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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File Number 1-4858
INTERNATIONAL FLAVORS & FRAGRANCES INC.
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(Exact Name of Registrant as specified in its charter)
NEW YORK 13-1432060
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(State or other jurisdiction of incorporation (IRS Employer
or organization) identification No.)
521 WEST 57TH STREET, NEW YORK, N.Y. 10019-2960
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 765-5500
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
---- ----
Number of shares outstanding as of May 12, 1997: 109,119,265
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1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
3/31/97 12/31/96
--------- --------
Assets
Current Assets:
Cash & Cash Equivalents ........................ $ 207,255 $ 261,370
Short-term Investments ......................... 54,136 56,613
Trade Receivables .............................. 290,154 253,484
Allowance For Doubtful Accounts ................ (7,716) (8,733)
Inventories: Raw Materials ..................... 213,758 211,124
Work in Process ................... 18,541 24,644
Finished Goods .................... 125,853 133,310
---------- ----------
Total Inventories ................. 358,152 369,078
Other Current Assets ........................... 74,925 74,544
---------- ----------
Total Current Assets ........................... 976,906 1,006,356
---------- ----------
Property, Plant & Equipment, At Cost ............. 853,575 878,224
Accumulated Depreciation ......................... (400,177) (410,427)
---------- ----------
453,398 467,797
Other Assets ..................................... 33,480 32,760
---------- ----------
Total Assets ..................................... $1,463,784 $1,506,913
========== ==========
Liabilities and Shareholders' Equity
Current Liabilities:
Bank Loans ..................................... $ 18,282 $ 18,929
Accounts Payable-Trade ......................... 62,052 57,681
Dividends Payable .............................. 39,393 39,628
Income Taxes ................................... 70,635 56,832
Other Current Liabilities ...................... 94,679 107,394
---------- ----------
Total Current Liabilities ...................... 285,041 280,464
---------- ----------
Other Liabilities:
Deferred Income Taxes .......................... 16,914 16,941
Long-term Debt ................................. 6,977 8,289
Retirement and Other Liabilities ............... 125,206 124,682
---------- ----------
Total Other Liabilities .......................... 149,097 149,912
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Shareholders' Equity:
Common Stock (115,761,840 shares issued in '97
and in '96) ..................................... 14,470 14,470
Capital in Excess of Par Value ................... 138,694 138,480
Restricted Stock ................................. (10,688) --
Retained Earnings ................................ 1,130,423 1,106,572
Cumulative Translation Adjustment ................ 17,428 47,555
---------- ----------
1,290,327 1,307,077
Treasury Stock, at cost -- 6,418,087 shares
in '97 and 5,790,323 in '96 ................... (260,681) (230,540)
---------- ----------
Total Shareholders' Equity ...................... 1,029,646 1,076,537
---------- ----------
Total Liabilities and Shareholders' Equity ....... $1,463,784 $1,506,913
========== ==========
See Notes to Consolidated Financial Statements
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2
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
3 Months Ended 3/31
-----------------------
1997 1996
-------- --------
Net Sales ........................................ $382,813 $382,767
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Cost of Goods Sold ............................... 207,293 204,071
Research and Development Expenses ................ 23,573 22,949
Selling and Administrative Expenses .............. 56,330 55,321
Interest Expense ................................. 559 546
Other (Income) Expense, Net ...................... (4,071) (4,414)
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283,684 278,473
-------- --------
Income Before Taxes on Income .................... 99,129 104,294
Taxes on Income .................................. 35,885 38,130
-------- --------
Net Income ....................................... $ 63,244 $ 66,164
======== ========
Earnings Per Share ............................... $0.58 $0.60
Average Number of Shares Outstanding (000's) ..... 109,704 111,000
Dividends Paid Per Share ......................... $0.36 $0.34
See Notes to Consolidated Financial Statements
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3
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
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<CAPTION>
3 Months Ended 3/31
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1997 1996
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<S> <C> <C>
Cash Flows From Operating Activities:
Net Income .................................................................... $ 63,244 $ 66,164
Adjustments to Reconcile to Net Cash Provided by Operations:
Depreciation ................................................................ 12,296 11,660
Deferred Income Taxes ....................................................... 376 7,301
Changes in Assets and Liabilities:
Current Receivables ....................................................... (47,100) (42,780)
Inventories ............................................................... 1,491 10,179
Current Payables .......................................................... 11,024 (5,168)
Other, Net ................................................................ 1,504 (341)
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Net Cash Provided by Operations ............................................... 42,835 47,015
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Cash Flows From Investing Activities:
Proceeds From Sales/Maturities of Short-term Investments ...................... 3,037 2,033
Purchases of Short-term Investments ........................................... (1,746) (12,336)
Additions to Property, Plant & Equipment,
Net of Minor Disposals ....................................................... (9,620) (20,915)
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Net Cash Used in Investing Activities ......................................... (8,329) (31,218)
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Cash Flows From Financing Activities:
Cash Dividends Paid to Shareholders ........................................... (39,628) (37,749)
(Decrease) Increase in Bank Loans ............................................. (171) 2,986
Decrease in Long-term Debt .................................................... (884) (998)
Proceeds From Issuance of Stock Under Stock Option Plans ...................... 4,588 2,987
Purchase of Treasury Stock .................................................... (45,880) (96)
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Net Cash Used In Financing Activities ......................................... (81,975) (32,870)
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Effect of Exchange Rate Changes on Cash and Cash Equivalents .................. (6,646) (4,111)
--------- ---------
Net Change in Cash and Cash Equivalents ....................................... (54,115) (21,184)
Cash and Cash Equivalents at Beginning of Year ................................ 261,370 251,430
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Cash and Cash Equivalents at End of Period .................................... $ 207,255 $ 230,246
========= =========
Interest Paid ................................................................. $ 533 $ 572
Income Taxes Paid ............................................................. $ 17,555 $ 23,279
See Notes to Consolidated Financial Statements
</TABLE>
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4
Notes to Consolidated Financial Statements
These interim statements and management's related discussion and analysis should
be read in conjunction with the consolidated financial statements and their
related notes, and management's discussion and analysis of results of operations
and financial condition included in the Company's 1996 Annual Report to
Shareholders. In the opinion of the Company's management, all normal recurring
adjustments necessary for a fair statement of the results for the interim
periods have been made.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (FAS 128), Earnings per Share, which is
effective for both interim and annual periods ending after December 15, 1997.
FAS 128 simplifies the rules of computing earnings per share and prescribes that
companies present basic and diluted earnings per share amounts, as defined, on
the face of the income statement. The Company is studying the implications of
FAS 128 but does not believe the impact on earnings per share will be material.
Effective January 1, 1997, the Company adopted Statement of Position 96-1 (SOP
96-1), Accounting for Environmental Remediation Liabilities issued by the
American Institute of Certified Public Accountants. SOP 96-1 establishes
guidance for when environmental liabilities should be recorded and the factors
to be considered in determining amounts recognized. The effect of adopting this
standard was not material to the Company.
As described in Note 2 of the Notes to the Consolidated Financial Statements
included in the Company's 1996 Annual Report to Shareholders, the Company
undertook a program to expand and streamline its aroma chemical production
facilities during 1996. The aroma chemical streamlining resulted in a
nonrecurring pretax charge to second quarter 1996 earnings of $49,707,000
($31,315,000 after tax or $.29 per share). At December 31, 1996, the remaining
balance in the reserve was as follows:
Employee related .................................. $10,069,000
Closing manufacturing plants ...................... 32,632,000
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Total ............................................. $42,701,000
===========
Utilization of the reserve since December 31, 1996 has not been material.
In connection with an employment contract, the Company made a restricted stock
award effective January 1, 1997. The restrictions generally relate to continuous
employment and expire over a five year period from the date of grant.
Compensation expense is recognized over the restricted period.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Operations
Worldwide net sales for the first quarter of 1997 were $382,813,000, compared to
$382,767,000 in the 1996 first quarter. Sales in the first quarter of 1997 were
affected by the translation of local currency sales gains into the stronger U.S.
dollar. If the dollar exchange rate had remained the same during these periods,
worldwide sales would have increased approximately 5% over the sales reported in
the first
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5
quarter of last year. Local sales increases were achieved in all geographic
areas, and were particularly strong in Western Europe in both flavor and
fragrance products. Sales, margins and earnings are also being affected by
highly competitive conditions for aroma chemicals, which have caused the Company
to lower prices for certain aroma chemicals.
Net income for the first quarter of 1997 totaled $63,244,000 compared to
$66,164,000 in the prior year first quarter. Earnings per share for the quarter
were $.58, as compared to $.60 in the prior year quarter. Net income per share
in 1997, also affected by the stronger U.S. dollar, was slightly below the first
quarter of 1996.
The percentage relationship of cost of goods sold and other operating expenses
to sales for the first quarter 1997 and 1996 are detailed below.
First Quarter
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1997 1996
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Cost of Goods Sold ........................ 54.1% 53.3%
Research and Development Expense .......... 6.2% 6.0%
Selling and Administrative Expense ........ 14.7% 14.5%
As described in Note 2 of the Notes to the Consolidated Financial Statements
included in the Company's 1996 Annual Report to Shareholders, the Company
undertook a program to expand and streamline its aroma chemical production
facilities during 1996. The aroma chemical streamlining resulted in a
nonrecurring pretax charge to second quarter 1996 earnings of $49,707,000
($31,315,000 after tax or $.29 per share). At December 31, 1996, the remaining
balance in the reserve was as follows:
Employee related .................................... $10,069,000
Closing manufacturing plants ........................ 32,632,000
-----------
Total ............................................... $42,701,000
===========
Utilization of the reserve since December 31, 1996 has not been material.
Financial Condition
The financial condition of the Company continued to be strong. Cash, cash
equivalents and short-term investments totaled $261,391,000 at March 31, 1997.
At March 31, 1997, working capital was $691,865,000 compared to $725,892,000 at
December 31, 1996. Gross additions to property, plant and equipment during the
first quarter of 1997 were $9,717,000. In September 1996, the Company announced
a plan to repurchase up to an additional 7.5 million shares of its common stock.
An existing program to repurchase 7.5 million shares, which has been in effect
since 1992, was completed in the first quarter of 1997. Repurchases will be made
from time to time on the open market or through private transactions as market
and business conditions warrant. The repurchased shares will be available for
use in connection with the Company's employee benefit plans and for other
general corporate purposes.
In January 1997, the Company's cash dividend was increased 5.9% to an annual
rate of $1.44 per share, and $.36 per share was paid to shareholders in the
first quarter of 1997. The Company anticipates that
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6
its growth, capital expenditure programs and share repurchase programs will be
funded from internal sources.
The cumulative translation adjustment component of Shareholders' Equity at March
31, 1997 was $17,428,000 compared to $47,555,000 at December 31, 1996. Changes
in the component result from translating the net assets of the majority of the
Company's foreign subsidiaries into U.S. dollars at current exchange rates as
required by the Statement of Financial Accounting Standards No. 52 on accounting
for foreign currency translation.
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7
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
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<S> <C>
4(a) Shareholder Protection Rights Agreement dated as of February 20,
1990 between Registrant and The Bank of New York, as Rights Agent.
4(b) Amendment No.1 dated as of April 6, 1990 to Shareholder Protection Rights Agreement.
4(d) Specimen certificates of Registrant's Common Stock bearing legend notifying of
Shareholder Protection Rights Agreement.
10(a) Agreement dated as of January 1, 1997 between Registrant and Eugene P. Grisanti,
Chairman and President of Registrant.
10(b) Form of Executive Severance Agreement approved by Registrant's Board of Directors on
February 14, 1989.
10(c) Registrant's Executive Death Benefit Plan effective July 1, 1990.
10(d) Supplemental Retirement Investment Plan adopted by Registrant's Board of Directors on
November 14, 1989.
10(e) Supplemental Retirement Plan adopted by Board of Directors on October 29, 1986.
10(h) Stock Option Plan for Non-Employee Directors.
10(i) Registrant's Directors' Deferred Compensation Plan adopted by Registrant's Board of
Directors on September 15, 1981.
27 Financial Data Schedule (EDGAR version only).
(b) Reports on Form 8-K
Registrant filed no report on Form 8-K during the quarter for
which this report on Form 10-Q is filed.
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8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
Dated: May 14, 1997 By: /s/ THOMAS H. HOPPEL
-----------------------------------------
Thomas H. Hoppel, Vice-President and Chief
Financial Officer
Dated: May 14, 1997 By: /s/ STEPHEN A. BLOCK
-----------------------------------------
Stephen A. Block, Vice-President Law and
Secretary
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
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4(a) Shareholder Protection Rights Agreement dated as of February
20, 1990 between Registrant and The Bank of New York, as Rights
Agent.
4(b) Amendment No. 1 dated as of April 6, 1990 to Shareholder
Protection Rights Agreement.
4(d) Specimen certificates of Registrant's Common Stock bearing legend
notifying of Shareholder Protection Rights Agreement.
10(a) Agreement dated as of January 1, 1997 between Registrant and
Eugene P. Grisanti, Chairman and President of Registrant.
10(b) Form of Executive Severance Agreement approved by Registrant's
Board of Directors on February 14, 1989.
10(c) Registrant's Executive Death Benefit Plan effective July 1, 1990.
10(d) Supplemental Retirement Investment Plan adopted by Registrant's
Board of Directors on November 14, 1989.
10(e) Supplemental Retirement Plan adopted by Board of Directors on
October 29, 1986.
10(h) Stock Option Plan for Non-Employee Directors.
10(i) Registrant's Directors' Deferred Compensation Plan adopted by
Registrant's Board of Directors on September 15, 1981.
27 Financial Data Schedule (EDGAR version only).
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SHAREHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
February 20, 1990
between
INTERNATIONAL FLAVORS & FRAGRANCES INC.
and
THE BANK OF NEW YORK,
as Rights Agent
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<PAGE>
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
Article I
CERTAIN DEFINITIONS
Page
----
Section 1.1 Certain Definitions ....................................... 2
Article II
THE RIGHTS
Section 2.1 Summary of Rights ......................................... 10
Section 2.2 Legend on Common Stock Certificates ....................... 10
Section 2.3 Exercise of Rights; Separation of Rights .................. 11
Section 2.4 Adjustments to Exercise Price; Number of Rights ........... 16
Section 2.5 Date on Which Exercise is Effective ....................... 18
Section 2.6 Execution, Authentication, Delivery
and Dating of Rights Certificates ....................... 19
Section 2.7 Registration, Registration of Transfer and Exchange ....... 20
Section 2.8 Mutilated, Destroyed, Lost and Stolen Rights
Certificates ............................................ 22
Section 2.9 Persons Deemed Owners ..................................... 23
Section 2.10 Delivery and Cancellation of Certificates ................. 24
Section 2.11 Agreement of Rights Holders ............................... 24
Article III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
CERTAIN TRANSACTIONS
Section 3.1 Flip-in ................................................... 25
Section 3.2 Flip-over ................................................. 29
Article IV
THE RIGHTS AGENT
Section 4.1 General ................................................... 31
Section 4.2 Merger or Consolidation or Change of Name of Rights Agent.. 32
Section 4.3 Duties of Rights Agent .................................... 33
Section 4.4 Change of Rights Agent .................................... 39
<PAGE>
Article V
MISCELLANEOUS
Section 5.1 Redemption ................................................. 41
Section 5.2 Expiration ................................................. 42
Section 5.3 Issuance of New Rights Certificates ........................ 42
Section 5.4 Supplements and Amendments ................................. 42
Section 5.5 Fractional Shares .......................................... 43
Section 5.6 Rights of Action ........................................... 43
Section 5.7 Holder of Rights Not Deemed a Shareholder .................. 44
Section 5.8 Notice of Proposed Actions ................................. 45
Section 5.9 Notices .................................................... 45
Section 5.10 Suspension of Exercisability ............................... 47
Section 5.11 Costs of Enforcement ....................................... 47
Section 5.12 Successors ................................................. 47
Section 5.13 Benefits of this Agreement ................................. 47
Section 5.14 Descriptive Headings ....................................... 48
Section 5.15 Governing Law .............................................. 48
Section 5.16 Counterparts ............................................... 48
Section 5.17 Severability ............................................... 48
EXHIBITS
Exhibit A Form of Rights Certificate (Together with
Form of Election to Exercise)
-ii-
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SHAREHOLDER PROTECTION RIGHTS AGREEMENT
---------------------------------------
SHAREHOLDER PROTECTION RIGHTS AGREEMENT (this "Agreement"), dated as of
February 20, 1990, between International Flavors & Fragrances Inc., a New York
corporation (the "Company"), and The Bank of New York, a New York banking
corporation, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent hereunder).
WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on
February 28, 1990 (the "Record Time") and (b) authorized the issuance of one
Right in respect of each share of Common Stock issued after the Record Time and
prior to the Separation Time (as hereinafter defined);
WHEREAS, each Right entitles the holder thereof, after the Separation Time,
to purchase securities of the Company (or, in certain cases, of certain other
entities) pursuant to the terms and subject to the conditions set forth herein;
and
WHEREAS, the Company desires to appoint the Rights Agent to act on behalf
of the Company, and the Rights Agent is willing so to act, in connection with
the issuance, transfer, exchange and replacement of Rights Certificates
<PAGE>
(as hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
Article I--Certain Definitions
1.1 Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of 20%
or more of the outstanding shares of voting stock of the Company; provided,
however, that the term "Acquiring Person" shall not include any Person who is
the Beneficial Owner of outstanding shares of voting stock of the Company on the
date of this Agreement (an "Existing Shareholder"), including any group that may
be formed which is comprised solely of Existing Shareholders, until such time
hereafter as any such Existing Shareholder shall become the Beneficial Owner
(other than by means of a stock dividend, stock split, gift or inheritance) by
purchase of any additional shares of voting stock; and provided further that the
term "Acquiring Person" shall not include any Person who shall become the
Beneficial Owner of 20% or more of the outstanding shares of voting stock of the
Company solely as a result of an acquisition by the Company of shares of voting
stock, until such time thereafter as such Person shall become the Beneficial
Owner (other than by
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means of a stock dividend or stock split) of any additional shares of voting
stock.
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as such Rule
is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have "Beneficial
Ownership" of, and to "Beneficially Own", any securities as to which such Person
or any of such Person's Affiliates or Associates is or may be deemed to be the
beneficial owner pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, as such Rules are in effect on the date of this Agreement, as well
as any securities as to which such Person or any of such Person's Affiliates or
Associates has the right to become Beneficial Owner (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner", or to have "Beneficial Ownership" of, or to "Beneficially Own", any
security (i) solely because such security has been tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's Affiliates or
Associates until such tendered security is accepted for payment or exchange,
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(ii) solely because such Person or any of such Person's Affiliates or Associates
has or shares the power to vote or direct the voting of such security pursuant
to a revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and regulations
under the Securities Exchange Act of 1934, except if such power (or the
arrangements relating thereto) is then reportable under Item 6 of Schedule 13D
under the Securities Exchange Act of 1934 (or any similar provision of a
comparable or successor report), (iii) solely because of the grant by the
Company to such Person, in connection with the execution of an agreement to
acquire the Company, of options to acquire such security or (iv) held for or
pursuant to the terms of any employee stock ownership or other employee benefit
plan of the Company or a majority-owned Subsidiary of the Company. For purposes
of this Agreement, in determining the percentage of the outstanding shares of
Common Stock with respect to which a Person is the Beneficial Owner, all shares
as to which such Person is deemed the Beneficial Owner shall be deemed
outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York are generally authorized or
obligated by law or executive order to close.
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"Close of business" on any given date shall mean the time on such date (or,
if such date is not a Business Day, the time on the next succeeding Business
Day) at which the offices of the transfer agent for the Common Stock (or, after
the Separation Time, the offices of the Rights Agent if the Rights Agent is
different than the transfer agent for the Common Stock) are closed to the
public.
"Common Stock" shall mean the shares of Common Stock, par value $0.12 1/2,
of the Company.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole Right. Until
adjustment thereof in accordance with the terms hereof, the Exercise Price shall
equal $200.00.
"Expiration Time" shall mean the earliest of (i) the Exchange Time, (ii)
the Redemption Time and (iii) the close of business on the tenth-year
anniversary of the date hereof.
"Flip-in Date" shall mean the close of business on the tenth business day
after any Stock Acquisition Date which is not the result of a Flip-over
Transaction or Event, unless the Rights are previously redeemed.
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<PAGE>
"Flip-over Stock" of any Person shall mean the capital stock (or similar
equity interest) with the greatest voting power in respect of the election of
directors (or other persons similarly responsible for direction of the business
and affairs) of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately controls such
first-mentioned Person.
"Flip-over Transaction or Event" shall mean a transaction or series of
transactions after the time when an Acquiring Person has become such in which,
directly or indirectly, (A) the Company shall consolidate or merge with any
other Person or (B) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer) assets (i) aggregating
more than 50% of the assets (measured by either book value or fair market value)
or (ii) generating more than 50% of the operating income or cash flow, of the
Company and its Subsidiaries (taken as a whole) to any other Person (other than
the Company or one or more of its wholly owned Subsidiaries) or to two or more
such Persons which are Affiliates or Associates or otherwise acting in concert.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
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<PAGE>
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4 hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days during such period of 20 Trading Days not to be fully
comparable with the closing price on such date, each such closing price so used
shall be appropriately adjusted in order to make it fully comparable with the
closing price on such date. The closing price per share of any securities on any
date shall be the last reported sale price, regular way, or, in case no such
sale takes place or is quoted on such date, the average of the closing bid and
asked prices, regular way, for each share of such securities, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange, Inc.
or, if the securities are not listed or admitted to trading on the New York
Stock Exchange, Inc., as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if the securities are not listed or admitted to trading on any national
securities exchange, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the securities
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<PAGE>
are not listed or admitted to trading on any national securities exchange or
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the securities
selected by the Board of Directors of the Company; provided, however, that if on
any such date the securities are not listed or admitted to trading on a national
securities exchange or traded in the over-the-counter market, the closing price
per share of such securities on such date shall mean the fair value per share of
securities on such date as determined in good faith by the Board of Directors of
the Company, after consultation with a nationally recognized investment banking
firm, and set forth in a certificate delivered to the Rights Agent.
"Person" shall mean any individual, firm, partnership, association, group
(as such term is used in Rule 13d-5 under the Securities Exchange Act of 1934,
as such Rule is in effect on the date of this Agreement), corporation or other
entity.
"Redemption Price" shall mean an amount (calculated to the nearest one
one-hundredth of a cent) equal to $0.01 per Right.
"Redemption Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 5.1 hereof.
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"Separation Time" shall mean the close of business on the earlier of (i)
the tenth day (or such later date as the Board of Directors of the Company may
from time to time fix by resolution adopted prior to the Separation Time that
would otherwise have occurred) after the date on which any Person (other than
the Company, a majority-owned Subsidiary of the Company or an employee stock
ownership or other employee benefit plan of the Company or a majority-owned
Subsidiary of the Company) commences a tender or exchange offer which, if
consummated, would result in such Person's becoming an Acquiring Person and (ii)
the Flip-in Date; provided, that if the foregoing results in the Separation Time
being prior to the Record Time, the Separation Time shall be the Record Time,
and provided further, that if any tender or exchange offer referred to in clause
(i) of this definition is cancelled, terminated or otherwise withdrawn prior to
the Separation Time, such offer shall be deemed, for purposes of this
definition, never to have been made.
"Stock Acquisition Date" shall mean the first date of public announcement
by the Company (by any means) or by an Acquiring Person (by means of filing a
Schedule 13D under the Securities Exchange Act of 1934 (or any comparable or
successor report or schedule) or an amendment thereto) that an Acquiring Person
has become such.
"Subsidiary" of any specified Person shall mean any corporation or other
entity of which a majority of the
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voting power of the equity securities or a majority of the equity interest is
Beneficially Owned directly or indirectly, by such Person.
"Trading Day", when used with respect to any securities, shall mean a day
on which the New York Stock Exchange, Inc. is open for the transaction of
business or, if such securities are not listed or admitted to trading on the New
York Stock Exchange, Inc., a day on which the principal national securities
exchange on which such securities are listed or admitted to trading is open for
the transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a Business Day.
Article II--The Rights
2.1 Summary of Rights. As soon as practicable after the Record Time, the
Company will mail a letter to shareholders summarizing the terms of the Rights
to each holder of record of Common Stock as of the Record Time, at such holder's
address as shown by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the Common Stock
issued after the Record Time but prior to the Separation Time shall evidence one
Right for each share of Common Stock represented thereby and
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shall have impressed on, printed on, written on or otherwise affixed to them the
following legend:
Until the Separation Time (as defined in the Rights Agreement referred
to below), this certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Shareholder Protection Rights
Agreement, dated as of February 20, 1990 (as such may be amended from time
to time, the "Rights Agreement"), between International Flavors &
Fragrances Inc. (the "Company") and The Bank of New York, as Rights Agent,
the terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement, such
Rights may be redeemed, may be exchanged for shares of Common Stock or
other securities or assets of the Company, may expire, may become void (if
they are "Beneficially Owned" by an "Acquiring Person" or an "Affiliate" or
"Associate" thereof, as such terms are defined in the Rights Agreement, or
by any transferee of any of the foregoing) or may be evidenced by separate
certificates and may no longer be evidenced by this certificate. The
Company will mail or arrange for the mailing of a copy of the Rights
Agreement to the holder of this certificate without charge within five days
after the receipt of a written request therefor.
Certificates representing shares of Common Stock that are issued and outstanding
at the Record Time shall evidence one Right for each share of Common Stock
evidenced thereby notwithstanding the absence of the foregoing legend.
2.3 Exercise of Rights; Separation of Riqhts. (a) Subject to adjustment as
herein set forth, each Right will entitle the holder thereof, after the
Separation Time, to purchase, for the Exercise Price, one share of Common Stock.
(b) Until the Separation Time, (i) no Right may be exercised and (ii) each
Right will be evidenced by the
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certificate for the associated share of Common Stock (together, in the case of
certificates issued prior to the Record Time, with the letter mailed to the
record holder thereof pursuant to Section 2.1) and will be transferable only
together with, and will be transferred by a transfer (whether with or without
such letter) of, such associated share. Notwithstanding any other provision of
this Agreement, any Rights held by the Company or any of its Subsidiaries, other
than in a fiduciary capacity, shall be void.
(c) After the Separation Time and prior to the Expiration Time, the Rights
(i) may be exercised and (ii) may be transferred independent of the Common
Stock. Promptly following the Separation Time, and following receipt of notice
of the Separation Time from the Company, the Rights Agent will, at the
Company's expense, mail to each holder of record of Common Stock as of the
Separation Time, at such holder's address as shown by the records of the Company
(the Company hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose), (x) a certificate (a "Rights Certificate") in
substantially the form of Exhibit A hereto appropriately completed, representing
the number of Rights held by such holder at the Separation Time, in a machine
printable format, and having such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent
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with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any national securities exchange or quotation system on which the
Rights may from time to time be listed or traded, or to conform to usage, and
(y) a disclosure statement describing the Rights; provided, however, that the
Company shall have no obligation to distribute Rights Certificates to any
Acquiring Person or Affiliate or Associate of an Acquiring Person.
(d) Subject to Sections 2.3 and 5.10, Rights may be exercised on any
Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent the Rights Certificate evidencing such Rights
with an Election to Exercise (an "Election to Exercise") substantially in the
form attached to the Rights Certificate duly completed, accompanied by payment
in cash, or by certified or official bank check or money order payable to the
order of the Company, of a sum equal to the Exercise Price multiplied by the
number of Rights being exercised and a sum sufficient to cover any transfer tax
or charge which may be payable in respect of any transfer involved in the
transfer or delivery of Rights Certificates or the issuance or delivery of
certificates for shares or depositary receipts (or both) in a name other than
that of the holder of the Rights being exercised.
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(e) Upon receipt of a Rights Certificate, with an Election to Exercise
accompanied by payment as set forth in Section 2.3(d) above, and subject to
Section 5.10, the Rights Agent will thereupon promptly (i)(A) requisition, as
transfer agent or to the transfer agent of the Common Stock, stock certificates
evidencing such number of shares or other securities to be purchased (the
Company hereby irrevocably authorizing the Rights Agent, as transfer agent, and
any other transfer agents, to comply with all such requisitions) and (B) if the
Company elects pursuant to Section 5.5 hereof not to issue certificates
representing fractional shares, requisition from the depositary selected by the
Company depositary receipts representing the fractional shares to be purchased
or requisition from the Company the amount of cash to be paid in lieu of
fractional shares in accordance with Section 5.5 hereof and (ii) after receipt
of such certificates, depositary receipts and/or cash, deliver the same to or
upon the order of the registered holder of such Rights Certificate, registered
(in the case of certificates or depositary receipts) in such name or names as
may be designated by such holder.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights remaining unexercised will be issued by the Rights
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Agent to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) cause to be kept
available until the Expiration Time out of its authorized and unissued shares of
capital stock a number of shares of Common Stock that will be sufficient to
permit the exercise in full of all outstanding Rights; (ii) take all such action
as may be necessary to ensure that all shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (subject to
payment of the Exercise Price), be duly and validly authorized, executed, issued
and delivered and fully paid and nonassessable; (iii) take all such action as
may be necessary to comply with any applicable requirements of the Securities
Act of 1933 or the Securities Exchange Act of 1934, and the rules and
regulations thereunder, and any other applicable law, rule or regulation, in
connection with the issuance of any shares upon exercise of Rights; (iv) use its
best efforts to cause all shares issued upon exercise of Rights to be listed on
a national securities exchange upon issuance; and (v) pay when due and payable
any and all federal and state transfer taxes and charges which may be payable in
respect of the original issuance or delivery of the Rights Certificates or of
any shares issued upon the exercise of Rights, provided that the Company shall
not be required to pay any transfer tax or charge which may be
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payable in respect of any transfer involved in the transfer or delivery of
Rights Certificates or the issuance or delivery of certificates for shares in a
name other than that of the holder of the Rights being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event the
Company shall at any time after the Record Time and prior to the Separation Time
(i) declare or pay a dividend on Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares of Common Stock, (x) the Exercise Price in
effect after such adjustment will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the number of shares of Common
Stock (the "Expansion Factor") that a holder of one share of Common Stock
immediately prior to such dividend, subdivision or combination would hold
thereafter as a result thereof and (y) each Right held prior to such adjustment
will become that number of Rights equal to the Expansion Factor, and the
adjusted number of Rights will be deemed to be distributed among the shares of
Common Stock with respect to which the original Rights were associated (if they
remain outstanding) and the shares issued in respect of such dividend,
subdivision or combination, so that each such share of Common Stock will have
exactly one Right associated with it. Each adjustment
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made pursuant to this paragraph shall be made as of the payment or effective
date for the applicable dividend, subdivision or combination.
In the event the Company shall at any time after the Record Time and prior
to the Separation Time issue any shares of Common Stock otherwise than in a
transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such share.
(b) In the event the Company shall at any time after the the Record Time
and prior to the Separation Time issue or distribute any securities or assets in
respect of, in lieu of or in exchange for Common Stock (other than pursuant to a
regular periodic cash dividend or a dividend paid solely in Common Stock)
whether by dividend, in a reclassification or recapitalization (including any
such transaction involving a merger, consolidation or binding share exchange),
or otherwise, the Company shall make such adjustments, if any, in the Exercise
Price, number of Rights and/or securities or other property purchasable upon
exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and the
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Rights Agent shall amend this Agreement as necessary to provide for such
adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this Section 2.4
shall be calculated to the nearest cent. Whenever an adjustment to the Exercise
Price is made pursuant to this Section 2.4, the Company shall (i) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (ii) promptly file with the Rights Agent
and with each transfer agent for the Common Stock a copy of such certificate and
(iii) mail a brief summary thereof to each holder of Rights.
(d) Irrespective of any adjustment or change in the securities purchasable
upon exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the securities so purchasable which were
expressed in the initial Rights Certificates issued hereunder.
2.5 Date on Which Exercise is Effective. Each person in whose name any
certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price for such Rights (and any applicable taxes and other
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governmental charges payable by the exercising holder hereunder) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the stock transfer
books of the Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights Certificates.
(a) The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of such Rights
Certificates.
Promptly after the Company learns of the Separation Time, the Company will
notify the Rights Agent of such Separation Time and will deliver Rights
Certificates executed by the Company to the Rights Agent for countersignature,
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and the Rights Agent shall manually countersign and deliver such Rights
Certificates to the holders of the Rights pursuant to Section 2.3(c) hereof. No
Rights Certificate shall be valid for any purpose until manually countersigned
by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.7 Registration, Registration of Transfer and Exchange. (a) After the
Separation Time, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the
Rights Register for the Company and registering Rights and transfers of Rights
after the Separation Time as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and subject
to the provisions of Section 2.7(c) below, the Company will execute, and the
Rights Agent will countersign and deliver, in the name of the holder or the
designated transferee or
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transferees, as required pursuant to the holder's instructions, one or more new
Rights Certificates evidencing the same aggregate number of Rights as did the
Rights Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b) hereof, all Rights
issued upon any registration of transfer or exchange of Rights Certificates
shall be the valid obligations of the Company, and such Rights shall be entitled
to the same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment by the
holders of Rights of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
(d) The Company shall not be required to register the transfer or exchange
of any Rights after the Rights have been redeemed under Section 5.1 hereof or
become void pursuant to Section 3.1(b) hereof.
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2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If any
mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, the Company shall execute and the Rights Agent shall
countersign and deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
surrendered.
(b) If there shall be delivered to the Company and the Rights Agent prior
to the Expiration Time (i) evidence to their satisfaction of the destruction,
loss or theft of any Rights Certificate and (ii) such security or indemnity as
may be required by them to save each of them and any of their agents harmless,
then, in the absence of notice to the Company or the Rights Agent that such
Rights Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under this
Section 2.8, the Company may require the payment by the holders of Rights of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other
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expenses (including the fees and expenses of the Rights Agent) connected
therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) for
registration of transfer, the Company, the Rights Agent and any agent of the
Company or the Rights Agent may deem and treat the person in whose name such
Rights Certificate (or, prior to the Separation Time, such Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary. As used in this
Agreement, unless the context otherwise requires, the term "holder" of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).
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2.10 Delivery and Cancellation of Certificates. All Rights Certificates
surrendered upon exercise or for redemption, registration of transfer or
exchange shall, if surrendered to any person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly cancelled by
the Rights Agent. The Company may at any time deliver to the Rights Agent for
cancellation any Rights Certificates previously countersigned and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Rights Certificates so delivered shall be promptly cancelled by the Rights
Agent. No Rights Certificates shall be countersigned in lieu of or in exchange
for any Rights Certificates cancelled as provided in this Section 2.10, except
as expressly permitted by this Agreement. The Rights Agent may, but shall not be
required to destroy, all cancelled Rights Certificates and deliver a certificate
of destruction to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated share of
Common Stock;
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(b) after the Separation Time, the Rights Certificates will be transferable
only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will under the
circumstances set forth in Section 3.1(b) become void; and
(e) this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4 hereof.
Article III -- Adjustments to the Rights in the Event of Certain
Transactions
3.1 Flip-in. (a) In the event that prior to the Expiration Time a Flip-in
Date shall occur, the Company shall take such action as shall be necessary to
ensure and provide that, except as provided below, each Right shall
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constitute the right to purchase from the Company, upon exercise thereof in
accordance with the terms hereof (but subject to Section 5.10 hereof), that
number of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition Date equal to twice the Exercise Price for an amount in cash equal
to the Exercise Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the event that on or
after such Stock Acquisition Date an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred with respect to
the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were Beneficially
Owned on or after the Stock Acquisition Date by an Acquiring Person or an
Affiliate or Associate thereof or by any transferee, direct or indirect, of any
of the foregoing shall become void and any holder of such Rights (including
transferees) shall thereafter have no right to exercise or transfer such Rights
under any provision of this Agreement. If any Rights Certificate is presented
for assignment or exercise and the Person presenting the same will not complete
the certification set forth at the end of the form of assignment or notice of
election to exercise and provide such additional evidence of the identity of the
Beneficial Owner and its Affiliates and Associates (or former Beneficial Owners
and their Affiliates
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and Associates) as the Company shall reasonably request, then the Company shall
be entitled to conclusively deem the Beneficial Owner thereof to be an Acquiring
Person or an Affiliate or Associate thereof or a transferee of any of the
foregoing and accordingly will deem the Rights evidenced thereby to be void and
not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at any time
after a Flip-in Date and prior to the time that an Acquiring Person becomes the
Beneficial Owner of more than 50% of the outstanding shares of Common Stock,
elect to exchange all (but not less than all) the then outstanding Rights (which
shall not include Rights that have become void pursuant to the provisions of
Section 3.1(b)) for shares of Common Stock at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted in order to protect the interests
of holders of Rights generally in the event that after the Separation Time an
event of a type analogous to any of the events described in Section 2.4(a) or
(b) shall have occurred with respect to the Common Stock (such exchange ratio,
as adjusted from time to time, being hereinafter referred to as the "Exchange
Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right will
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thereafter represent only the right to receive a number of shares of Common
Stock equal to the Exchange Ratio. Promptly after the action of the Board of
Directors electing to exchange the Rights, the Company shall give notice thereof
(specifying the steps to be taken to receive shares of Common Stock in exchange
for Rights) to the Rights Agent and the holders of the Rights outstanding
immediately prior thereto by mailing such notice in accordance with Section 5.9.
(d) In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Common Stock of the Company to permit the
exercise or exchange in full of the Rights in accordance with Section 3.1(a) or
(c), the Company shall either (i) call a meeting of shareholders seeking
approval to cause sufficient additional shares to be authorized (provided that
if such approval is not obtained the Company will take the action specified in
clause (ii) of this sentence) or (ii) take such action as shall be necessary to
ensure and provide, to the extent permitted by applicable law and any agreements
or instruments in effect on the Stock Acquisition Date to which it is a party,
that each Right shall thereafter constitute the right to receive, (x) at the
Company's option, either (A) in return for the Exercise Price, debt or equity
securities or other assets (or a combination thereof) having a fair value equal
to twice the Exercise Price, or
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(B) without payment of consideration (except as otherwise required by applicable
law), debt or equity securities or other assets (or a combination thereof)
having a fair value equal to the Exercise Price, or (y) if the Board of
Directors of the Company elects to exchange the Rights in accordance with
Section 3.1(c), debt or equity securities or other assets (or a combination
thereof) having a fair value equal to the product of the Market Price of a share
of Common Stock on the Flip-in Date times the Exchange Ratio in effect on the
Flip-in Date, where in any case set forth in (x) or (y) above the fair value of
such debt or equity securities or other assets shall be as determined in good
faith by the Board of Directors of the Company, after consultation with a
nationally recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall not
enter into any agreement with an Acquiring Person with respect to, consummate or
permit to occur any Flip-over Transaction or Event unless and until it shall
have entered into a supplemental agreement with the Person engaging in such
Flip-over Transaction or Event (the "Flip-over Entity"), for the benefit of the
holders of the Rights, providing that, upon consummation or occurrence of the
Flip-over Transaction or Event (i) each Right shall thereafter constitute the
right to purchase from the Flip-over Entity, upon exercise thereof in accordance
with the
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terms hereof, that number of shares of Flip-over Stock of the Flip-over Entity
having an aggregate Market Price on the date of consummation or occurrence of
such Flip-over Transaction or Event equal to twice the Exercise Price for an
amount in cash equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of Rights generally in
the event that after such date of consummation or occurrence an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Flip-over Stock) and (ii) the Flip-over Entity
shall thereafter be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the obligations and
duties of the Company pursuant to this Agreement. The provisions of this Section
3.2 shall apply to successive Flip-over Transactions or Events.
(b) Prior to the Expiration Time, unless the Rights will be redeemed
pursuant to Section 5.1 hereof in connection therewith, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instruments which would eliminate or otherwise diminish in any respect the
benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.
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Article IV -- The Rights Agent
4.1 General. (a) The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company agrees to pay to
the Rights Agent such compensation as shall be agreed to in writing between the
Company and the Rights Agent for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and expenses and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, damage, claim, liability, or expense,
incurred without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability. The
provisions of this Section shall survive the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any certificate for securities
purchasable upon exercise of Rights, Rights
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Certificate, certificate for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed and executed by the
proper person or persons and, where necessary, to be verified or acknowledged.
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the
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Rights Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel for the Company), and the opinion of such counsel will be
full and complete authorization and protection to the Rights Agent as
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<PAGE>
to any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by a person believed by the Rights Agent to be the
Chairman of the Board, the President or any Vice President and by the Treasurer
or any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and
-34-
<PAGE>
recitals are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
authorization, execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any certificate for securities purchasable upon
exercise of Rights or Rights Certificate (except its countersignature thereof);
nor will it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor will it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 3.1(b) hereof) or any adjustment
required under the provisions of Section 2.4, 3.1 or 3.2 hereof or responsible
for the manner, method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment (except with
respect to the exercise of Rights after the Rights Agent's actual receipt of the
certificate contemplated by Section 2.4 describing any such adjustment); nor
will it by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any securities purchasable upon exercise
of Rights or any Rights or as to whether any securities purchasable upon
exercise of Rights will, when issued, be duly and validly authorized,
-35-
<PAGE>
executed, issued and delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
persons for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such person. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken or such omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of,
-36-
<PAGE>
the Rights Agent in accordance with a proposal included in such app1ication on
or after the date specified in such application (which date shall not be less
than five Business Days after the date any officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to any earlier date) unless prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in Common Stock, Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company
-37-
<PAGE>
resulting from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the Form of
Assignment or Form of Election to Exercise included as part of Exhibit A hereto,
as the case may be, has not been executed, the Rights Agent shall not take any
further action with respect to such requested transfer or exercise without first
consulting with the Company.
(1) In addition to the foregoing, the Rights Agent shall be protected and
shall incur no liability for, or in respect of, any action taken or omitted by
it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the Form of Assignment and the Form
of
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<PAGE>
Election to Exercise unless the Rights Agent shall have actual knowledge that,
as executed, such certification is untrue, or (ii) the non-execution of such
certification including, without limitation, any refusal to honor any otherwise
permissible assignment or election by reason of such non-execution.
(m) The Company agrees to give the Rights Agent prompt written notice of
any event or ownership which would prohibit the exercise or transfer of the
Rights Certificates.
4.4 Change of Rights Agent. The Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice (or such lesser notice
as is acceptable to the Company) in writing mailed to the Company and, at the
Company's expense, to each transfer agent of Common Stock by registered or
certified mail, and to the holders of the Rights in accordance with Section 5.9.
The Company may remove the Rights Agent upon 30 days' notice in writing, mailed
to the Rights Agent and to each transfer agent of the Common Stock by registered
or certified mail, and to the holders of the Rights in accordance with Section
5.9. If the Rights Agent should resign or be removed or otherwise become
incapable of acting, the Company will appoint a successor to the Rights Agent.
If the Company fails to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning
-39-
<PAGE>
or incapacitated Rights Agent or by the holder of any Rights (which holder
shall, with such notice, submit such holder's Rights Certificate for inspection
by the Company), then the Company shall become the Rights Agent and the holder
of any Rights may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of the State of New York, in
good standing, having its principal office in the State of New York, which is
authorized under such laws to exercise the powers of the Rights Agent
contemplated by this Agreement and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common
-40-
<PAGE>
Stock, and mail a notice thereof in writing to the holders of the Rights.
Failure to give any notice provided for in this Section 4.4, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Article V - Miscellaneous
5.1 Redemption. (a) The Board of Directors of the Company may, at its
option, at any time prior to the Flip-in Date, elect to redeem all (but not less
than all) the then outstanding Rights at the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights (or, if the resolution of the Board of Directors
electing to redeem the Rights states that the redemption will not be effective
until the occurrence of a specified future time or event, upon the occurrence of
such future time or event), without any further action and without any notice,
the right to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in cash. Promptly after
the Rights are redeemed, the Company shall give notice of such redemption to the
Rights Agent and the holders of the then outstanding Rights by mailing such
notice in accordance with Section 5.9.
-41-
<PAGE>
5.2 Expiration. No Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1(c) or 5.1 hereof.
5.3 Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement.
5.4 Supplements and Amendments. The Company and the Rights Agent may from
time to time supplement or amend this Agreement without the approval of any
holders of Rights (i) in any respect prior to the Flip-in Date (other than to
change the Redemption Price or the Expiration Time, except as contemplated
elsewhere herein), (ii) to make any changes following the close of business on
the Flip-in Date which the Company may deem necessary or desirable and which
shall not materially adversely affect the interests of the holders of Rights or
(iii) in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be inconsistent with any other provisions herein or
otherwise defective. The Rights Agent will duly execute and deliver any
supplement or amendment hereto reguested by the
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<PAGE>
Company which satisfies the terms of the preceding sentence; provided, however,
that the Rights Agent shall not be required to execute any supplement or
amendment hereto which adversely alters the Rights Agent's rights or duties.
5.5 Fractional Shares. If the Company elects not to issue certificates
representing fractional shares upon exercise of Rights, the Company shall, in
lieu thereof, (a) evidence such fractional shares by depositary receipts issued
pursuant to an appropriate agreement between the Company and a depositary
selected by it, providing that each holder of a depositary receipt shall have
all of the rights, privileges and preferences to which such holder would be
entitled as a beneficial owner of such fractional share, or (b) pay to the
registered holder of such Rights the same fraction of the Market Price
(determined as of the date of exercise) of one share of the stock issuable upon
such exercise on the day of exercise.
5.6 Rights of Action. Subject to the terms of this Agreement, rights of
action in respect of this Agreement, other than rights of action vested solely
in the Rights Agent, are vested in the respective holders of the Rights; and any
holder of any Rights, without the consent of the Rights Agent or of the holder
of any other Rights, may, on such holder's own behalf and for such holder's own
benefit and the benefit of other holders of Rights, enforce, and may institute
and maintain any suit, action or proceed-
-43- -
<PAGE>
ing against the Company to enforce, or otherwise act in respect of, such
holder's right to exercise such holder's Rights in the manner provided in such
holder's Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Shareholder. No holder, as such, of any
Rights shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of shares or any other securities which may at any time be issuable
on the exercise of such Rights, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription rights,
or otherwise, until such Rights
-44-
<PAGE>
shall have been exercised in accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company shall propose after the
Separation Time and prior to the Expiration Time (i) to effect or permit (in
cases where the Company's permission is required) occurrence of any Flip-in Date
or Flip-over Transaction or Event or (ii) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right and to the Rights Agent, in accordance with Section 5.9
hereof, a notice of such proposed action, which shall specify the Flip-in Date
or the date on which such Flip-over Transaction or Event, liquidation,
dissolution, or winding up is to take place, and such notice shall be so given
at least 20 Business Days prior to the date of the taking of such proposed
action.
5.9 Notices. Notices or demands authorized or required by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights to or on the
Company shall be sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
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<PAGE>
International Flavors & Fragrances Inc.
521 West 57th St.
New York, New York 10019
Attention: Wallace G. Dempsey
Secretary
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
The Bank of New York
90 Washington Street
Equity Tender and Exchange Department
New York, New York 10286
Attention: Leonard Small
Assistant Vice President
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice.
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<PAGE>
5.10 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action need be taken pursuant to Section
3.1(c) or 3.1(e) or to comply with federal or state securities laws, the Company
may suspend the exercisability of the Rights for a period of up to ninety (90)
days following the date of the occurrence of the Separation Time or the Flip-in
Date in order to take such action or comply with such laws. In the event of any
such suspension, the Company shall issue as promptly as practicable a public
announcement stating that the exercisability of the Rights has been temporarily
suspended and shall simultaneously so notify the Rights Agent.
5.11 Costs of Enforcement. The Company agrees that if the Company or any
other Person the securities of which are purchasable upon exercise of Rights
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
such holder's rights pursuant to any Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other
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<PAGE>
than the Company, the Rights Agent and the holders of the Rights any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
holders of the Rights.
5.14 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.15 Governing Law. This Agreement and each Right issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts made and to be performed entirely within such
state.
5.16 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
5.17 Severability. If any term or provision hereof or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable
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<PAGE>
the remaining terms and provisions hereof or the application of such term or
provision to circumstances other than those as to which it is held invalid or
unenforceable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By /S/ EUGENE P. GRISANTI
--------------------------------------
Name: Eugene P. Grisanti
Title: President
THE BANK OF NEW YORK,
as Rights Agent
By /S/ ERIC KAMBACK
--------------------------------------
Name: Eric Kamback
Title: Assistant Vice President
-49-
<PAGE>
EXHIBIT A
[Form of Rights Certificate]
Certificate No. W- _______ Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR MANDATORY EXCHANGE,
AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS
OR AFFILIATES OR ASSOCIATES THEREOF (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE FOREGOING
WILL BE VOID.
Rights Certificate
INTERNATIONAL FLAVORS & FRAGRANCES INC.
This certifies that _____________________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Protection Rights Agreement, dated as of February
20, 1990 (as such may be amended from time to time, the "Rights Agreement"),
between International Flavors & Fragrances Inc., a New York corporation (the
"Company"), and The Bank of New York, a New York banking corporation, as Rights
Agent (the "Rights Agent", which term shall include any successor Rights Agent
under the Rights Agreement), to purchase from the Company at any time after the
Separation Time (as such term is defined in the Rights Agreement) and prior to
the close of business on February 20, 2000, one fully paid share of Common
Stock, par value $0.12 1/2 per share (the "Common Stock") of the Company
(subject to
<PAGE>
adjustment as provided in the Rights Agreement) at the Exercise Price referred
to below, upon presentation and surrender of this Rights Certificate with the
Form of Election to Exercise duly executed at the designated office of the
Rights Agent in The City of New York. The Exercise Price shall initially be
$200.00 per Right and shall be subject to adjustment in certain events as
provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Common Stock, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
-2-
<PAGE>
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, each Right evidenced by
this Certificate may be (a) redeemed by the Company under certain circumstances,
at its option, at a redemption price of $0.01 per Right or (b) exchanged by the
Company under certain circumstances, at its option, for one share of Common
Stock per Right (or, in certain cases, other securities or assets of the
Company), subject in each case to adjustment in certain events as provided in
the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of any securities
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of
-3-
<PAGE>
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Date: ___________
INTERNATIONAL FLAVORS & FRAGRANCES INC.
ATTEST:
___________________________ By_____________________________________
Secretary
Countersigned:
THE BANK OF NEW YORK, as Rights Agent
By _______________________________
Authorized Signatory
-4-
AMENDMENT NO. 1
AMENDMENT NO. 1, dated as of April __, 1990, to the Shareholder Protection
Rights Agreement (the "Rights Agreement"), dated as of February 20, 1990,
between International Flavors & Fragrances Inc. (the "Company") and The Bank of
New York (the "Rights Agent"). All terms used herein shall have the meanings
ascribed to them in the Rights Agreement.
* * *
WHEREAS, the Company and the Rights Agent desire to make certain amendments
to the Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree
as follows:
1. The definition of the term "Acquiring Person" contained in Section 1.1
of the Rights Agreement shall be deleted and replaced in its entirety with the
following:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of 20%
or more of the outstanding shares of voting stock of the Company; provided,
however, that the term "Acquiring Person" shall not include any Person who is
the Beneficial Owner of outstanding shares of voting stock of the Company on the
date of this Agreement (an "Existing Shareholder"), including any group that may
be formed which is comprised solely of Existing Shareholders, until such time
hereafter as any such Existing Shareholder shall become
<PAGE>
the Beneficial Owner (other than by means of a stock dividend, stock split,
gift, inheritance or receipt or exercise of, or accrual of any right to
exercise, a stock option granted by the Company) by purchase of any additional
shares of voting stock; and provided further that the term "Acquiring Person"
shall not include any Person who shall become the Beneficial Owner of 20% or
more of the outstanding shares of voting stock of the Company solely as a result
of an acquisition by the Company of shares of voting stock, until such time
thereafter as such Person shall become the Beneficial Owner (other than by means
of a stock dividend or stock split) of any additional shares of voting stock."
2. The provisions of the Rights Agreement, as amended by this Amendment
No. 1, shall remain in full force and effect.
3. This Amendment No. 1 may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
4. This Amendment No. 1 shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such state.
<PAGE>
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By /s/ EUGENE P. GRISANTI
---------------------------------------------------
Name: Eugene P. Grisanti
Title: Chairman and President
THE BANK OF NEW YORK, as Rights Agent
By ___________________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By
---------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By /s/ ERIC KAMBACH
---------------------------------------
Name: Eric Kambach
Title: Assistant Vice President
---------
I F F (Logo)
NUMBER SHARES
CU _____________ ______________
COMMON STOCK COMMON STOCK
INTERNATIONAL FLAVORS & FRAGRANCES INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK
CUSIP 459506 10 1
This Certifies that ___________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
is the owner of _______________________________________________________________
_______________________________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
INTERNATIONAL FLAVORS & FRAGRANCES INC., transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney on
surrender of this certificate properly endorsed.
This certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated__________________________
/s/ /s/
- ---------------------------- ----------------------------
Secretary Chairman and President
----------------
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
(NEW YORK)
By TRANSFER AGENT
AND REGISTRAR
__________________________________
Authorized Signature
NOTE:
FOR EXPLANATION OF CERTAIN ABBREVIATIONS,
SEE REVERSE SIDE OF THIS CERTIFICATE
----------------
I F F
CORPORATE
SEAL
1909
NEW YORK
----
(c) SECURITY-COLUMBIAN UNITED STATES BANKNOTE COMPANY
<PAGE>
INTERNATIONAL FLAVORS & FRAGRANCES INC.
The Restated Certificate of Incorporation as amended includes the following
provisions:
"NINTH: * * *
"(4) Any director may be removed with cause by the affirmative vote of at
least two-thirds (2/3) of the whole Board of Directors of the Corporation or may
be removed with or without cause by the stockholders as provided in the By-laws
of the Corporation. Any vacancy in the Board of Directors of the Corporation
arising from any cause shall be filled for the unexpired portion of the term by
the affirmative vote of at least two-thirds (2/3) of the whole Board of
Directors or by the stockholders as provided in the By-laws of the Corporation."
* * *
"TENTH:
Each holder of any equity or voting shares, as such terms are defined in
Section 39 of the New York Stock Corporation Law, of any class of the
Corporation shall have the preemptive right to purchase equity or voting shares
of the Corporation or any shares, notes, debentures, bonds or other securities
convertible into or carrying options or warrants to purchase its equity or
voting shares, in any and all cases, notwithstanding the provisions of Section
39(4) of the New York Stock Corporation Law, except as may otherwise be
determined by the affirmative vote of at least two-thirds (2/3)of the whole
Board of Directors, and except that such preemptive right shall not apply upon
the issuance of equity or voting shares by the Corporation upon the exercise of
stock options or upon the surrender of scrip certificates outstanding as of the
date of this Restated Certificate of Incorporation."
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--.........Custodian.........
TEN ENT--as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to Minors
JT TEN --as joint tenants with
right survivorship and Act...............
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
| |
| |
|_____________________________________|
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ____________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated__________________________
_____________________________________
Notice: The signature to this assignment must correspond with the name as
written upon the face of the certificate in every particular, without
alteration or enlargement or any change whatever.
------------
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Protection Rights Agreement, dated
as of February 20, 1990 (as such may be amended from time to time, the "Rights
Agreement"), between International Flavors & Fragrances Inc. (the "Company") and
The Bank of New York, as Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed, may be exchanged for shares
of Common Stock or other securities or assets of the Company, may expire, may
become void (if they are "Beneficially Owned" by an "Acquiring Person" or an
"Affiliate" or "Associate" thereof, as such terms are defined in the Rights
Agreement, or by any transferee of any of the foregoing) or may be evidenced by
separate certificates and may no longer be evidenced by this certificate. The
Company will mail or arrange for the mailing of a copy of the Rights Agreement
to the holder of this certificate without charge within five days after the
receipt of a written request therefor.
<PAGE>
---------
I F F (Logo)
NUMBER SHARES
CU _____________ ______________
COMMON STOCK COMMON STOCK
INTERNATIONAL FLAVORS & FRAGRANCES INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK
CUSIP 459506 10 1
This Certifies that ___________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
is the owner of _______________________________________________________________
_______________________________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
INTERNATIONAL FLAVORS & FRAGRANCES INC., transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney on
surrender of this certificate properly endorsed.
This certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated__________________________
/s/ /s/
- ---------------------------- ----------------------------
Secretary Chairman and President
----------------
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
(NEW YORK)
By TRANSFER AGENT
AND REGISTRAR
__________________________________
Authorized Signature
NOTE:
FOR EXPLANATION OF CERTAIN ABBREVIATIONS,
SEE REVERSE SIDE OF THIS CERTIFICATE
----------------
I F F
CORPORATE
SEAL
1909
NEW YORK
----
(c) SECURITY-COLUMBIAN UNITED STATES BANKNOTE COMPANY
<PAGE>
INTERNATIONAL FLAVORS & FRAGRANCES INC.
The Restated Certificate of Incorporation as amended includes the following
provisions:
"NINTH: * * *
"(4) Any director may be removed with cause by the affirmative vote of at
least two-thirds (2/3) of the whole Board of Directors of the Corporation or may
be removed with or without cause by the stockholders as provided in the By-laws
of the Corporation. Any vacancy in the Board of Directors of the Corporation
arising from any cause shall be filled for the unexpired portion of the term by
the affirmative vote of at least two-thirds (2/3) of the whole Board of
Directors or by the stockholders as provided in the By-laws of the Corporation."
* * *
"TENTH:
Each holder of any equity or voting shares, as such terms are defined in
Section 39 of the New York Stock Corporation Law, of any class of the
Corporation shall have the preemptive right to purchase equity or voting shares
of the Corporation or any shares, notes, debentures, bonds or other securities
convertible into or carrying options or warrants to purchase its equity or
voting shares, in any and all cases, notwithstanding the provisions of Section
39(4) of the New York Stock Corporation Law, except as may otherwise be
determined by the affirmative vote of at least two-thirds (2/3)of the whole
Board of Directors, and except that such preemptive right shall not apply upon
the issuance of equity or voting shares by the Corporation upon the exercise of
stock options or upon the surrender of scrip certificates outstanding as of the
date of this Restated Certificate of Incorporation."
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common UNIF GIFT MIN ACT--.........Custodian.........
TEN ENT--as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to Minors
JT TEN --as joint tenants with
right survivorship and Act...............
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
For value received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
| |
| |
|_____________________________________|
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ____________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated__________________________
____________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed:
_______________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
------------
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Shareholder Protection Rights Agreement, dated
as of February 20, 1990 (as such may be amended from time to time, the "Rights
Agreement"), between International Flavors & Fragrances Inc. (the "Company") and
The Bank of New York, as Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be redeemed, may be exchanged for shares
of Common Stock or other securities or assets of the Company, may expire, may
become void (if they are "Beneficially Owned" by an "Acquiring Person" or an
"Affiliate" or "Associate" thereof, as such terms are defined in the Rights
Agreement, or by any transferee of any of the foregoing) or may be evidenced by
separate certificates and may no longer be evidenced by this certificate. The
Company will mail or arrange for the mailing of a copy of the Rights Agreement
to the holder of this certificate without charge within five days after the
receipt of a written request therefor.
AGREEMENT made as of January 1, 1997, between
INTERNATIONAL FLAVORS & FRAGRANCES INC. a New York
corporation, (hereinafter called the "Employer") and
Eugene P. Grisanti (hereinafter called the "Employee").
The Employee is now Chairman of the Board of Directors of
the Employer and is employed by the Employer as its President and
chief executive officer under an Agreement between the Employer
and the Employee dated January 1, 1992 (the "Prior Agreement"),
which provides for a fixed term of employment to December 31,
1996. The parties hereto desire to enter into a new agreement
relating to the terms and conditions of continued employment of
the Employee after December 31, 1996 on the basis hereinafter set
forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The Employer shall employ the Employee, and the Employee shall
serve the Employer, as President and chief executive officer or in such other
senior capacity to which the Employee may agree, for the period (the "executive
period") which shall commence on January 1, 1997 and which
1
<PAGE>
may be terminated at any time thereafter, with or without cause, by either the
Employer or the Employee on written notice to the other and shall terminate
December 31, 2001 in any event. During the executive period the Employer shall
employ the Employee as President and chief executive officer or in such other
senior executive capacity to which the Employee may agree, at such salary (at a
rate not less than the rate in effect at the date hereof) and upon such other
terms and conditions as the Board of Directors of the Employer may determine
from time to time, subject to the terms and conditions of this Agreement. In
addition to his salary, the Employee may share, in such proportions as the Board
of Directors or a duly authorized committee of such Board in its sole discretion
shall determine, in any pension, incentive compensation, bonus, stock option,
profit sharing, group insurance, disability or other employee benefit plans,
programs, or policies, whether of general or limited application, now in effect
or hereafter adopted for the Employer. In the event that the Employer shall
terminate the executive period prior to December 31, 2001, the compensation of
the Employee shall continue for a period of twelve (12) months after such
termination (but ending not later than December 31, 2001) at the rate in effect
prior to such termination.
2
<PAGE>
2. After termination of the executive period, the Employee shall
serve the Employer and its subsidiaries for a period of ten (10) years in such
consulting capacity as the Employer may reasonably request, in order that the
Employer may continue to have the benefit of the Employee's experience. The
length of the consulting period shall not be affected by any disability of
the Employee. During the consultation period the Employee shall be free to
devote the greater part of his time to other pursuits. For his services as a
consultant, the Employer shall pay the Employee an annual fee, in equal monthly
installments, of One Hundred Fifty Thousand Dollars ($150,000).
3. During the executive period, the Employee shall devote to the
performance of his duties hereunder substantially his full time subject to
reasonable vacations.
4. During the consultation period, the Employee shall not engage
directly or indirectly in any business which is competitive to that of the
Employer and its subsidiaries, but this shall not prevent the Employee from
owning a beneficial interest in less than five percent (5%)
3
<PAGE>
of the outstanding capital stock of any publicly owned competitive company.
5. (a) The Employer hereby grants to the Employee as of January 1,
1997, a stock award of 250,000 shares of Common Stock of the Employer (the
"Award") of the par value of twelve and one half cents ($.12 1/2) per share,
subject to a period of restriction as provided below (the "Restriction Period")
and subject to the attainment of a performance goal ("Performance Goal") as
provided below. The Restriction Period with respect to the Award shall commence
on the date hereof and shall terminate in five installments as hereinafter
provided. Shares awarded hereunder shall be made available from shares
reacquired by the Company, including shares purchased in the open market.
(b) The Employee shall be issued one or more certificates for
the shares of Common Stock of the Employer awarded under this Agreement
subject to the terms and conditions hereinafter provided ("Restricted
Stock"). Such certificate or certificates shall be registered in the name
of the Employee, and shall bear an appropriate legend referring to the
terms, conditions and restrictions
4
<PAGE>
applicable to such substantially in the following form:
"The transferability of this certificate and
the shares of stock represented hereby are
subject to the terms and conditions (including
forfeitures) of an agreement entered into
between the registered owner and International
Flavors & Fragrances Inc. Copies of such
agreement are on file in the offices of
International Flavors & Fragrances Inc., 521
West 57th Street, New York, New York 10019."
Such certificate or certificates shall also be subject to such stop-transfer
orders and other restrictions as the Employer may deem advisable under the
rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is
then listed and any applicable federal or state securities law, and the
Employer may cause an appropriate additional legend or legends to be put
on any such certificates to make reference to any such restrictions.
(c) The Employer may cause the stock certificates evidencing such
shares to be held in custody by a bank or other institution, or the
Employer may itself hold such shares in its custody until the restrictions
thereon
5
<PAGE>
shall have lapsed and may require that the Employee shall deliver a stock power
or powers endorsed in blank relating to the stock covered by the Award.
(d) Except as required by law, the Employee is not required
to make any payment or provide consideration for the Award other than the
rendering of future services to the Employer.
(e) The shares of Common Stock awarded pursuant to this
Agreement shall be subject to the following restrictions and
conditions:
(i) The Restriction Period shall extend from the date hereof,
January 1, 1997, to February 28, 1998 with respect to one fifth of the
shares covered by the award, to February 28, 1999 with respect to one
fifth of such shares, to February 28, 2000 with respect to one fifth of
such shares, to February 28, 2001 with respect to one fifth of such
shares, and to February 28, 2002 with respect to the remaining one fifth
of such shares. During the Restriction Period with respect to each such
installment of such shares covered by the Award, the Employee shall not
be permitted to sell, transfer,
6
<PAGE>
pledge or assign any of the Restricted Stock included in such installment.
(ii) In addition to the provisions of Section 5(e)(i), each
installment of the Award is subject to the attainment of a Performance
Goal for that installment either as provided in Section 5(e)(ii)(A) or
in Section 5(e)(ii)(B) below, in either case the attainment of such
goal to be certified in writing by the Stock Option and Compensation
Committee (the "Committee"). If a Performance Goal for any
Installment Period is not attained as hereinafter provided, that
installment of the Award shall be forfeited. The performance goals set
forth in (A) and (B) below are alternate performance goals, i.e., the
requirement is satisfied if the Performance Goal as set forth in
either A or B is met.
(A) This Performance Goal for each
installment shall be attained if 1% of the
7
<PAGE>
Employer's Net Income for the applicable
Installment Period exceeds the Fair Market Value
of the installment.
If a Performance Goal is not attained for an
Installment Period under either this Section or
under Section 5(e)(ii)B, the shares awarded with
respect to that Installment Period shall remain
held in custody as provided in Section 5(c) until
the end of a succeeding Installment Period, and
this Performance Goal for the former Installment
Period or Periods as well as for the latter
Installment Period shall be attained if 1% of the
average of the Net Incomes for such Installment
Periods exceeds the Fair Market Value of any one
installment. Notwithstanding the foregoing, this
Performance Goal for any Installment Period shall
be attained if 1% of the average of the Net
Incomes with respect to the combined first
Installment Period and all subsequent Installment
8
<PAGE>
Periods exceeds the Fair Market Value of any one
installment.
"Fair Market Value" of a share of Common
Stock means the mean between the highest and the
lowest sales prices thereof on the date of grant,
as reported in The Wall Street Journal, New York
Stock Exchange Transactions--Composite
Transactions, or as reported in any successor
quotation system adopted prospectively for this
purpose by the Committee.
"Installment Period" means the Restriction
Period with respect to each installment of the
Award as provided in Section 5(e)(ii).
"Net Income" means the amount reported by the
Employer as consolidated income (after taxes)
before extraordinary items and the cumulative
effect of accounting changes, adjusted, however,
by adding any amount which has been expensed
(after taxes) for the Award under this Agreement
in computing such Net Income, all as determined in
9
<PAGE>
accordance with generally accepted accounting
principles and as appearing in the Employer's
consolidated financial statements for the year as
audited by the Employer's independent accountants.
(B) This Performance Goal for each
installment shall be attained if the Employer's
return on equity ("Return on Equity") for the
applicable Installment Period was equal to or
greater than 15%.
If a Performance Goal is not attained for an
Installment Period under either this Section or
under Section 5(e)(ii)(A), the shares awarded with
respect to that Installment Period shall remain
held in custody as provided in Section 5(c) until
the end of a succeeding Installment Period, and
this Performance Goal for the former Installment
Period shall be attained if the Employer's Return
on Equity for the combined former and any later
Installment Period or Periods was equal to or
10
<PAGE>
greater than 15%. Notwithstanding the foregoing,
this Performance Goal for any Installment Period
shall be attained if the Employer's Average Return
on Equity including the first Installment Period
and all subsequent Installment Periods was equal
to or greater than 15%. For this purpose, Average
Return on Equity shall be determined by dividing
the average of the Net Incomes for such
installment periods by the Average Total
Shareholder Equity for such periods.
"Average Total Shareholder Equity" for any
period means the arithmetic average of the amounts
of Total Shareholder Equity as at the beginning
and the end of such period.
"Installment Period" means the Restriction
Period with respect to each installment of the
Award as provided in Section 5(e)(i).
"Net Income" has the same definition as in
Section 5(e)(ii)(A) above.
11
<PAGE>
"Return on Equity" means the amount obtained
by dividing Net Income by the Average Total
Shareholder Equity.
"Total Shareholder Equity" means the amount
reported in the consolidated balance sheet by the
Employer as total shareholder equity, determined
in accordance with generally accepted accounting
principles and as appearing in the Employer's
Annual Report for the year, adjusted for the
extraordinary or non-recurring items described
with respect to Net Income, and any amount which
has been expensed (after tax) for the award under
this Agreement in computing such Net Income.
(iii) Except as provided in Section 5(e)(i), the Employee shall
have with respect to the Restricted Stock all of the rights of a
stockholder of the Company, including the right to vote the shares and
receive dividends and other distributions, provided that
distributions in the form of stock shall be subject to the same
restrictions as the underlying Restricted Stock. Certificates for shares of
each installment of
12
<PAGE>
Restricted Stock shall be delivered to the Employee promptly after, and
only after, the Restriction Period for such shares shall expire and the
Performance Goal shall have been attained without any forfeiture having
occurred with respect to such shares.
(iv) In the event of either the death of the Employee or a termination
of his employment by either the Employer or Employee as a result of
disability of the Employee on a date (the "early termination date") prior
to December 31, 2001, all restrictions on the Award shall thereupon
terminate and the Award shall no longer be subject to the attainment of any
Performance Goal with respect to that number of shares of the Restricted
Stock which, together with the number of shares of Restricted Stock the
restrictions on which shall have lapsed prior to the early termination
date, shall bear the same proportion to the total number of shares of
Restricted Stock 250,000 as the number of full months which shall have
elapsed from the date of this agreement to the early termination date shall
bear to the total number of months (60) of the executive period.
13
<PAGE>
(v) Upon termination of employment of the Employee for any reason
during the Restriction Period or before the applicable Performance Goals
are satisfied, subject to the provisions of Section 5 (e)(iv), or in the
event that the Employee fails promptly to pay or make satisfactory
arrangements as to the withholding taxes as provided in Section 5 (f), all
shares still subject to restriction shall be forfeited by the Employee and
will be deemed to be reacquired by the Employer.
(vi) The Employee may, at any time prior to the expiration of the
Restriction Period, waive all rights with respect to all or some of the
shares of Restricted Stock by delivering to the Employer a written notice
of such waiver.
(vii) Any attempt to dispose of Restricted Stock in a manner contrary
to the restrictions shall be ineffective.
(viii) Upon any "change in control" of the Employer, as that term is
defined in Section 1 of the Executive Severance Agreement between the
Employer and
14
<PAGE>
the Employee dated as of February 16, 1989 ("ESA"), all restrictions in
effect with respect to the any remaining installments of the Award shall
thereupon lapse and have no further force or effect, and the Award shall no
longer be subject to the attainment of any Performance Goal.
f) The Employee shall, no later than the latter of the date as
of which the restrictions would otherwise lapse or the Performance Goal is
attained with respect to any installment of Restricted Stock referred to
in Section 5 (e), or at any earlier date, as determined by the Employer,
on which the Employee is subject to a tax as a result of the Award, pay
to the Employer, or make arrangements satisfactory to the Employer,
regarding payment of any Federal, state or local taxes of any kind
required by law to be withheld with respect to the stock subject to such
Award, and the Employer and its subsidiaries shall, to the extent permitted by
law, have the right to deduct such amount from any payment of any kind
otherwise due to the Employee.
g) In the event that the outstanding shares of Common Stock shall
be changed into or exchanged for a
15
<PAGE>
different number or kind of shares of stock, securities or property of the
Employer or of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, stock dividend, split-up, combination of
shares, or otherwise), there shall be substituted for each share of Common Stock
then subject to the Award the number and kind of shares of stock, securities or
property into which such outstanding shares of Common Stock shall be so changed
or for which such shares shall be so exchanged. The Board of Directors of the
Employer, in the event of any such change or exchange, shall have the power and
authority to make any equitable adjustments with respect to the Award as it
deems necessary or advisable to enable the Employee to receive the full intended
benefit of the Award. In the event of any such change or exchange, any stock,
securities or other property which the employee is entitled to receive by reason
of his ownership of shares of Restricted Stock shall also be subject to the same
restrictions and performance goals as such Restricted Stock, and shall bear an
appropriate legend.
h) Neither this Section 5 nor any action taken thereunder shall be
construed as giving the Employee any right to be retained in the employ of the
Employer or
16
<PAGE>
any of its subsidiaries or as qualifying in any way the right of the Employer or
the Employee to terminate the employment of the Employee at any time, with or
without cause, as provided in Section 1 of this Agreement.
i) Income realized as a result of an Award of Restricted
Stock shall not be included in the Employee's compensation for the purpose
of the ESA or any benefit plan in which the Employee may be enrolled or for
which the Employee may become eligible unless otherwise specifically
provided for in such plan.
6. All notices hereunder shall be in writing and delivered or
mailed by registered mail, return receipt requested, to the following
addresses: to the Employer at its office at 521 West 57th Street, New
York, N.Y. 10019, and to the Employee at 118 Delafield Island Road,
Darien, Connecticut 06820, or to such other address as the Employer
or Employee may hereafter designate in writing for the purpose.
7. This Agreement shall not be assignable by the Employer
without the written consent of the Employee, except that if the Employer
shall merge or consolidate with or
17
<PAGE>
into, or transfer substantially all of its assets, including good will, to
another corporation or other form of business organization, this Agreement shall
bind and run to the benefit of the successor of the Employer resulting from such
merger, consolidation or transfer. Neither the Employee nor any person
designated by him may assign, pledge or encumber his or her interest in this
Agreement or any part hereof without the Employer's written consent, this
agreement being personal to the Employee and the beneficiaries designated by
him.
8. This Agreement supercedes the Prior Agreement, which shall
have no further force or effect with respect to the employment of the
Employee by the Employer as an executive or with respect to his services and
compensation as a consultant, after the date of this Agreement.
9. This Agreement may not be modified except by a writing signed
by both parties hereto. This Agreement shall be construed under and be
governed by the laws of the State of New York.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereto
and to a duplicate counterpart hereof set their signatures
as of the day and year first above written.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By: __________________________________
THOMAS H. HOPPEL
Vice President and
Chief Financial Officer
Attest:
_________________________________
STEPHEN A. BLOCK,
Vice President and Secretary
____________________________________
EUGENE P. GRISANTI
[SEAL]
EPGAGMT3
AGMT
19
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
-1-
<PAGE>
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-
-2-
<PAGE>
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
-3-
<PAGE>
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.
-----------------------------------------
Executive
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By_______________________________________
Attest:______________________________
(Seal)
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
EXECUTIVE DEATH BENEFIT PLAN
Effective July 1, 1990
<PAGE>
ARTICLE I
PURPOSE OF THE PLAN
1.01 The purpose of the Plan is to assist the Company in attracting and
retaining qualified executive and creative employees and to provide eligible
employees with increased death benefits during employment with the Company
and/or after retirement.
ARTICLE II
DEFINITIONS
2.01 "Annual Base Salary" shall mean the basic annual rate of a
Participant's compensation (before making any reductions pursuant to an
effective Cash or Deferred Wage and Salary Conversion Agreement under the
International Flavors & Fragrances Inc. Retirement Investment Fund Plan), in
effect for him or her on the first day of the Plan Year, but excluding bonuses,
commissions and all other forms of compensation or benefits including additional
compensation from this Plan and any amount contributed for him or her by the
Company to any public or private employee benefit plan.
2.02 "Basic Insurance Plan" shall mean the basic group term life insurance
plan for employees and retirees maintained by the Company at its expense to
provide noncontributory life insurance coverage based on annual earnings (as
that term is defined in the Basic Insurance Plan), as such plan may be amended,
modified or replaced from time to time.
2.03 "Beneficiary" shall mean the individual or entity designated by the
Participant to receive the death benefit payable under the Plan upon the
Participant's death. If no such designation is made, or if the designated
individual predeceases the Participant or the entity no longer exists, then the
Beneficiary shall be the Participant's estate.
2.04 "Company" shall mean International Flavors & Fragrances Inc.
2.05 "Effective Date" shall mean July 1, 1990
2.06 "Eligible Employee" shall mean an individual who is employed by the
Company or one of its subsidiaries on or after the Effective Date and who, (a)
is a participant in either the Company's Management Incentive Compensation Plan
("MICP") or Special Executive Bonus Plan ("SEBP"), (b) is a participant in the
Basic Insurance Plan, (c) has not yet attained the age of 70
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and (d) has submitted to the Insurer a properly completed application for life
insurance under this Plan.
2.07 "Entrance Date" shall mean that date on which an Eligible Employee
first becomes a Participant. The first Entrance Date, as regards any Eligible
Employee, shall be the later of the Effective Date or the date of acceptance by
the Insurer of such Eligible Employee's application for life insurance under
this Plan. Beginning with the year 1991, subsequent Entrance Dates as regards
any additional Eligible Employee(s), shall be the February 1 coinciding with or
following the date of acceptance by the Insurer of their application for life
insurance under this Plan.
2.08 "Insurer" shall mean that independent company from time to time
issuing to the Company written split-dollar life insurance policies on the lives
of Participants in accordance with the terms of the Plan.
2.09 "Participant" shall mean each Eligible Employee during his or her
employment by the Company or one of its subsidiaries on and after the Entrance
Date, who has not attained the age of 70 and who is accepted by the Insurer as
insurable for life insurance.
2.10 "Plan" shall mean this Executive Death Benefit Plan.
2.11 "Plan Committee" shall mean the committee appointed by the Chief
Executive Officer of the Company to administer the Plan.
2.12 "Retired Participant" shall mean each Participant or Senior
Participant who leaves the employ of the Company or one of its subsidiaries at a
time when he or she is eligible to receive an immediate Early, Normal, or
Deferred Pension, or, upon attaining age 65, a Disability Pension from the
Company's qualified pension plan.
2.13 "Senior Participant" shall mean each Participant, during his or her
employment by the Company or one of its subsidiaries, who has attained the age
of 70.
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<PAGE>
ARTICLE III
BENEFITS TO PARTICIPANTS
3.01 The death benefit payable to each Participant's beneficiary under the
Basic Insurance Plan shall be reduced to $50,000 during the period prior to
termination of employment with the Company and to $12,500 upon becoming a
Retired Participant. The Company may require any Eligible Employee, as a
condition of becoming a Participant, to deliver an instrument signed by him or
her waiving benefits under the Basic Insurance Plan in excess of $50,000 as long
as the Eligible Employee shall be a Participant or Senior Participant in this
Plan. No such waiver and no provision of this Plan shall adversely affect such
Participant's right to be reinstated in the Basic Insurance Plan, upon the
termination of this Plan, if such other plan shall then be in effect.
3.02 The Company shall purchase and have all ownership rights (except as
otherwise provided under Section 3.04 of this Plan) to a split dollar insurance
policy on the life of each Participant. Such policy shall provide a death
benefit equal to the excess of twice the Participant's Annual Base Salary on the
first day of the Plan Year in which death shall occur over the death benefit
provided by the Basic Insurance Plan. Upon the death of a Participant, death
benefit under such policy shall be paid by the Insurer to the Participant's
Beneficiary designated as provided in Section 3.04 of this Plan. Upon a
Participant's attaining the status of a Senior Participant or Retired
Participant, whichever shall first occur, his or her Beneficiary designation(s)
and/or any Beneficiary designations made by his or her assignee under Section
3.04 of this Plan shall lapse, and upon the Retired or Senior Participant's
death, the entire death benefit under such policy shall be paid by the Insurer
to the Company.
3.03 All premiums on each policy described in 3.02 above shall be paid by
the Company for the respective accounts of all Participants. The imputed income
to each Participant shall be determined in accordance with Internal Revenue
Service Ruling 66-110 (1966-1 CBl2), or applicable Federal tax laws, regulations
or rulings which may be subsequently published relating to split dollar life
insurance programs. The Company will record this portion of the premium as
additional taxable compensation to each Participant.
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<PAGE>
3.04 Each Participant or his or her assignee shall have the right to
designate the Beneficiary(ies) of the death benefit under the policy on his or
her life described in Section 3.02 by a signed writing delivered to the Plan
Committee and the right during the Participant's employment with the Company or
any subsidiary to change the Beneficiary designation at any time by a similar
writing. Notwithstanding the foregoing, a Participant may, during the
Participant's employment with the Company, irrevocably assign his or her right
to designate and change Beneficiary(ies) under the policy by a signed writing
delivered to the Plan Committee prior to the Participant's death.
3.05 All benefits to a Participant, his or her assignee or Beneficiary(ies)
under this Article III shall cease upon the earlier of (a) the termination of
his or her employment with the Company or any subsidiary for any reason other
than death or (b) the Participant's becoming a Senior Participant. If a
Participant terminates his or her employment with the Company or any subsidiary
prior to age 55, the Company shall use its best efforts to have the Insurer
offer to such Participant the opportunity to purchase all ownership rights in
the insurance policy on his or her life at its cash surrender value.
ARTICLE IV
BENEFITS TO RETIRED AND SENIOR PARTICIPANTS
4.01 Within 30 days after receipt by the Company of a signed written notice
of intent to retire from a Participant who will qualify upon the indicated
retirement date as a Retired Participant under the provisions of Section 2.12 of
this Plan, and, if earlier, at least 60 days prior to a Participant's attaining
age 70, the Company shall execute and deliver to such Participant a supplemental
death benefit agreement containing the Company's written promise, effective upon
the Participant's attaining the status of Retired Participant or Senior
Participant, as the case may be, to pay to the Beneficiaries of the Participant,
upon the Participant's death, a death benefit in an amount equal to that
provided in Section 4.02 of this Article IV, which agreement, upon execution by
such Participant and return to the Company within 15 days after its receipt
shall be binding upon the Company and the Participant. Whether or not
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<PAGE>
such agreement is executed and returned to the Company, upon attaining the
status of Retired Participant or Senior Participant, such Retired or Senior
Participant and his or her assignee or Beneficiary(ies) shall have no rights in
or under the split dollar insurance policy on his or her life, such persons'
rights under this Plan being limited to those set forth in said supplemental
death benefit agreement if executed and returned. The Company's obligation to
make payments under such supplemental death benefit agreements may be delegated,
irrevocably or otherwise, to a third party who may be the Insurer.
4.02(a) The amount of the death benefit provided under Section 4~0l shall
be a multiple of the Retired Participant's or Senior Participant's Annual Base
Salary on the first day of the Plan Year prior to his or her attaining the
status of Retired Participant or Senior Participant, whichever first occurs. The
resultant amount shall be reduced by $12,500 in the case of a Retired
Participant, and by $50,000 in the case of a Senior Participant while in Senior
Participant status.
If immediately prior to attaining the status of Retired Participant or Senior
Participant, the Participant was a participant in the Company's MICP, such
multiple shall be two; otherwise the multiple shall be one. In no event,
however, shall the aggregate death benefit payable to the Beneficiary(ies) of a
Senior Participant (including the portion payable from the Basic Insurance Plan)
be less than $135,000 if death occurs while he or she is in the status of
Senior Participant.
4.02(b) The amount of the death benefit payable under this plan to the
Beneficiary of a Retired Participant who did not have twenty (20) or more years
of employment with the Company and any of its subsidiaries at the date of his or
her retirement shall be reduced at the rate of 5% for each year or fraction
thereof that such years of employment were less than twenty (20). The maximum
reduction under this sub-section shall be 50%. No reduction shall be made under
this sub-section in the benefit paid under the Basic Insurance Plan.
4.03 Each Retired Participant and each Senior Participant shall have the
right to designate the Beneficiary(ies) of the death benefit under the
supplemental death benefit agreement described in Section 4.01 by a signed
writing delivered to the Plan Committee and the right during the Retired
Participants or Senior Participant's lifetime to change the Beneficiary
designation at any time by a similar writing.
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<PAGE>
ARTICLE V
ADMINISTRATION
5.01 The Plan Committee shall be the fiduciary and, as such, shall have
full responsibility and authority to interpret, control and administer the Plan
and agreements entered into with Participants pursuant to the Plan, including
the power to amend the Plan as provided in Section 6.02 hereof, the power to
promulgate rules of Plan administration, the power to investigate and settle any
disputes as to rights or benefits arising under the Plan and such agreements,
the power to appoint agents, accountants and consultants, the power to delegate
the Committee's duties, the power to issue instructions to the Insurer, and the
power to make such other decisions or take such other actions as the Plan
Committee, in its sole discretion, deems necessary or advisable to aid in the
proper administration of the Plan. Actions and determinations by the Plan
Committee shall be final, binding and conclusive, subject to the review
procedure in Section 5.03 of this Plan, for all purposes of this Plan, unless
clearly contradictory to law or an express provision hereof.
5.02 Without limitation, the Company shall have the power and authority to
transfer ownership of life insurance policies to terminating Participants, as
provided in Section 3.05, or to a trust subject to the claims of the Company's
general creditors and to execute and deliver written agreements binding the
Company to pay death benefits as provided in Section 4.01.
5.03 Any Participant, Beneficiary or other person (hereafter called
"Claimant") claiming any benefit under this Plan may submit a written claim to
the Plan Committee specifying the particular benefit claimed. If any benefit
claimed under this Plan is denied in whole or in part, the Plan Committee shall
give written notice of the denial to the Claimant within a reasonable period of
time following receipt of the claim by the Plan Committee. Such written notice
to the Claimant shall set forth the specific reason(s) for denial of the benefit
claimed in a manner calculated to be understood by the Claimant. In addition,
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<PAGE>
the written notice shall specifically refer to the pertinent provisions of the
Plan or other document on which the denial is based. If additional material or
information is necessary for the Claimant to perfect the claim, then a
description of such material or information and an explanation of any such
material or information as is necessary shall be set forth in the written
notice.
The Claimant may then, within 60 days following receipt of the written
notice of denial, file with the Plan Committee any additional evidence bearing
on his or her claim and a written request for a review of the denial of the
benefit. As part of the review procedure, the Claimant or his or her duly
authorized representative may review pertinent documents. Within 60 days
following receipt of a request for review, unless special circumstances require
a further extention of time but in no event later than 120 days after a receipt
of a request for review, the Plan Committee shall conduct a full and fair review
of the initial decision denying the benefit and mail to the Claimant is written
in a manner calculated to be understood by the Claimant as well as specific
references to the pertinent provisions of the Plan or other document on which
the decision is based.
If the benefit or claim under review arises under a life insurance policy issued
by the Insurer, the Plan Committee shall, as part of the review, obtain from the
Insurer, a determination of the reason or reasons for the denial of the benefit
or claim under the relevant insurance policy based upon all evidence available
to the Plan Committee and the Insurer.
ARTICLE VI
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
6.01 The Board of Directors of the Company may from time to time amend,
suspend or terminate the Plan, in whole or in part.
6.02 The Plan Committee also may from time to time amend the Plan as may be
needed (a) to comply with applicable tax or welfare benefit plan laws,
regulations or rulings related to split dollar life insurance programs or
otherwise or (b) to resolve ambiguities in the Plan or related documents, but no
such amendment by the Plan Committee shall alter, expand or contradict the
intent of the authorizing resolutions adopted by the Company's Board of
Directors on March 13, 1990.
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<PAGE>
6.03 No amendment, suspension or termination of the Plan shall materially
adversely affect (a) the payment of a death benefit already due under the Plan
as the result of the death of a Participant prior to the date of adoption of
such amendment, suspension or termination, or (b) the rights of any Retired
Participant or Senior Participant or his or her Beneficiary(ies) under a
supplemental death benefit agreement entered into prior to the date of adoption
of such amendment, suspension or termination of the Plan.
ARTICLE VII
FUNDING
7.01 No promise of payment of benefits by the Company under this Plan shall
be secured by any specific assets of the Company, nor shall any assets of the
Company be designated as attributable or allocated to the satisfaction of such
promise, except that the Company undertakes to purchase a split dollar insurance
policy on the life of each Participant as described in 3.02, subject to
acceptance by the Insurer. Benefit payments by the Company shall be made from
the Company's general assets.
ARTICLE VIII
GENERAL PROVISIONS
8.01 No benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, except by will or the laws of descent and distribution and, except as
provided in Section 3.04 of this Plan, any attempt thereat shall be void. No
such benefit shall, prior to receipt thereof, be in any manner liable for or
subject to the debts, contracts, liabilities, engagements or torts of any
Participant or his or her Beneficiaries.
8.02 This Plan shall inure to the benefit of, and be binding upon, the
Company and each Participant, and upon the successors and assigns of the Company
and of each Participant.
8.03 The Company or the Insurer shall deduct from the amount of any
payments hereunder all taxes required to be withheld by applicable laws.
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<PAGE>
8.04 This Plan shall be governed by, and construed in accordance with, the
laws of the State of New York.
8.05 The Insurer selected by the Plan Committee shall be a reputable
insurance company in good standing and authorized to issue split dollar life
insurance policies under the laws of the State of New York, but the Company does
not guarantee the payment or performance by the Insurer of the Insurer's
obligations under any life insurance policies issued by it.
8.06 Except for the first "short" Plan Year beginning July 1, 1990 and
ending January 31, 1991, each Plan Year shall begin on February 1 of one
calendar year end on January 31 of the succeeding calendar year.
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
SUPPLEMENTAL RETIREMENT PLAN (S.R.P.)
The accrual and payment of benefits as calculated under the Company's
Qualified Pension Plan may be limited by present and future government rules
covering qualified plans. A non-qualified Supplemental Retirement Plan is hereby
established to accrue and pay that part of the pension benefits that, because of
governmentally imposed limitations, cannot be accrued or paid by the qualified
plan.
This Plan shall be unfunded and shall be administered by a Supplemental
Pension Committee, the members of which shall be the same individuals as those
comprising the Qualified Plan's Pension Committee.
The Plan Year shall be the same as that of the Company's Qualified Pension
Plan.
Anyone who is a Participant in the Company's Qualified Pension Plan and for
whom benefits calculated under this Plan would exceed benefits under the
Qualified Pension Plan is also a Participant in this Plan.
For purposes of this Supplemental Retirement Plan, Compensation and Rate of
Compensation are defined as follows:
Compensation or Rate of Compensation of any Participant shall mean the
sum of amounts determined in paragraph (a) and (b) below:
(a) The basic rate of monthly compensation (including any
reductions made pursuant to an effective cash or deferred wage and
salary conversion agreement under Section 401(k) of the Internal
Revenue Code), in effect for him on the Compensation Date (as defined
in the Qualified Pension Plan), and
<PAGE>
(b) One-twelfth of the bonus (if any) awarded to him with respect
to the calendar year immediately preceding the above Compensation Date
irrespective of whether payment of such bonus was made in that
calendar year or deferred to a subsequent calendar year. Compensation,
as defined, shall exclude compensation for overtime service, shift
differential, commissions and all other forms of fringe compensation
or benefits and any amount contributed for him by the Employer to any
public or private employee benefit plan including this Plan other than
contributions corresponding to reductions referred to in paragraph (a)
above.
Calculation of benefits under this Plan shall be made in the same manner as
provided in the Company's Qualified Pension Plan but using the above definition
of Compensation. Amounts of benefits so calculated shall not be subject to
limitations imposed by Governmental enactments, rules or regulations concerning
qualified benefit plans, including those limitations embodied in the Qualified
Pension Plan under "Maximum Pensions".
Benefits accrued and payable from this Plan shall be the excess, if any, of
benefits calculated as described above over benefits payable under the Company's
Qualified Pension Plan and shall be payable in the same form and manner as the
Participants' benefits under such plan.
Amounts payable under this Plan shall not be assignable or subject to
attachment or levy of any kind.
The Company may terminate this Plan at any time, whereupon the rights of
participants to their benefits accrued to the date of such termination shall be
nonforfeitable. The Company may amend this Plan at any time but no amendment
shall cause a reduction in the amounts theretofore credited to any participant.
The effective date of this Plan shall be January 1, 1987.
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INTERNATIONAL FLAVORS & FRAGRANCES INC.
SUPPLEMENTAL RETIREMENT INVESTMENT PLAN ("SRIP")
The accrual and payment of benefits under the Company's Retirement
Investment Fund Plan ("RIFP") may be limited by present and future government
rules covering qualified plans. A non-qualified Supplemental Retirement
Investment Plan ("SRIP") is hereby established to accrue each year and pay
upon retirement or other termination of employment that part of the RIFP
benefits that, because of governmentally imposed limitations, cannot be accrued
or paid by the qualified plan.
This Plan shall be unfunded and shall be administered by a SRIP Committee
("the Committee"), the members of which shall be the same individuals as those
comprising the RIFP Administrative Committee.
The SRIP Plan Year shall be the same as that of the RIFP.
Any employee who is a Participant in the Company's RIFP and for whom
benefits calculated under this Plan would exceed benefits calculated under the
RIFP is also a Participant in this Plan.
For purposes of this Plan, "Compensation or Rate or Compensation" is
defined as follows:
"'Compensation or Rate of Compensation' of any Participant shall mean the
basic rate of monthly compensation from the Company in effect for him on
the Compensation Date (as defined in the RIFP), including one-twelfth
-1-
<PAGE>
of any earnings deferred by him in respect of the Plan Year pursant to a
then effective cash or deferred wage and salary conversion agreement
("CODA") under Section 401(k) of the Internal Revenue Code, but excluding
compensation for overtime service, shift differential, bonuses, commissions
and all other forms of fringe compensation or benefits and any amount
contributed for him by the Company to any public or private employee
benefit plan, including this Plan, other than contributions corresponding
to CODA reductions referred to above."
Amounts of benefits and rate of compensation calculated for this Plan shall
not be subject to limitations imposed by governmental enactments, rules or
regulations concerning qualified benefit plans, including those limitations
embodied in the RIFP under the "Compensation or Rate of Compensation" and
"Maximum Additions" sections.
The calculation of benefits under this Plan for any Plan Year for any
Participant shall be performed as follows:
First, the percentage of total "Compensation" (calculated under the
provisions of RIFP then in effect) of all RIFP Participants for such year
represented by the Company's total contribution to the RIFP for such year
shall be determined to the third decimal place. Such percentage shall then
be applied to the "Compensation" (calculated under the provisions of this
Plan) for such Plan year of such Participant in this Plan to determine his
-2-
<PAGE>
total allocation. Benefits accrued each Plan Year under this Plan for such
Participant and allocated to his account shall be the excess, if any, of
the allocation calculated as described above for this Plan over the
contribution allocable to the Participant for the same Plan Year under the
Company's RIFP and shall be payable in an all-cash, lump sum payment at the
same time as the Participant's benefits under RIFP.
The annual benefit allocated to each Participant's account under this Plan
shall be adjusted commencing the April 1 following the applicable Plan Year,
until actually paid to the Participant, by increasing it by interest at the same
average rate of return as earned from time to time by Retirement Investment Fund
A of the RIFP.
Amounts payable under this Plan shall not be assignable or subject to
attachment or levy of any kind and may not be borrowed against or withdrawn
prior to retirement or other termination of employment.
The Company may terminate this Plan at any time, whereupon the rights of
Participants to their benefits accrued and adjusted as aforesaid to the date of
such termination shall be nonforfeitable. The Company may amend this Plan at any
time by action of the Board of Directors but no amendment shall cause a
reduction in the amounts theretofore credited to any Participant, adjusted as
aforesaid.
The effective date of this Plan shall be November 14, 1989, and benefits
shall be calculated and accrued hereunder for the 1989 Plan Year and subsequent
Plan Years.
-3-
INTERNATIONAL FLAVORS & FRAGRANCES INC.
STOCK OPTION PLAN FOR NON-EMPOYEE DIRECTORS
International Flavors & Fragrances Inc., a New York corporation (herein
called "IFF"), hereby establishes the Stock Option Plan For Non-Employee
Directors (herein called the "Plan") on the following terms and conditions:
1. Purpose: To attract and retain the services of qualified independent
directors of IFF who are not employees of IFF and provide additional incentive
for such directors to work for the best interests of IFF and its shareholders.
2. Method of Adoption: By the approval of the Board of Directors of IFF
(herein called the "Board") and of the holders of a majority of IFF shares.
3. Grant of Options: Options for 1,000 shares each will be automatically
granted to each non-employee director in each year commencing in 1990 and
ending in 1999, and each such grant in each year shall be made on the date of
the Annual Meeting of the Shareholders of IFF in that year.
4. Number of Shares: The Plan shall cover an aggregate of 100,000 shares of
common stock of IFF of the par value of $.12 1/2 each. Either authorized and
unissued shares or treasury shares may be used. If any options expire or
terminate without being exercised in full, including options voluntarily
surrendered for cancellation, the shares subject thereto which have not been
purchased in accordance with the terms of such options shall be available for
the grant of new options under the Plan.
5. Purchase Price: The purchase price per share for any stock optioned at
any time under this Plan shall be the fair market value thereof on the date of
granting the option. Upon exercise of any stock option the director may pay for
the stock covered by the stock option with Common Stock of IFF taken at its fair
market value, providing the director has held such Common Stock for at least six
months or such longer period as determined by the Board.
6. Eligibility: All members of the Board who are not employees of IFF or
one of its subsidiaries (including subsidiaries which may become such after
adoption of this Plan), including any such members elected to the Board by the
shareholders on the date of grant of an option.
7. Directorship at the Time of Exercise of Options: Any stock option may
be exercised by any director only so long as he or she remains a director of
IFF, provided that if a director voluntarily resigns with the consent of the
Board, if he or she becomes totally disabled or retires at or after age 65, he
or she may exercise within 3 months thereafter (but not later than the
expiration date of the option) the option as to the balance, if any, of the
shares which the director was entitled to purchase under the terms of the option
at the date of such resignation, disability or retirement. If a director dies
while a director of IFF, his or her legal representatives, distributees or
legatees, as the case may be, may exercise within 3 months thereafter (but not
later than the expiration date of the option) the option as to the balance, if
any, of the shares which the director was entitled to purchase under the terms
of the option at the date of his or her death or, in case such death occurs
less than 48 months from the date of the grant of the option, that proportion of
the shares covered by the option which the number of days in the period from the
date of grant to the date of the director's death bears to the number 1460, less
any shares previously purchased under the option.
A-1
<PAGE>
8. Individual Options: The maximum number of shares for which stock options
may be granted to any individual under the Plan shall be 10,000.
9. Exercise of Options: Each stock option may be exercised as follows: up
to one-third of the shares covered at any time after 24 months from the date of
grant, up to two-thirds of such shares at any time after 36 months from such
date; and all the shares at any time after 48 months from such date. An option
may not be exercised, if, in the opinion of counsel for the Company, exercise of
the option or delivery of shares pursuant thereto might result in a violation of
any law or regulation of an agency of government or have an adverse effect on
the listing status or qualification of the Company shares on any securities
exchange.
10. Rights of Optionees Before Issuance of Stock Certificates: No optionee
shall have any rights as a stockholder with respect to any shares covered by
any stock option until the date of the issuance of the stock certificate for
such shares following exercise of the options. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
11. Anti-Dilution Provisions: Each option agreement shall contain such
provisions as the Board or the Committee shall deem to be appropriate, including
provisions for appropriate adjustment of the option price and the number of
shares covered, or both, to protect the optionee in the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger or consolidation (except as otherwise stated below) or in the
event of any other change in the corporate capital structure of IFF. In the
event of any such adjustment, the aggregate number and class of shares available
under the Plan and the maximum number of shares as to which options may be
granted to any director may also be appropriately adjusted.
12. Nonassignability: No option shall be assignable or transferable by an
optionee except by will or by the laws of descent and distribution, and an
option shall be exercisable during his or her lifetime only by him or her.
13. Administration: The Plan is intended to be self-operative to the
maximum extent consistent with prudent business practice. Under no circumstances
shall any individual or group of individuals exercise discretion with respect to
designating the recipient of an option, the number of shares of Common Stock
that are subject to an option, the date of grant of an option or the exercise
price or dates of exercise of an option. Otherwise, the Plan shall be
administered by vote of a majority of the Board, or by a majority of the Stock
Option and Compensation Committee of the Board (herein called the
"Committee").
14. Acceleration of Option upon Merger or Consolidation: In the event of
the merger or consolidation of IFF with or into another corporation as a result
of which IFF is not the surviving corporation, then on written notice to the
optionee given by the surviving corporation, the option may be exercised, as to
the entire number of shares subject thereto, on and after the effective date of
such merger or consolidation and the option shall cease and terminate as to any
shares as to which it has not been exercised on a date 180 days after the
effective date of such merger or consolidation or on the expiration date of such
option, whichever is earlier.
15. Agreements: Options issued under the Plan shall be evidenced by
agreements in such form as the Board or the Committee may approve. The terms of
such agreements shall comply with the applicable terms of the Plan contained
herein. The option agreement shall not impose on IFF or its subsidiaries any
obligation to continue any individual as a director for any period.
A-2
<PAGE>
16. Change in Control: In the event of a "change in control" of IFF, all
options previously granted to a director shall become immediately exercisable in
full, and he or she or his or her legal representatives, distributees or
legatees in the event of the death of a director may exercise within 3 months
thereafter (but not later than the respective expiration dates of the options)
any and all outstanding options.
"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 percent 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.
17. Interpretation: In the event of any difference of opinion between an
optionee and IFF concerning the meaning or effect of the Plan, such
difference shall be resolved by the Board.
18. Compliance with Applicable Laws: All options granted under the Plan
shall be non-statutory options not intended to qualify under Section 422A of
the Internal Revenue Code of 1986, as amended. No shares shall be offered under
the Plan and no stock certificate shall be delivered upon exercise of options
until such offering has been registered under the Securities Act of 1933, as
amended, and any other applicable governmental laws and regulations, unless in
the opinion of counsel such offering is exempt from registration under such Act,
and until IFF shall have complied with any applicable provisions of the
Securities Exchange Act of 1934, as amended, and applicable requirements of the
New York Stock Exchange.
19. Amendment and Termination of the Plan: The Board may from time to time,
with respect to any shares at the time not subject to options, suspend or
discontinue the Plan or amend it in any respect, except as provided in paragraph
13 hereof, provided that (a) no revision or amendment shall change the selection
or eligibility of directors to receive options under the Plan, the purchase
price thereunder, or materially increase the benefits accruing to participants
under the Plan, (b) without the approval of the holders of a majority of
outstanding shares of IFF (except as provided in paragraph 11 above), increase
the aggregate numbers of shares available for options, or reduce the option
price below that provided for hereunder.
A-3
lNTERNATI0NAL FLAVORS & FRAGRANCES INC. ("IFF")
DIRECTORS' DEFERRED C0MPENSATI0N PLAN
1. The Corporation has established this plan to give outside directors of
the Corporation the option to defer receipt of the annua1 retainer and meeting
fees payable to them for services as an IFF director.
2. IFF directors are elected for a one-year term of office commencing with
the Annual Meeting of Stockholders held on the second Thursday of May in each
year. IFF pays each director who is not an employee of or consultant to the
Corporation ("outside director") an annual retainer in two equal installments on
November 30 and May 31 of each year, plus a meeting fee for each meeting
attended. Following the adoption of this Plan by the Board but prior to November
1, 1981, any outside director of the Corporation may elect to have payment of
all of his or her semi-annual retainer and meeting fees for services as a
director after November 1, 1981, deferred in one of the ways specified in
paragraph 5 below. Such election, and any subsequent change thereof, shall be
made in writing signed by the director and filed with the Secretary of the
Corporation.
3. An election by a director to defer compensation with respect to any
year of service as a director shall be irrevocable after such year of service
begins. Such election, once made, shall also continue in effect with respect to
the retainer for subsequent years of service as a director unless, before the
Annual Meeting of Stockholders beginning any such year, the director files a new
election or informs the Secretary in writing that he or she wishes to receive
his or her retainer and meeting fees in cash.
<PAGE>
4. Any director's compensation deferred pursuant to the terms of this plan
will be increased, until actually paid to the director, at the interest rates
applicable from time to time with respect to deferred compensation awards under
the Corporation's deferred compensation plans for employees.
5. Payment of a director's deferred compensation shall be made in a lump
sum or in up to ten annual installments commencing as soon as practicable after
the earlier of (i) the beginning of a calendar year specified by the director in
his or her election or (ii) the end of the calendar year in which the
director's service as a director of the Corporation terminates or in which the
director attains 75 years of age (whichever occurs later).
6. Any amounts of deferred compensation remaining unpaid at the time of a
director's death shall be paid in a lump sum to the director's estate.
7. The Corporation shall have no duty to fund any obligations under this
plan. The rights of each participating director shall be limited to those of a
general creditor of the Corporation. Amounts payable under this plan shall not
be assignable or subject to attachment, execution or levy of any kind.
8. The Board shall have power to amend or terminate this p1an at any time,
but no such action shall adversely affect any obligation with respect to
deferred compensation theretofore incurred.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Balance Sheet & Consolidated Statement of Income and is qualified
in its entirety by reference to such financial statements. Amounts in thousands
of dollars, except per share amounts.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 207,255
<SECURITIES> 54,136
<RECEIVABLES> 290,154
<ALLOWANCES> (7,716)
<INVENTORY> 358,152
<CURRENT-ASSETS> 976,906
<PP&E> 853,575
<DEPRECIATION> (400,177)
<TOTAL-ASSETS> 1,463,784
<CURRENT-LIABILITIES> 285,041
<BONDS> 6,977
0
0
<COMMON> 14,470
<OTHER-SE> 1,015,176
<TOTAL-LIABILITY-AND-EQUITY> 1,463,784
<SALES> 382,813
<TOTAL-REVENUES> 382,813
<CGS> 207,293
<TOTAL-COSTS> 287,196
<OTHER-EXPENSES> (4,071)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 559
<INCOME-PRETAX> 99,129
<INCOME-TAX> 35,885
<INCOME-CONTINUING> 63,244
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,244
<EPS-PRIMARY> $0.58
<EPS-DILUTED> $0.58
</TABLE>
