International Flavors & Fragrances, Inc.
Executive Severance Agreement
Agreement dated as of February 16, 1989 between International Flavors &
Fragrances Inc., a New York corporation, with its principal office at 521 West
57th Street, New York, New York 10119 (hereinafter called the "Corporation") and
the undersigned officer of the Corporation (hereinafter called "the Executive").
WITNESSETH THAT:
WHEREAS, the Board of Directors of the Corporation ("the Board")
recognizes that attempts, hostile and otherwise, to obtain control of companies
are widespread at the present time, and that, although the Corporation is not
aware that any such attempt against it is contemplated at this time, the
possibility of such an attempt may raise uncertainties among the Corporation's
key manaqement personnel as to the security of their employment, to the
detriment of the Corporation and its business;
WHEREAS, should the Corporation or its shareholders be the object of such
an attempt, the Board believes it important that the Corporation and the Board
be able to rely upon the
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Executive to continue in his position and to give the Board his objective advice
as to the interests of the Corporation and its shareholders, without being
distracted by personal uncertainties and questions (including possible
termination of his employment) created by such an attempt; and
WHEREAS, the Board believes the Executive should have reasonable assurances
as to his continued employment, and fair severance payments should his
employment be terminated as a result of any change of control of the
Corporation.
NOW, THEREFORE, in view of the foregoing, and for other good and valuable
consideration, it is agreed as follows:
1. Definitions.
(a) "Change in control" shall mean the earliest to occur of any of the
following events:
(i) any person, corporation, partnership, association, trust or
other entity, or any "group" as defined in Section 13(d) (3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
shall hereafter become the "beneficial owner," as defined in Rule
13d-3 promulgated under the Exchange Act, directly or indirectly, of
securities of the Corporation representing 40 per-
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cent or more of the combined voting power of the Corporation's then
outstanding securities; or
(ii) persons not nominated by the Board in the Corporation's most
recent proxy statement shall constitute a majority of the members of
the Board.
(b) "Involuntary termination" shall mean termination of the Executive's
employment with the Corporation, other than for cause, or by reason of
retirement or death, within three years following a change in control, without
the written consent of the Executive, and shall be deemed to include voluntary
resignation by the Executive from his position and employment with the
Corporation, within three years following a change in control, if
(1) the Executive has had a reduction in his salary of more than 10%
or experienced a substantial diminution in his duties, responsibilites or
status with the Corporation compared to those existing at the time of the
change in control, and,
(2) the Executive has given the Corporation written notice of
objection to the reduction in his salary or of the specific respects in
which his duties, responsibilites or status have been
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diminished substantially, and,
(3) within 10 days after receipt of the Executive's written notice,
the Corporation has not made a written offer to restore the Executive's
previous salary, duties, responsibilites and status with the Corporation
substantially to those existing at the time of the change in control.
If the Executive, by reason of physical or mental disability, is unable to
substantially perform his usual and customary duties for a continuous period of
180 days, and he is thereafter certified to be totally and permanently disabled
by an independent panel of three qualified physicians selected either by mutual
agreement of the parties or by the American Arbitration Association at the
request of either party, he shall be deemed to have retired at the end of such
180 days.
A change in the Executive's title or a change in the Executive's principal
place of work or an elimination of any substantial benefit of employment or
executive privilege shall be presumed to be a substantial diminution of the
Executive's status.
The Executive may elect to submit his resignation to become effective only
upon a determination pursuant to arbitration under the procedures described in
Section 6 hereof that the
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events listed in Section 1(b) (1), (2) and (3) shall have occurred.
(c) "Previous compensation" shall mean the greater of (a) the Executive's
compensation for the calendar year prior to the year in which such termination
shall have occurred, and (b) the Executive's compensation for the calendar year
prior to the year in which the change of control occurred, in each case
including as such compensation his salary and any amounts awarded him under the
Corporation's Management Incentive Compensation Plan.
(d) Termination for cause shall mean termination for (i) the willful and
continued failure by the Executive to substantially perform his duties with the
Corporation or (ii) the willful engaging by the Executive in gross misconduct
materially and demonstrably injurious to the Corporation. No act, or failure to
act, on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without belief that his action
or omission was in the interest of the Corporation. Notwithstanding the
foregoing, he will not be deemed to have been terminated for cause unless and
until there has been delivered to him a copy of a resolution, duly adopted by
the affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of
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the Board called and held for the purpose (after reasonable notice to the
Executive and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith and reasonable opinion of the
Board the Executive was guilty of conduct set forth above in clauses (i) or (ii)
above and specifying in detail the particulars thereof. No action of the Board
hereunder shall affect the right of the Executive to arbitration of any dispute
hereunder as provided in Section 6 hereof.
2. Payments to Executive. Within ten (10) business days after the date of
involuntary termination, the Executive shall receive from the Corporation:
(a) any amounts due him from the Corporation to the date of
termination, including salary prorated to that date and reimbursement for
expenses incurred prior to that date in accord with the Corporation's
policies and practices.
(b) an amount equal to three times his previous compensation;
provided, however, that such payment shall not exceed three times the
Executive's "base amount" allocable to such payment pursuant to Section
280G of the Internal Revenue Code.
(c) Any awards made to the Executive under the Corporation's
Management Incentive Compensation Plan or any
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other compensation plan of the Corporation, payment of which shall have
been deferred, including interest or other investment returns on any such
deferred awards.
(d) For each share of common stock of the Corporation subject to any
option held by the Executive, whether or not such option is then
exercisable, an amount equal to the difference between the exercise price
thereof and a price equal to the highest of (i) the market price on the New
York Stock Exchange at the close of business on the effective day of
termination, (ii) the price contained in any published tender offer made
within one year before or after the date of change in control, (iii) the
price contained in any merger or acquisition agreement entered into by the
Corporation and any third party within one year before or after the date of
change in control, or (iv) the market price on the New York Stock Exchange
on the date of change in control, and, upon such payment, such option shall
be deemed cancelled and annulled.
3. Continuation of Fringe Benefits. In the event of involuntary
termination, the Corporation shall continue to provide coverage to and for the
Executive under the Corporation's (a) Health Care Plan, (b) Dental Assistance
Plan and (c) Life Insurance and Accidental Death and Dismemberment Insurance
Plan (Survivor Benefits Plan) for a period of three years from the
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date of such termination, to the same extent as if he were in the employ of the
Corporation during such three-year period. Except as to any requirement that the
Executive be in the active employ of the Corporation, coverage under each of
the foregoing Plans shall be subject to the terms and conditions of each Plan,
as in existence at the time of the change in control.
4. Pensions, etc. In the event of involuntary termination, as and when the
Executive, his beneficiaries and his estate shall be entitled to receive
benefits under the Corporation's Pension Plan, Retirement Investment Fund Plan,
Supplemental Retirement Plan and any supplemental pensions provided the
Executive, his beneficiaries and his estate under any resolutions adopted by the
Board of Directors of the Corporation prior to the change of control of the
Corporation, the Executive, his beneficiaries and his estate, in addition, shall
be paid by the Corporation benefits in an amount equal to the difference between
(i) the benefits the Executive, his beneficiaries and his estate shall be
entitled to receive under such plans and resolutions and (ii) the benefits he
and they would have received under such Plans and resolutions had his employment
continued at his previous compensation to the third anniversary of such
involuntary termination.
5. Consultancies. In the event of involuntary termination, the Executive
shall be entitled to receive any fees for
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services as a consultant pursuant to any employment agreement between the
Corporation and the Executive, in such amounts and for such period of time as
such agreement may provide, and the Corporation's obligation to pay such fees
shall not be diminished by any of the provisions hereof.
6. Claims or Disputes. Any claim or dispute (including a submission under
the last paragraph of Section 1 (b) hereof) shall be resolved under procedures
established by arbitration in New York, N.Y. pursuant to the rules of the
American Arbitration Association. If the Executive receives an award in such a
proceeding, the award shall include his attorneys' fees and all expenses
reasonably incurred in connection with such proceeding.
7. Limitation on payments. In the event the amounts to be paid to the
Executive by the Corporation on involuntary termination of employment, whether
made pursuant to this Agreement, or otherwise, including the present value as of
the date of such termination of any payments to be made in the future, when
taken together, would subject the Executive to payment of an excise tax under
Section 4999 of the Internal Revenue Code of 1986, as amended, then, in that
event, the amount payable under Section 2(b) hereof shall be reduced by the
minimum amount necessary to avoid liability on the part of the Executive for
payment of such excise tax. In the event that as a result of
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mistake, inadvertence, or for any other reason, the Executive receives, upon
involuntary termination, under this Agreement, or otherwise, payments, which,
when taken together, including the present value as of the date of such
termination of any payments to be made in the future, exceed the maximum amount
which may be paid by the Corporation without subjecting the Executive to
liability for payment of such excise tax, then the amount by which such payments
exceed such maximum amount shall be deemed to be a loan by the Corporation to
the Executive to be repaid promptly, with interest from the date of payment,
calculated at the Citibank, N.A. prime rate as in effect from time to time. In
any case where doubt or a dispute exists as to the application of the provisions
of this Section, the payments required under this Agreement shall be made in
full, as and when due, and shall be deemed payments on account pending a
determination of the application of this Section, subject to the provisions of
the second sentence hereof.
8. Full Settlement. The Corporation's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counter-claim, recoupment, defense or other right which
the Corporation may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment
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by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement. The Corporation agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Corporation or others of the validity or enforceability of, or liability under
any provision of this Agreement.
9. No Guarantee of Employment. This Agreement is intended to provide
certain benefits to the Executive under the circumstances described herein only
on and after a change in control as herein defined and may be amended
or terminated by the Board at any time prior to a change of control of the
Corporation. The Agreement shall not be construed as a guarantee of continued
employment prior to or following a change in control, nor is it intended to
confer any benefit on any person other than the Corporation, the named
Executive, his beneficiaries and his estate.
10. No Waiver, etc. This Agreement is not intended to and shall not operate
or be construed as a waiver, release or abandonment of any rights or benefits
Executive may have or be entitled to while actively employed or upon termination
of employment, retirement, disability or death, whether such right or benefit
shall accrue by contract, statute operation of law, corporate policy or
otherwise.
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11. Applicable Law. This Agreement shall be construed under and governed by
the laws of the State of New York.
12. Assignability. This Agreement is non-assignable by the Executive.
13. Binding on heirs, etc. This Agreement shall be binding upon the heirs,
executors and administrators of the Executive and upon the successors and
assigns of the Corporation.
IN WITNESS WHEREOF, the Agreement has been executed on the above date by
the Executive and by the Corporation, through its duly authorized officers in
accordance with a resolution adopted by the Board on February 14, 1989.
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Executive
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By_______________________________________
Attest:______________________________
(Seal)
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