EXHIBIT 99.1
SEVERANCE AGREEMENT AND MUTUAL RELEASE
This SEVERANCE AGREEMENT AND MUTUAL RELEASE (this "Agreement") is entered
into by and between PANAMERICAN BEVERAGES, INC. (together with its successors
and assigns, "PANAMCO") and WILLIAM G. COOLING ("MR. COOLING").
WHEREAS, MR. COOLING is currently employed by PANAMCO and serves as its
Chief Executive Officer and as Chairman of its Board of Directors (the
"Board"); and
WHEREAS, the terms and conditions of MR. COOLING's employment are
described in an Employment Agreement with PANAMCO dated as of October 6, 2000
(the "Employment Agreement") and in certain related documents; and
WHEREAS, MR. COOLING and PANAMCO (the "Parties") desire to terminate the
Employment Agreement and to set forth in this Agreement the terms and
conditions of the termination of MR. COOLING's employment by PANAMCO as Chief
Executive Officer and of his service as Chairman of PANAMCO's Board of
Directors and an employee (which terms and conditions include a mutual release
and waiver of all claims unless expressly exempted herein);
NOW, THEREFORE, the Parties agree as follows:
1. Execution of Agreement and Effective Date. The Parties agree that MR.
COOLING's employment by PANAMCO shall terminate effective 5:00 p.m. on August
30, 2002 (the "Termination Date") in a termination governed by Section 8(c) of
the Employment Agreement. The Parties further confirm that, as of the
Termination Date, MR. COOLING shall cease to serve as PANAMCO's Chief
Executive Officer and as Chairman of PANAMCO's Board, and shall resign as a
director of PANAMCO. MR. COOLING understands that the waiver language set
forth in Section 4 of this Agreement is intended to encompass the entire
period of his employment with PANAMCO and, therefore, MR. COOLING agrees that
he shall not be entitled to benefits pursuant to Section 2 of this Agreement
unless MR. COOLING executes this Agreement on or before his Termination Date.
This Agreement shall become effective and enforceable on the eighth (8th) day
after MR. COOLING signs the Agreement and shall not, prior to that day, be
revocable by PANAMCO unless revoked by MR. COOLING in accordance with Section
11 below.
2. Benefits. In consideration for MR. COOLING's waiver of certain claims
against PANAMCO, and the mutual promises made in this Agreement, and of MR.
COOLING's entitlements under the Employment Agreement, PANAMCO agrees to
provide the following to MR. COOLING:
1 of 6
A. Lump Sum Severance Payment. PANAMCO promises to pay MR. COOLING the
gross amount of One Million, Three Hundred and Fifty Thousand Dollars
($1,350,000.00), less (in accordance with Section 15(f) of the Employment
Agreement) any tax withholding required by applicable law or regulation. Such
amount shall be paid by wire transfer of immediately available funds on the
5th business day after the 7 day revocation period described in Section 11
below expires. Such payment shall be deemed to satisfy, inter alia, any
entitlement MR. COOLING might otherwise have under Section 8(c)(i) of the
Employment Agreement.
B. Annual Incentive Award. In the event the consolidated net income of
PANAMCO for calendar year 2002 is at least $150,000,000.00, PANAMCO promises
to pay MR. COOLING an annual incentive award in the gross amount of Five
Hundred Thousand Dollars ($500,000.00), less (in accordance with Section 15(f)
of the Employment Agreement) any tax withholding required by applicable law or
regulations. Alternatively, in the event the consolidated net income of
PANAMCO for calendar year 2002 is at least $170,000,000.00, PANAMCO promises
to pay MR. COOLING an annual incentive award in the gross amount of One
Million Dollars ($1,000,000.00), less (in accordance with Section 15 of the
Employment Agreement) any tax withholding required by applicable law or
regulation. For purposes of this Section 2B, the Company's consolidated net
income for calendar year 2002 shall be the consolidated net income for such
year as set forth in the Company's audited annual financial statements for
such year as first certified by the Company's independent auditors, but
excluding any increase for a special adjustment (including, without
limitation, the extraordinary one time sale of any asset such as the gain
recognized on the sale of Panamco's interest in Cervejarias Kaiser S.A., or
write up in the value of goodwill or of other tangible or intangible assets;
and further excluding any decrease for any special adjustment (including,
without limitation, the write down in the value of goodwill or of other
tangible or intangible assets). Any annual incentive award due shall be paid
in cash promptly after such certification.
C. Benefits under Employment Agreement. Mr. Cooling shall also be
entitled to such other and additional amounts and benefits as are provided in
Sections 8(e) (provided, however, any reimbursement for attorneys' fees and
other charges of counsel for MR. COOLING relating to this Agreement pursuant
to Section 7(e) of the Employment Agreement shall be limited to $10,000 (Ten
Thousand Dollars)), 8(f), 9 and 10 of the Employment Agreement accrued as of
the Termination Date, treating the termination of his employment by PANAMCO as
governed by Section 8(c) of the Employment Agreement for this purpose. For
avoidance of doubt, the foregoing benefits include benefits under the Stock
Option Agreement between the Parties made as of November 10, 2000.
D. Modification of Restricted Stock Agreement of November 10, 2000. The
period of vesting for the second tranche of Restricted Stock shall be extended
to November 10, 2005 by which date the second tranche must be earned or
forfeited in accordance with the Restricted Stock Agreement; and the period of
vesting for the third tranche of Restricted Stock shall be
2 of 6
extended to November 10, 2006 by which date the third tranche must be earned
or forfeited in accordance with the Restricted Stock Agreement.
MR. COOLING understands and acknowledges that he would not receive some
of the benefits provided pursuant to this Section 2 except for his execution
of this Agreement, his waiver of claims against PANAMCO, and the fulfillment
of the promises contained herein.
3. Promissory Notes. PANAMCO loaned the principal amount of $766,756.23
to MR. COOLING under the terms of a Promissory Note from MR. COOLING to
Panamerican Beverages, Inc., dated June 21, 2001 on its first page (the "2001
Note"). PANAMCO loaned the principal amount of $426,799.00 to MR. COOLING
under the terms of a Promissory Note from MR. COOLING to Panamerican
Beverages, Inc., dated April 10, 2002 on its first page (the "2002 Note").
Nothing in this Agreement shall be construed to modify or amend any of the
terms of either the 2001 Note or the 2002 Note.
4. Mutual Release of Claims. For the purposes of this Section 4 and of
Section 6 below, "PANAMCO" shall include PANAMCO LLC, Panamerican Beverages,
Inc., and any parent companies, subsidiaries, related or affiliated entities,
and their respective owners, directors, officers, managers, agents, and
employees. MR. COOLING knowingly and voluntarily waives and releases any and
all known and unknown rights and claims that he has or may have against
PANAMCO as of the date MR. COOLING signs this Agreement, other than claims
arising under or preserved by this Agreement, including but not limited to any
claim(s) under:
o The Employment Agreement (other than as specifically reserved under
Section 2C hereof;
o The National Labor Relations Act;
o Title VII of the Civil Rights Act of 1964;
o Sections 1981 through 1988 of Title 42 of the United States Code;
o The Employee Retirement Income Security Act of 1974;
o The Immigration Reform and Control Act of 1986;
o The Americans with Disabilities Act of 1990;
o The Fair Labor Standards Act;
o The Age Discrimination in Employment Act of 1967;
o The Older Workers Benefit Protection Act;
o The Equal Pay Act of 1963;
o The Occupational Safety and Health Act;
o The Family and Medical Leave Act of 1993;
o Any other federal, state or local civil or human rights law or any other
federal, state or local law, regulation or ordinance; or
3 of 6
o Any public policy, contract, or common law claims, including any tort
claims (e.g., negligent or intentional infliction of emotional distress,
defamation, assault, battery, false imprisonment, wrongful termination,
etc.) whether based on common law or otherwise.
Panamerican Beverages, Inc., on behalf of itself and all individuals and
entities included within the definition of "PANAMCO" for purposes of this
Section 4, hereby knowingly and voluntarily waives and releases, MR. COOLING
against, any and all known and unknown rights and claims that it, or any such
individuals or entities, have or may have against MR. COOLING (including his
heirs, assigns, agents, and representatives) as of the date Panamerican
Beverages, Inc. signs this Agreement, other than claims arising under or
preserved by this Agreement, including but not limited to any claim(s) under
any federal, state or local law regulation or ordinance or any public policy,
contract, or common law claims, including any tort claims.
This waiver also bars any claim or demand for costs, fees, or other
expenses (including, without limitation, attorney's fees) incurred in
connection with any claim that is waived or released pursuant to this Section
4. The listing of claims waived in this Section 4 is intended to be
illustrative rather than exhaustive. MR. COOLING AND PANAMCO EACH ACKNOWLEDGE
AND AGREE THAT THIS AGREEMENT CONSTITUTES A FULL AND FINAL BAR TO ANY AND ALL
CLAIMS OF ANY TYPE OTHER THAN THE 2001 NOTE AND THE 2002 NOTE THAT EACH NOW
HAS AGAINST THE OTHER TO THE EXTENT SET FORTH IN THIS SECTION 4.
5. Cooperation. MR. COOLING agrees (on reasonable request by PANAMCO, at
PANAMCO's sole expense, and subject to his other commitments and obligations)
to cooperate with PANAMCO in effecting a smooth transition of the management
of PANAMCO with respect to the duties and responsibilities which MR. COOLING
performed for PANAMCO as its Chief Executive Officer and as Chairman of its
Board. MR. COOLING agrees to make himself reasonably available (on reasonable
request by PANAMCO, at PANAMCO's sole expense, and subject to his other
commitments and obligations) regarding prior business arrangements, and
regarding pending litigation or litigation which may arise in the future,
concerning matters of which MR. COOLING has personal knowledge or which were
within MR. COOLING's management responsibilities.
6. No Lawsuits. Each Party promises not to institute or have instituted, on
such Party's behalf, any lawsuit against the other Party based upon any claim
waived by such Party in Section 4 above. This Agreement is not intended to
limit either Party's right of access to any government agency, or either
Party's right to participate in any investigation by any government agency.
However, each of the Parties agrees that, with respect to the claims such
Party is waiving herein, such Party is waiving not only such Party's right to
recover money or other relief in any action that such Party might institute,
but such Party's right to recover money or other relief in any action that
might be brought on such Party's behalf by any other person or entity,
including any federal, state or local governmental agency or department.
4 of 6
7. Adequate Consideration. Each Party agrees that the benefits provided to
such Party under this Agreement constitute adequate and ample consideration
for the rights and claims such Party is waiving under this Agreement and for
the obligations imposed upon such Party by virtue of this Agreement.
8. Non-Admission. Each Party agrees that neither this Agreement, nor the other
Party's waiver of claims pursuant to this Agreement, shall be deemed or
construed at any time or for any purpose as an admission by such other Party
of any liability or unlawful conduct of any kind.
9. Severability. Should any provision of this Agreement be declared illegal or
unenforceable by any court, arbitrator or other tribunal of competent
jurisdiction and should such tribunal determine that such provision cannot be
modified to be enforceable, such provision shall immediately become null and
void, leaving the remainder of this Agreement in full force and effect.
10. Incorporation by Reference from Employment Agreement. The provisions of
Sections 9 through 15 of the Employment Agreement shall be deemed incorporated
into this Agreement as if fully set forth herein, with references in such
Sections to "the Executive", "the Company" and "this Agreement" being treated
(where appropriate) as references to MR. COOLING, PANAMCO, and this Agreement,
respectively.
11. Time to Consider Signing Agreement/Right to Revoke. MR. COOLING
understands and acknowledges that he has been allowed to take up to twenty-one
(21) days after receipt of this Agreement to decide whether to sign this
Agreement. MR. COOLING further understands and acknowledges that he may revoke
this Agreement within seven (7) days following the day he executes this
Agreement. Any revocation within that period must be submitted, in writing, to
Eugene A. Rostov, Esq., c/o Baker & McKenzie, 1200 Brickell Avenue, Ste. 1900,
Miami Florida 33131, and state, "I hereby revoke the Severance Agreement and
Mutual Release." To be effective, the revocation must be delivered to Baker &
McKenzie's offices in Miami, directed to Mr. Rostov's attention, within seven
(7) days of execution of this Agreement.
12. Encouragement to Consult Attorney. PANAMCO hereby encourages MR. COOLING
to consult his attorney before signing this Agreement, and MR. COOLING
acknowledges that he has consulted his attorney before signing this Agreement.
THE PARTIES HAVE READ, UNDERSTOOD AND FULLY CONSIDERED THE SEVERANCE AGREEMENT
AND GENERAL RELEASE AND ARE MUTUALLY DESIROUS OF ENTERING INTO SUCH SEVERANCE
AGREEMENT AND GENERAL RELEASE. HAVING ELECTED TO EXECUTE THIS SEVERANCE
AGREEMENT AND GENERAL RELEASE, TO FULFILL THE PROMISES SET FORTH HEREIN, AND
TO RECEIVE THEREBY THE BENEFITS SET FORTH HEREIN, MR. COOLING FREELY AND
KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS
5 of 6
SEVERANCE AGREEMENT AND GENERAL RELEASE INTENDING TO WAIVE, SETTLE AND RELEASE
ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST PANAMCO TO THE EXTENT SET FORTH
HEREIN.
13. Non Disparagement. Each Party agrees that such Party will neither publicly
disparage the other Party nor, directly or indirectly, contact the press or
the media, or any of PANAMCO's current or former employees, directors,
officers, agents, customers, vendors, or anyone that does business with
PANAMCO, or any of MR. COOLING's former or future employers, or any of his
current or future business associates, for the purpose of disparaging the
other Party's good name or business reputation.
14. Counterpart, Signature by Facsimile. This Agreement may be executed in one
or more faxed counterparts, each of which will constitute an original but all
of which together constitute a single document.
IN WITNESS WHEREOF, the Parties have executed this Severance Agreement
and General Release as of August 29, 2002. In addition, the individual
executing this Agreement on behalf of PANAMCO represents and warrants that he
has been duly authorized to do so by PANAMCO's Board.
PANAMCO WILLIAM G. COOLING
By: /s/ Carlos Hernandez-Artigas By /s/ William G. Cooling
--------------------------------- -----------------------------
Carlos Hernandez Artigas William G. Cooling
Vice President
Date: August 29, 2002 Date: August 29, 2002
------------------------------ --------------------------
6 of 6