors of non-alcoholic beverages at the time of CEO’s separation from service. The “Restricted Area” is any state in the United States in which the Company sold or distributed products or services of the Company as of the Effective Date. CEO expressly acknowledges and agrees that, because of the nature of the services he has provided as Chief Executive Officer of the Company under this Agreement, he provided such services throughout the Restricted Area and, therefore, the Restricted Area is reasonably defined to protect the Company’s legitimate business interests.

 

B-3


The CEO acknowledges and agrees:

(i) The knowledge and experience the CEO acquired while an employee, officer and executive of the Company are of a special, unique and extraordinary character and that his position with the Company placed him in a position of confidence and trust with the Company’s customers and employees.

(ii) The CEO’s experience and capabilities are such that he can obtain subsequent employment without breaching the terms and conditions of this Agreement and his obligations under this Agreement will not prevent him from earning a livelihood.

(iii) The CEO has special knowledge, contacts and expertise with respect to the operations of the Company and its Subsidiaries, and the Company would not enter into this Agreement without obtaining the covenants and agreements of the CEO as set forth in this Agreement.

 

B-4

 

 

 

 

 

 

 

 

Exhibit 10.5.4

Coca-Cola Enterprises Inc.

Executive Severance Plan

(As Amended and Restated Effective December 31, 2008)

 

1.

Purpose.

The purpose of the Coca-Cola Enterprises Inc. Executive Severance Plan (the “Plan”) is to provide severance pay and benefits to eligible officers and management employees whose employment is terminated by the Company under certain circumstances. The Plan, as amended and restated, is applicable to eligible officers and management employees whose employment is terminated on or after December 31, 2008. The Plan is intended to be an “employee welfare benefit plan” as defined in Section 3(1) of the ERISA maintained primarily for the purpose of providing benefits for a select group of management or highly compensated employees. All benefits under the Plan shall be paid solely from the general assets of the Company.

 

2.

Definitions.

Affiliate” means a company that would be considered a single employer together with the Company under Code sections 414(b) or 414(c).

Annual Bonus Award” means the target bonus under the annual incentive plan in effect for an Eligible Employee on the date of his or her termination of employment. If there is no annual incentive plan in place at the time of the Eligible Employee’s termination, the bonus award amount will be equal to his or her target bonus under the last annual incentive plan in which the Eligible Employee participated, provided such plan was in effect within the six months prior to the Eligible Employee’s termination date.

Cause” means (i) willful or gross misconduct by the Eligible Employee that is materially detrimental to the Company or an Affiliate, including but not limited to a violation of the Company’s trading policy or code of business conduct, (ii) acts of personal dishonesty or fraud by an Eligible Employee toward the Company or an Affiliate, (iii) the Eligible Employee’s conviction of a felony, except for a conviction related to vicarious liability based solely on his or her position with the Company or an Affiliate, provided that the Eligible Employee had no involvement in actions leading to such liability or had acted upon the advice of the Company’s or an Affiliate’s counsel, or (iv) the Eligible Employee’s refusal to cooperate in an investigation of the Company if requested to do so by the Board.

Change in Control” means the occurrence of any of the circumstances described below in clauses (i) through (iv):

 

 

(i)

If any “person” (except for the Company or any Affiliate, a trustee or other entity holding securities under any employee benefit plan of the Company or any Affiliate, or The Coca-Cola Company, but only to the extent of its “current ownership”) is or becomes the “beneficial owner” directly or indirectly, of securities of the Company representing more than 20% of the combined total voting power of the Company’s then-outstanding securities.

As used in this definition of “Change in Control,” “person” is used as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (as amended); “beneficial owner” is used as defined in Rule 13d-3 of the Securities Exchange Act of 1934 (as amended); and “current ownership” of The Coca-Cola Company means that entity’s direct and indirect beneficial ownership of no more than an aggregate of 168,956,718 shares of the Company’s common stock (including shares of the Company’s common stock issuable upon the exercise, exchange or conversion of securities exercisable or exchangeable for, or convertible into, shares of the Company’s common stock), the aggregate number being subject to adjustment for subsequent stock splits or dividends payable in stock that are applicable to all shares of the Company’s


common stock. For the avoidance of doubt, a change in the “current ownership” of The Coca-Cola Company (an “Ownership Change”) shall have occurred upon that company’s becoming the beneficial owner of any additional shares of the Company’s common stock, except for

(A) the beneficial ownership of such shares occurring by reason of the adjustments described in the preceding sentence,

(B) the beneficial ownership of shares owned by another entity (not exceeding 0.10 percent of the Company’s then-outstanding common stock) upon that entity being acquired by The Coca-Cola Company or an affiliate, provided that such shares are disposed of by The Coca-Cola Company or its affiliate to an unrelated third party within 30 days of their being acquired (provided, however, that if the disposition has not occurred within the 30-day period, the Ownership Change shall be deemed to have occurred when the beneficial ownership was first acquired; and

(C) the beneficial ownership of the Company’s common stock acquired with the prior consent of the Affiliated Transaction Committee of the Company’s Board of Directors, so that upon such Ownership Change, the entire beneficial ownership of The Coca-Cola Company shall be considered in determining whether The Coca-Cola Company is the beneficial owner directly or indirectly of securities of the Company representing more than 20% of the total combined voting power of the Company’s then-outstanding securities.

 

 

(ii)

If during any period of two consecutive years, the individuals constituting the Board of Directors of the Company at the beginning of the two-year period (and any new Director, except for a director designated by a person who has entered into an agreement with the Company to effect a “Change in Control” described in clause (i), (iii) or (iv), whose election by the Board or nomination for election by the Company’s shareowners was approved by a vote of at least two-thirds of the directors then still in office who were either directors at the beginning of the two-year period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board.

 

 

(iii)

If the shareowners of the Company approve a merger, consolidation, or share exchange with any other “person,” other than (i) a merger, consolidation, or share exchange that would result in the voting securities of the Company outstanding immediately prior to such event continuing to represent (either by remaining outstanding or being converted into voting securities of either (A) the surviving entity or (B) another entity that owns, directly or indirectly, the entire voting interest in the surviving entity (the “parent”)) more than 50% of the voting power of the voting securities of the Company or the surviving entity (or its parent) outstanding immediately after such event, or (ii) a merger or consolidation effected to implement a recapitalization of the Company in which no “person” acquires more than 30% of the combined voting power of the Company’s then-outstanding securities, then a “Change in Control” shall have occurred immediately prior to such merger, consolidation, or share exchange.

 

 

(iv)

If the shareowners of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).

Code” means the Internal Revenue Code of 1986, as amended.

Company” means Coca-Cola Enterprises Inc.

Eligible Employee” means senior officers and management employees of the Company (or any Affiliate of the Company designated by the HR and Compensation Committee or its delegate as participating in the Plan) who are in positions in the Global Leadership, Executive Leadership, Strategic Leadership, or Business Unit/Functional Leadership salary bands.

 

2


ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Good Reason” means the Eligible Employee’s (i) material demotion or diminution of duties, responsibilities and authority; (ii) material reduction in both base salary and annual incentive opportunities (except for reductions in annual incentive opportunities due to individual performance adjustments); or (iii) assignment to a position requiring relocation of more than 50 miles from the Eligible Employee’s primary workplace (i.e., the Company’s corporate headquarters or other location, as applicable), provided, however, that (a) the Eligible Employee does not consent to such event, (b) the Eligible Employee has given written notice to the Company within 60 days of the date on which the circumstances giving rise to the event initially arise, (c) the Company has one month to remedy the matter, and (d) if the matter is not remedied, the Eligible Employee actually separates from service within two years after the initial existence of the circumstances giving rise to the event.

HR and Compensation Committee” means the Human Resources and Compensation Committee of the Board of Directors of the Company.

Plan” means the Coca-Cola Enterprises Inc. Executive Severance Plan.

Related Company” means The Coca-Cola Company or a company that is at least 20 percent owned by The Coca-Cola Company or the Company.

Severance Benefits Committee” means the committee established by the HR and Compensation Committee to decide claims for benefits as described in Section 7 of this Plan.

Years of Service” means complete years of employment with Coca-Cola Enterprises Inc. or one of its Affiliates or predecessor companies, or any Related Company. If an Eligible Employee’s period of employment with the Company, its Affiliates, or any Related Company includes a break in service of 12 months or more, Years of Service will be determined taking into account only years of employment following such break in service. If an Eligible Employee received severance pay from the Company, an Affiliate, or a Related Company and subsequently became employed by the Company or its Affiliates, the years of employment taken into account in determining such severance pay shall not be taken into account in determining Years of Service.

 

3.

Eligibility.

(a) General Rules. An Eligible Employee shall receive the severance pay and benefits described in this Plan if the Eligible Employee’s employment with the Company and its Affiliates is terminated (i) by the Company other than for Cause at any time or (ii) by the Eligible Employee for Good Reason within 24 months following a Change in Control. In order to receive severance pay and benefits under the Plan, an Eligible Employee must execute a release of claims and non-competition agreement in the form provided by the Company and must not be in breach of any other restrictive covenants or other obligations under this Plan or any other agreement with the Company or its Affiliates, including, but not limited to, noncompetition, confidentiality, and similar provisions.

(b) Limitations. An Eligible Employee shall not receive severance pay and benefits under this Plan in any circumstance other than those described in Section 3(a), including, but not limited to, the Eligible Employee’s voluntary termination of employment without Good Reason or the Eligible Employee’s death or disability. Furthermore, an Eligible Employee shall not receive severance pay and benefits under this Plan if the Eligible Employee receives severance pay and benefits under another severance plan of the Company or its Affiliates or has entered into an individual employment or severance contract with the Company or an Affiliate that provides for severance pay and benefits and such contract is in effect on the date of the Eligible Employee’s termination of employment, even if such severance pay and benefits would be less than those offered under the Plan.

 

3


4.

Severance Pay and Benefits.

(a) Severance Pay. An Eligible Employee shall receive severance pay in accordance with the following schedule, based on the Eligible Employee’s salary band:

 

Years of Service

  

Amount of Severance Pay

 

  

Global, Executive, and Strategic

Leadership Bands

  

Business Unit/Functional Leadership Band

Fewer than 2 Years of Service

  

12 months of base salary and one times an Annual Bonus Award

  

12 months of base salary and one times an Annual Bonus Award

At Least 2 But Fewer Than 10 Years of Service

  

18 months of base salary and one and one-half times an Annual Bonus Award

  

15 months of base salary and one and one-quarter times an Annual Bonus Award

10 or more Years of Service

  

24 months of base salary and two times an Annual Bonus Award

  

18 months of base salary and one and one-half times an Annual Bonus Award

(b) Payment to Mitigate Costs of Future Medical Coverage and Outplacement Services. An Eligible Employee who is a participant in the Company’s medical plan at the time of his or her termination of employment shall receive $30,000 to mitigate the cost of future medical coverage. Additionally, an Eligible Employee shall receive an amount to mitigate the cost of obtaining outplacement services, as follows:

 

•   Global and Executive Leadership Bands

  

$

75,000

•   Strategic Leadership Band

  

$

50,000

•   Business Unit/Functional Leadership Band

  

$

25,000

Notwithstanding the foregoing, the amount related to the mitigation of outplacement services will not be payable if the Company has made outplacement services available to the Eligible Employee.

(c) Form and Timing of Severance Payments.

 

 

(i)

The amount of the severance pay determined under Section 4(a) above shall be paid in equal monthly installments commencing upon the Eligible Employee’s termination of employment, over the number of months of base salary determined based on the chart above.

 

 

(ii)

The amount of severance benefits provided under Section 4(b) above shall be paid in a lump-sum as soon as practicable following the Eligible Employee’s termination of employment.

 

 

(iii)

In the event of the Eligible Employee’s death prior to the receipt of all payments under this Plan, the balance of the unpaid amount will paid in a lump sum as soon as practicable following his or her death. If the Eligible Employee is married, such payment will be made to his or her spouse; otherwise, the payment will be made to his or her estate.

(d) Payment in Lieu of Annual Bonus Award. An Eligible Employee shall receive a payment equal to the Annual Bonus Award that would have been payable to the Eligible Employee for the year of termination. Such Annual Bonus Award shall be based on actual performance results for such year, rather than target, and prorated for his or her actual period of service during such year. The payment shall be made in a single lump sum in the calendar year following the calendar year in which the Eligible Employee terminates employment.

(e) Restricted Stock and Stock Units. With respect to an Eligible Employee’s restricted stock or deferred or restricted stock units (“restricted stock/stock units”) for which the performance-based conditions on vesting, if any, have been met, the service-based conditions on vesting on shall be waived on all such restricted stock/stock units and the shares underlying such restricted stock/stock units shall be paid to the Eligible Employee upon his or her termination of employment. With respect to an Eligible Employee’s restricted stock/stock units for which the performance-based conditions on vesting have not been met, the service-based conditions on vesting

 

4


shall be waived on a pro rata portion of such restricted stock/stock units, based on the number of whole months between the grant date of the award and the date of the Eligible Employee’s termination of employment. Any performance-based conditions on vesting of such restricted stock/stock units must be satisfied within the original service-based vesting period (unless a different period is provided for this purpose in the award document), or such restricted stock/stock units shall be forfeited. Notwithstanding the foregoing, the pro rata portion for special awards of restricted stock/stock unit grants made in 2002 and 2003 that were targeted to vest on the Eligible Employee’s 55th birthday shall be determined based on a five-year service requirement. The waiver of vesting provided for by this Section 4(e) shall not change the time of payment of any deferred or restricted stock units, which shall continue to be paid a the time provided under the applicable award documents.

(f) Cessation of Payments upon Rehire. If an Eligible Employee is rehired by the Company, an Affiliate, or a Related Company while the Eligible Employee is receiving installment payments of severance or before receiving the payment in lieu of annual bonus, the Eligible Employee shall forfeit all future installment payments and the payment in lieu of annual bonus (if it has not already been paid), and the Eligible Employee shall not receive any further payments under this Plan as of the rehire date.

(g) Committee Discretion. Notwithstanding the foregoing, the HR and Compensation Committee or its delegate may, in its sole discretion, reduce or otherwise adjust the amount of an Eligible Employee’s severance pay, amount in lieu of bonus, and restricted stock/stock unit vesting. Such determination shall be made before any severance payments commence under this Section 4. Unless the HR and Compensation Committee determines otherwise, the Company’s Senior Vice President, Human Resources, is delegated the authority to exercise the discretion provided by this provision with respect to Eligible Employees other than senior officers.

(h) Six Month Delay for Specified Employees. If an Eligible Employee is a “specified employee” within the meaning of Code section 409A(a)(2)(B)(i), then, to the extent a payment under this Section 4 is subject to Code section 409A, such payment shall not be made during the six months following separation from service, and any payments that would otherwise have been made during such six-month period shall be paid in a single lump sum at the end of such six-month period. The Company’s “specified employees” shall be determined in accordance with the methodology established by the HR and Compensation Committee or its delegate.

 

5.

Eligible Employee Obligations.

(a) General. An Eligible Employee’s severance pay and benefits provided under Section 4 are expressly conditioned on the Eligible Employee’s compliance with the obligations contained in this Section 5. If an Eligible Employee violates any of the obligations set forth in this Section 5, the Eligible Employee shall forfeit any remaining payments of severance, any unvested restricted stock/stock units, any outstanding stock options (whether or not vested), and all future nonqualified pension plan benefits.

(b) Release of Claims and Noncompetition Agreement. Before any severance pay and benefits become payable or are provided to an Eligible Employee, he or she must execute, and not revoke, a release of claims and noncompetition agreement in the form provided by the Company. Notwithstanding anything to the contrary in Section 4(c) or (d), if an Eligible Employee has not executed, without revocation, such release before the first payment under Section 4(c) or (d) is due to be made, such payments shall not be made unless and until the Eligible Employee executes, and does not revoke, the release. If the Eligible Employee executes, without revocation, such release within 60 days of his or her termination of employment, any amounts under Section 4(c) or (d) that would have been paid during the period before such execution will be paid in a lump sum within 30 days of executing the release. If the Eligible Employee does not execute the release within 60 days of his or her termination of employment, all payments under Section 4(c) or (d) that would have been paid during such 60-day period shall be forfeited, and each future installment payment shall be forfeited if the Eligible Employee has not executed the release by the time such payment would otherwise have been made.

(c) Nonsolicitation. The Eligible Employee shall not, during the period beginning with termination of employment and ending with the last installment payment of severance scheduled pursuant to Section 4(c), directly or indirectly, on his or her own behalf or on behalf of any person or entity, solicit, divert, or appropriate to any non-alcoholic beverage business or operations, any person or entity who transacted business with the Company or its

 

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Affiliates during the year preceding the date of the Eligible Employee’s termination of employment, provided that such person or entity is a person or entity with whom the Eligible Employee has had direct contact or has been a party to marketing or sales strategies with regard to.

The Eligible Employee further shall not, during the period beginning with the Eligible Employee’s termination of employment and ending with the last installment payment of severance scheduled pursuant to Section 4(c), directly or indirectly, on his or her own behalf or on behalf of any person or entity, solicit, divert, or hire away, or attempt to solicit, divert, or hire away to any person or entity, any person employed by the Company or an Affiliate on the date of the Eligible Employee’s termination of employment or at any time during the one-year period preceding the Eligible Employee’s termination of employment.

(d) Confidentiality. An Eligible Employee shall not use, reveal, disclose, or divulge (i) any trade secrets for so long as they remain trade secrets and (ii) any confidential information for five years after the Eligible Employee’s termination of employment. “Confidential information” means any data or information with respect to the business conducted by the Company or its Affiliates that is not generally known to the public and that is a valuable asset to the Company, including, but not limited to, sales reports, product pricing, sales materials, selling procedures, marketing agreements and programs, customer lists, customer requirements, specifications for new products, sources of supply for ingredients, packaging, and other materials used in the Company’s products, and the business plans and financial data of the Company, except to the extent that any such information is readily available in the public domain through no fault of the Eligible Employee.

(e) Nondisparagement. An Eligible Employee shall not disparage the Company, its Affiliates, or their employees, products, or services in any form or fashion following the Eligible Employee’s termination of employment.

(f) Records/Company Property. An Eligible Employee shall, following his or her termination of employment, return to the Company all documents (including copies and computer records thereof) of any nature that relate to or contain proprietary or confidential information concerning the Company, its Affiliates, its customers, or employees, and any and all property of the Company in his or her possession, including, but not limited to, computers, electronic recording media, business records, papers, documents, and other Company property.

(g) Cooperation. An Eligible Employee shall, following his or her termination of employment, cooperate with the Company and its counsel in any litigation or human resources matters in which he or she may be a witness or potential witness or have knowledge of the relevant facts or evidence. The Company shall reimburse such Eligible Employee for reasonable and necessary expenses incurred in the course of complying with this provision.

(h) Repayment of Severance Benefits in Certain Cases. If, within two years of an Eligible Employee’s termination of employment, the Board of Directors of the Company determines that the Eligible Employee’s employment could have been terminated for Cause, then (i) such event shall be treated as a violation of the obligations of this Section 5 and the forfeitures described in Section 5(a) shall be applicable, and (ii) the Eligible Employee shall promptly repay to the Company an amount equal to the sum of all severance payments under this Plan and all gains from the vesting of Company restricted stock/stock units occurring upon or subsequent to separation from service with the Company.

 

6.

Administration and Interpretation.

The HR and Compensation Committee (including any delegate of the HR and Compensation Committee) shall have sole discretionary authority to interpret, construe, apply, and administer the terms of the Plan and to determine eligibility for and the amounts of benefits under the Plan, including interpretation of ambiguous Plan provisions, determination of disputed facts or application of Plan provisions to unanticipated circumstances. The HR and Compensation Committee’s (or its delegate’s) decision on any such matter shall be final and binding.

 

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7.

Claims Procedures.

If an Eligible Employee (or other individual, collectively referred to in this section as the “applicant”) believes he or she has not been provided with severance benefits due under this Plan, then the applicant must file a request for benefits with the Severance Benefits Committee within ninety days of the his or her termination of employment. Any such claim shall be acted upon and approved or disapproved by the Severance Benefits Committee within ninety days following receipt (or within 180 days if special circumstances require and notice is given to the applicant before the end of the ninety-day period informing the applicant of the circumstances requiring the extension of time and the date by which the Severance Benefits Committee expects to render a decision).

If the claim for severance benefits is denied, in whole or in part, the Severance Benefits Committee shall notify the applicant in writing of such denial and of the applicant’s right to a review of the decision as set forth below and shall set forth, in a manner calculated to be understood by the applicant, the specific reasons for such denial, the specific references to pertinent Plan provisions on which the denial is based, a description of any additional material or information necessary for the applicant to perfect the application, an explanation of why such material or information is necessary and an explanation of the Plan’s review procedure and the time limits applicable to such procedures, including a statement of the applicant’s right to bring a civil action under ERISA following an adverse determination on review.

Any person whose claim is denied in whole or in part may appeal to the Company’s Vice President of Human Resources (the “VP-HR”) for review of the decision by submitting, within sixty days after receiving notice of the denial of the claim, a written statement to the VP-HR that:

 

 

(i)

requests a review of the claim for benefits;

 

 

(ii)

sets forth all of the grounds upon which the request for review is based and any facts in support of such request; and

 

 

(iii)

sets forth any issues or comments that the applicant deems pertinent to the application.

In addition, an applicant may submit written comments, documents, records and other information in support of the appeal, and the applicant shall be provided, free of charge, reasonable access to and copies of all documents, records and other information relevant to the applicant’s claim for benefits. (With respect to senior officers for whom the VP-HR could not perform an independent review, the HR and Compensation Committee shall review such appeal, and references to the VP-HR in this Section 7 shall be deemed to refer to the HR and Compensation Committee.)

The VP-HR shall act upon each appeal within sixty days after receipt of the applicant’s request for review by the VP-HR. The VP-HR shall make a full and fair review of each application and any written material submitted by the applicant or the Company in connection with such review, without regard to whether such information was submitted or considered in the initial benefit determination. If the VP-HR determines that special circumstances require an extension of time for processing an appeal, it may extend the initial period, in which case written notice of the extension shall be furnished to the applicant before the termination of the initial period indicating the special circumstances requiring an extension and the date by which the VP-HR expects to render a determination on review. In no event shall such extension exceed a period of sixty days from the end of the initial period. Based on this review, the VP-HR shall make an independent determination of the applicant’s eligibility for benefits under the Plan.

In the case of a denial of any appeal, the VP-HR shall notify the applicant in writing of such determination and shall set forth, in a manner calculated to be understood by the applicant, the specific reasons for the adverse determination, references to the specific Plan provisions on which the determination is based, a statement that the applicant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the applicant’s claim for benefits and a statement of the applicant’s right to bring an action under ERISA.

 

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The decision of the VP-HR on any claim for benefits shall be final and conclusive upon all persons. An Eligible Employee must pursue all claims procedures described above before seeking any other legal recourse with respect to Plan benefits. In addition, any lawsuit must be filed within six months from the date of the denied appeal, or two years from the Eligible Employee’s termination date, whichever occurs first.

 

8.

Miscellaneous.

(a) Amendment. The Company, by action of its HR and Compensation Committee, reserves the right to amend this Plan, in whole or in part, or to discontinue or terminate the Plan, at any time in its sole discretion. Notwithstanding the foregoing, for a period of two years following a Change in Control of the Company, the Plan may not be discontinued or terminated or amended in such a manner that decreases the benefits payable to an Eligible Employee or that makes any provision less favorable for an Eligible Employee.

(b) Withholding. The Company shall be entitled to withhold or cause to be withheld from amounts to be paid under this Plan to an Eligible Employee any federal, state, or local withholding or other taxes or amounts that it is from time to time required to withhold.

(c) Compliance with Section 409A. Notwithstanding anything to the contrary contained in this Plan, the payments and benefits provided under this Plan are intended to comply with Code section 409A, and the provisions of this Plan shall be interpreted such that the payments and benefits provided are either not subject to Code section 409A or are in compliance with Code section 409A. The Company may modify the payments and benefits under this Plan at any time solely as necessary to avoid adverse tax consequences under Code section 409A. Installment payments provided under this Plan shall be treated as separate payments for purposes of Code section 409A. Any reference to “termination of employment” under this Plan shall refer to a “separation from service” within the meaning of Code section 409A and the regulations thereunder. Good faith compliance with Code section 409A and applicable guidance will govern determinations of whether a “separation from service” has occurred prior to January 1, 2009; thereafter, a 50 percent threshold for the level of services shall be used rather than a 20 percent threshold pursuant to Treas. Reg. §1.409A-1(h)(1)(ii).

(d) No Implied Employment Rights. The Plan shall not be deemed to give any employee or other person any right to be retained in the employ of the Company or its Affiliates or to interfere with the right of the Company or its Affiliates to discharge any employee or other person at any time and for any reason.

(e) Governing Law. This Plan is intended to be governed by and will be construed in accordance with ERISA, and to the extent not preempted by ERISA, by the laws of the state of Delaware, without regard for any choice of law principles thereof.

(f) Severability. If any provision of the Plan is held to be invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

 

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