IFF [LETTERHEAD LOGO]
JUNE 23, 1998
Mr. Carlos A. Lobbosco
Alvear Avenue 1654
4th Floor
Buenos Aires, Argentina
Dear Carlos,
This letter will outline the understandings you and International Flavors &
Fragrances Inc. ("IFF") have reached in respect of your assignment, effective
July 1, 1998, to Europe as the Fragrance Area Manager, EAME (the "Assignment").
We have agreed as follows:
1. Effective July 1, 1998, your annual base salary will be the local
currency equivalent of US$385,000, converted at official exchange
rates. Your salary will be reviewed annually in accordance with IFF
policy for officers of IFF.
2. IFF will cause to be leased for your use during the Assignment, in the
name of the appropriate IFF subsidiary, an apartment in the
metropolitan area of London, England or such other city in Europe in
which you and IFF agree you will reside (the "Apartment"). IFF will
cause the rent and utilities (other than telephone) to be paid on the
Apartment. The initial monthly rent for the Apartment may not exceed
US $5,000 without my prior written approval. Any taxable income that
you are required to recognize as a result of the Company's leasing the
Apartment for your use will be considered "Other Assignment Income",
as defined in Section 5 below. You will be responsible for all costs
related to any housing that you continue to maintain in Argentina
during the Assignment.
3. During the Assignment you will continue to participate in the IFF
Management Incentive Compensation Plan ("MICP") on the same terms as
you currently
MR. CARLOS A. LOBBOSCO
JUNE 23, 1998
PAGE 2 OF 7 PAGES
participate in the MICP. Your MICP award will continue to be based on
a combination of the performance of IFF as well as your own. MICP will
be paid to you in US Dollars. MICP for 1998 will be calculated as a
percentage of your 1998 year-end salary (US$385,000).
4. You acknowledge that, on June 15, 1998, you were granted a stock
option award of 35,000 shares of IFF Common Stock under, and subject
to the terms and conditions of, the IFF 1997 Employee Stock Option
Plan. Two copies of a Stock Option Agreement are enclosed with this
letter. Please execute and return one copy to Steve Block in New York.
5. To the extent that the effective aggregate income tax rate on your
annual base salary and MICP during and relating to the Assignment
("Assignment Salary and Bonus") exceeds 26%, IFF will reimburse you,
on a fully "grossed up" basis, for all taxes in excess of 26% in
respect of such taxable Assignment Salary and Bonus. IFF will fully
"gross up" any other taxable income relating to the Assignment that
you are required to recognize ("Other Assignment Income"). Assignment
Salary and Bonus and Other Compensation Income are sometimes
collectively referred to as "Assignment Compensation." The effective
aggregate income tax rate on your Assignment Salary and Bonus, and the
tax due on Other Assignment Income, will be determined by considering
taxes owed on the Assignment Salary and Bonus and Other Assignment
Income in any country in which such taxes are required to be paid, and
will be calculated by Price Waterhouse LLP or such other independent
public accountants whom IFF may elect to retain to prepare your income
tax returns related to Assignment Compensation (the "Accountant"). IFF
will pay that percentage of the cost of having your taxes prepared by
the Accountant that Assignment Compensation bears to total taxable
income reported in returns prepared for you by the Accountant (the
"Assignment Compensation Percentage"). The determination by the
Accountant of (a) the effective aggregate income tax rate in respect
of Assignment Salary and Bonus, (b) taxes owed on Other Assignment
Income, and (c) the Assignment Compensation Percentage will be binding
on both you and IFF. You will be fully and solely responsible for all
taxes due in any
MR. CARLOS A. LOBBOSCO
JUNE 23, 1998
PAGE 3 OF 7 PAGES
country in respect of any income (whether or not compensation from
IFF) other than Assignment Compensation. Any taxable income that you
are required to recognize as a result of the Company's payment of the
Assignment Compensation Percentage will be considered Other Assignment
Income.
6. During the Assignment you will continue to participate in the IFF TCN
Pension Plan (the "TCN Plan"). IFF agrees to assure that, upon your
retirement from the Company, you will receive an aggregate minimum
monthly pension, expressed as a 60-month annuity certain (the
"Pension"), of at least the amount in respect of the various
retirement dates set forth in the schedule below (the "Pension
Schedule"). The Pension will be paid in US Dollars. If your actual
retirement date (the "Retirement Date") falls between any two dates in
the Pension Schedule, the Pension will be adjusted accordingly.
The amount of the Pension will first be calculated by aggregating the
retirement benefits which you have or will have earned at your actual
retirement date from all sources in which you currently participate or
have participated during your IFF service, including but not limited
to the TCN Plan, pension plans of other IFF entities, and the
Argentina social security/retirement system. The amount of the Pension
will be calculated in accordance with the terms of the TCN Plan. If
for any reason, the Pension as calculated under the TCN Plan does not
provide the minimum Pension required by the Pension Schedule, IFF will
pay you a monthly supplement amount so that your aggregate retirement
benefit equals the Pension required by the Pension Schedule for the
applicable retirement date. You will have the right to elect to
receive the Pension in such a way that, rather than receiving a
60-month annuity certain (which provides no benefit for your surviving
spouse beyond the fifth anniversary after the Retirement Date), your
surviving spouse, upon your death, will continue to receive a benefit
equal to 50% of the benefit you were receiving at your death. You
acknowledge, however, that should you elect such a "joint and 50%"
option, the amount to be paid to you at your retirement will be
reduced actuarially from that set forth in the Pension Schedule.
MR. CARLOS A. LOBBOSCO
JUNE 23, 1998
PAGE 4 OF 7 PAGES
PENSION SCHEDULE
----------------
---------------------------------------------------
MINIMUM GUARANTEED
RETIREMENT DATE MONTHLY PENSION (US$)
--------------- ---------------------
July 1, 1998 7,365
---------------------------------------------------
July 1, 1999 10,400
---------------------------------------------------
July 1, 2000 13,400
---------------------------------------------------
July 1, 2001 16,500
---------------------------------------------------
On or After 19,600
December 31, 2002
---------------------------------------------------
7. It is currently anticipated that the Assignment will terminate as of
July 1, 2001. IFF may elect in its sole discretion to cause the
Assignment to terminate earlier, and the Assignment may be extended
upon mutual agreement between you and IFF. After the termination of
the Assignment, you intend to return to Argentina. From the
termination of the Assignment until the Retirement Date, which is
currently anticipated to be December 31, 2002, you will remain an
employee of IFF, based in Buenos Aires, Argentina, and will perform
such services for IFF as the Chairman of the Board of Directors of the
Company may request. During this period your base salary will not be
lower than that at the end of the Assignment, and you will continue to
participate in the TCN Plan and have the same other benefits from IFF
as you had in Argentina prior to the Assignment.
8. During the Assignment, you will be eligible, as part of your paid
vacation, for annual home leave to Argentina. IFF will pay for up to
eight round trip business class airfares between Argentina and Europe,
which may be used by you and members of your family. Any taxable
income that you are required to recognize as a result of the Company's
payment of any such airfares will not be considered Assignment
Compensation, and will be your sole responsibility.
9. Until the Retirement Date you will be covered for life, disability and
travel insurance under those programs--including but not limited to
life insurance
MR. CARLOS A. LOBBOSCO
JUNE 23, 1998
PAGE 5 OF 7 PAGES
under IFF's basic and supplemental programs, of $900,000-maintained by
IFF for its employees in the United States. You and your family will
continue to be covered by the IFF Argentina medical scheme. You will
also be included in the IFF global medical and dental program,
currently administered by CIGNA.
10. You may elect to have IFF provide you with an automobile (the
"European Company Car") for your business and personal use in your
city of residence during the Assignment. In that event, insurance,
maintenance and other expenses in connection with the use of such at
automobile will be paid and/or reimbursed in accordance with IFF
policy. Any taxable income that you are required to recognize as a
result of the provision or your use of the European Company Car will
be considered Other Assignment Income. Should you elect to have IFF
provide the European Company Car, then, within thirty (30) days after
delivery of the European Company Car, you will either (a) purchase the
automobile currently provided to you by IFF in Argentina (the
"Argentine Company Car") at its then value, calculated in accordance
with usual IFF practice, or (b) you will return the Argentine Company
Car to IFF Argentina. Until and unless you elect to have IFF provide
you with the European Company Car, you may retain the use of the
Argentine Company Car on the same terms and conditions as it is now
provided. If you have not previously purchased or returned the
Argentine Company Car, on the Retirement Date you may purchase it at
its then value, calculated in accordance with usual IFF practice.
11. IFF Argentina will continue to pay your annual membership fees, up to
a maximum of the equivalent in Argentine Pesos of US$9,000 per year
(the "Club Fees"), in the Argentine Club in Buenos Aires. Should you
elect to join a social/sport club in Europe, all fees and expenses of
joining and/or maintaining your membership in such club will be your
sole responsibility. Any taxable income that you are required to
recognize as a result of IFF's payment of the Club Fees will not be
considered Assignment Compensation, and will be your sole
responsibility.
12. IFF will pay on your behalf the out-of-pocket expenses associated with
the shipment of your personal goods to
MR. CARLOS A. LOBBOSCO
JUNE 23, 1998
PAGE 6 OF 7 PAGES
Europe at the commencement, and from Europe to Argentina at the
termination, of the Assignment, in each case in accordance with the
IFF Corporate Relocation Policy then in effect. The Company will
also pay or reimburse you for all fees and expenses needed to obtain
any visa other travel documents and/or work permits that may be
required. You acknowledge that the effectiveness and continuing
enforceability of this Agreement is conditioned upon your obtaining
all authorizations necessary to enable you to undertake and to
continue in the Assignment. IFF will assist you in obtaining and
keeping all such authorizations. Finally, the Company acknowledges
that, at the commencement of the Assignment you will initially work
and reside in London. In accordance with the IFF Corporate
Relocation Policy IFF will pay or reimburse you for your temporary
living expenses in London until you move into your permanent
residence, which you intend will occur within four months (by
October 31, 1998). Any taxable income that you are required to
recognize as a result of IFF's payment or reimbursement of any cost
or expense contemplated by this Section 12 will be considered Other
Assignment income.
13. In the event your employment with IFF is terminated by IFF for any
reason other than for "Cause" prior to December 31, 2002, and in
connection with such termination you are not entitled to the benefits
under the Executive Severance Agreement between you and the Company
dated December 14, 1993, you will retire from IFF employment as of the
termination date, which will be deemed the Retirement Date. In such
event, you may elect (a) to commence receiving the Pension commencing
immediately after the Retirement Date, or (b) in lieu of commencing to
receive the Pension at the Retirement Date, to receive "Salary
Continuation Payments" equal to your monthly base salary at the
Retirement Date, for the shorter of (i) eighteen (18) months or (ii)
if the Retirement Date occurs after July 1, 2001, the number of months
between the Retirement Date and December 31, 2002, after which the
Pension will commence (with the amount of the Pension-including the
guaranteed minimum-computed based on your years of Service through the
Retirement Date but with a commencement date based on your age on the
actual date on which the Pension commences). After the Retirement
MR. CARLOS A. LOBBOSCO
JUNE 23, 1998
PAGE 7 OF 7 PAGES
Date, you will be entitled to all other benefits then granted by IFF
to retired employees of IFF Argentina. "Cause" will have the same
meaning in this Agreement as in the Executive Severance Agreement.
14. Should you die during the Assignment, IFF will assist your family in
arranging for, and will pay all reasonable costs of, the repatriation
of your remains and personal effects from Europe to Argentina.
Carlos, if the terms set forth above accurately reflect our understanding,
please sign and return the extra copy of this letter and return it to Steve
Block. If you have any questions, please feel free to contact Bill Myers,
Steve Block or me.
Sincerely,
INTERNATIONAL FLAVORS &
FRAGRANCES INC.
By: /s/ EUGENE P. GRISANTI
------------------------
Eugene P. Grisanti
Chairman & President
AGREED AND ACCEPTED:
/s/ CARLOS A. LOBBOSCO
------------------
Carlos A. Lobbosco