Coca Cola 2010 Annual Report Download - page 26

On or about June 3, 2010, an amended consolidated complaint was filed. On July 6, 2010, the Company and all other
defendants answered the amended consolidated complaint and filed motions to dismiss the amended consolidated
complaint and for an order staying discovery. On July 6, 2010, the plaintiffs filed a motion for class certification.
In the amended consolidated complaint, the plaintiffs allege, among other things, that by virtue of its stock ownership
in and business dealings with CCE, the Company controlled and dominated CCE during the relevant period and
therefore owed to CCE a duty of entire fairness and a duty not to misuse its control of CCE for its own ends which the
Company allegedly breached because, among other things, the transaction is not entirely fair; and that the Company,
CCE and CCE’s directors have violated Delaware law by not submitting the transaction to a separate vote of CCE’s
shareowners.
In the amended consolidated complaint, the plaintiffs seek a judgment enjoining the closing of the proposed transaction
and declaring the proposed transaction void (this request for relief has become moot upon the closing of the CCE
transaction on October 2, 2010), and ordering rescission, requiring disgorgement of profits, awarding damages, awarding
reasonable fees and expenses of counsel, and granting such other relief as the court deems just and proper.
Pursuant to the above-referenced MOU, and in consideration for the settlement of the consolidated Delaware litigation
and the consolidated Georgia litigation, prior to executing the Settlement Stipulation, the parties to the CCE
transaction made certain amendments to the merger agreement and certain supplemental disclosures in connection with
the proxy statement sent to the CCE shareowners soliciting approval of the merger. The settlement contemplated by
the Settlement Stipulation is subject to court approval and, if approved, would result in the dismissal with prejudice of
the consolidated Georgia litigation and the release by the plaintiff class of all claims under federal and state law that
were or could have been asserted in the consolidated Georgia litigation or the consolidated Delaware litigation or which
arise out of or relate to the transactions contemplated by the merger. A preliminary approval hearing on the settlement
has been set for March 3, 2011, and the final approval hearing for June 8, 2011. In addition, pursuant to the Settlement
Stipulation, the parties in the consolidated Delaware litigation will use their best efforts to obtain the dismissal with
prejudice of the consolidated Delaware litigation described above within five business days of the final approval of the
settlement by the Georgia court.
The Company believes that the allegations in the consolidated Georgia litigation are without merit and if the settlement
is not approved by the Georgia court, intends to defend vigorously its interests.
Aqua-Chem Litigation
On December 20, 2002, the Company filed a lawsuit (The Coca-Cola Company v. Aqua-Chem, Inc., Civil Action
No. 2002CV631-50) in the Superior Court, Fulton County, Georgia (the ‘‘Georgia Case’’), seeking a declaratory
judgment that the Company has no obligation to its former subsidiary, Aqua-Chem, Inc., now known as Cleaver-
Brooks, Inc. (‘‘Aqua-Chem’’), for any past, present or future liabilities or expenses in connection with any claims or
lawsuits against Aqua-Chem. Subsequent to the Company’s filing but on the same day, Aqua-Chem filed a lawsuit
(Aqua-Chem, Inc. v. The Coca-Cola Company, Civil Action No. 02CV012179) in the Circuit Court, Civil Division of
Milwaukee County, Wisconsin (the ‘‘Wisconsin Case’’). In the Wisconsin Case, Aqua-Chem sought a declaratory
judgment that the Company is responsible for all liabilities and expenses not covered by insurance in connection with
certain of Aqua-Chem’s general and product liability claims arising from occurrences prior to the Company’s sale of
Aqua-Chem in 1981, and a judgment for breach of contract in an amount exceeding $9 million for costs incurred by
Aqua-Chem to date in connection with such claims. The Wisconsin Case initially was stayed, pending final resolution of
the Georgia Case, and later was voluntarily dismissed without prejudice by Aqua-Chem.
The Company owned Aqua-Chem from 1970 to 1981. During that time, the Company purchased over $400 million of
insurance coverage, which also insures Aqua-Chem for some of its prior and future costs for certain product liability
and other claims. The Company sold Aqua-Chem to Lyonnaise American Holding, Inc., in 1981 under the terms of a
stock sale agreement. The 1981 agreement, and a subsequent 1983 settlement agreement, outlined the parties’ rights
and obligations concerning past and future claims and lawsuits involving Aqua-Chem. Cleaver-Brooks, a division of
Aqua-Chem, manufactured boilers, some of which contained asbestos gaskets. Aqua-Chem was first named as a
defendant in asbestos lawsuits in or around 1985 and currently has approximately 40,000 claims pending against it.
The parties agreed in 2004 to stay the Georgia Case pending the outcome of insurance coverage litigation filed by
certain Aqua-Chem insurers on March 26, 2004. In the coverage action, five plaintiff insurance companies filed suit
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