FIRST AMENDMENT TO THE
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
This FIRST AMENDMENT dated September 26, 2000 ("Amendment") to
the SHAREHOLDER PROTECTION RIGHTS AGREEMENT dated as of March 21, 2000 (the
"Agreement"), is made 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). All terms having initial
capital letters used herein not otherwise defined in this Amendment shall
have the meanings set forth in the Agreement, as amended by this Amendment.
WHEREAS, the Company and the Rights Agent entered into the
Agreement for the purposes set forth therein; and
WHEREAS, the Company and the Rights Agent have the authority to
amend the Agreement in any respect prior to the Flip-in Date pursuant to
Section 5.4 of the Agreement;
NOW, THEREFORE, in consideration of $10.00 and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Agreement is hereby amended by replacing the definition
of "Acquiring Person" contained in Section 1.1 in its entirety with the
following:
"'Acquiring Person' shall mean any Person who is a Beneficial
Owner of 15% or more of the outstanding shares of Common Stock; provided,
however, that the term "Acquiring Person" shall not include any Person (i)
who is an Existing Shareholder, including any group that is comprised
solely of Existing Shareholders, until such time hereafter as any such
Existing Shareholder or group of Existing Shareholders, shall become the
Beneficial Owner (other than by means of a stock dividend, stock split,
gift or inheritance or receipt or exercise of, or accrual of any right to
exercise, any stock options or shares of Common Stock granted by the
Company) by purchase of additional shares of Common Stock which additional
shares, in the aggregate, exceed one percent of the outstanding Common
Stock at the time of such acquisition, (ii) who shall become the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock solely as a
result of an acquisition by the Company of shares of Common Stock, until
such time hereafter or thereafter as any of such Persons shall become the
Beneficial Owner (other than by means of a stock dividend or stock split)
of any additional shares of Common Stock, (iii) who becomes the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock but who
acquired Beneficial Ownership of shares of Common Stock without any plan or
intention to seek or affect control of the Company, if such Person promptly
divests, or enters into an agreement satisfactory to the Company, in its
sole discretion, pursuant to which it will divest (without exercising or
retaining any power, including voting power, with respect to such shares),
sufficient shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) so that such Person
ceases to be the Beneficial Owner of 15% or more of the outstanding shares
of Common Stock or (iv) who Beneficially Owns shares of Common Stock
consisting solely of one or more of (A) shares of Common Stock Beneficially
Owned pursuant to the grant or exercise of an option granted to such Person
(an "Option Holder") by the Company in connection with an agreement to
merge with, or acquire, the Company entered into prior to a Flip-in Date,
(B) shares of Common Stock (or securities convertible into, exchangeable
into or exercisable for Common Stock), Beneficially Owned by such Option
Holder or its Affiliates or Associates at the time of grant of such option,
and (C) shares of Common Stock (or securities convertible into,
exchangeable into or exercisable for Common Stock) acquired by Affiliates
or Associates of such Option Holder after the time of such grant which, in
the aggregate, amount to less than 1% of the outstanding shares of Common
Stock. In addition, the Company, any wholly-owned Subsidiary of the Company
and any employee stock ownership or other employee benefit plan of the
Company or a wholly-owned Subsidiary of the Company shall not be an
Acquiring Person."
2. The Agreement is hereby amended by adding a new subsection (c)
to Section 5.1, reading as follows:
"(c) Notwithstanding the provisions of Section 5.1(a) hereof,
if, within 180 days of a public announcement by a third party of an intent
or proposal to engage (without the current and continuing concurrence of
the Board of Directors) in a transaction involving an acquisition of or
business combination with the Company or otherwise to become an Acquiring
Person, there is an election of Directors resulting in a majority of the
Board of Directors being comprised of persons who were not nominated by the
Board of Directors in office immediately prior to such election, then
following the effectiveness of such election for a period of 180 days (the
"Special Period") the Rights, if otherwise then redeemable absent the
provisions of this paragraph (c), shall be redeemable upon either of the
following conditions being satisfied, but not otherwise:
(i) by a vote of a majority of the Directors then in office,
provided that
(A) before such vote, the Board of Directors shall have
implemented the Value Enhancement Procedures (as defined below) and
(B) promptly after such vote, the Company publicly
announces such vote and
(I) the manner in which the Value Enhancement Procedures
were implemented,
(II) any material financial, business, personal or other
benefit or relationship (an "Interest") which each Director and each
Affiliate of such Director (identifying each Director and Affiliate
separately in relation to each such Interest) has in connection with any
suggested, proposed or pending transaction with or involving the Company (a
"Transaction"), or with any other party or Affiliate of any other party to
a Transaction, where such Transaction would or might, or is intended to, be
permitted or facilitated by redemption of the Rights (an "Affected
Transaction"), other than treatment as a shareholder on a pro rata basis
with other shareholders or pursuant to compensation arrangements as a
director or employee of the Company or a subsidiary which have been
previously disclosed by the Company,
(III) the individual vote of each Director on the motion
to redeem the Rights, and
(IV) the statement of any Director who voted for or
against the motion to redeem the Rights and desires to have a statement
included in such announcement, or
(ii) if clause (i) is not applicable, by a vote of a majority
of the Directors then in office, provided that (A) if there is a challenge
to the Directors' action approving redemption and/or any related Affected
Transaction as a breach of the fiduciary duty of care or loyalty, the
Directors, solely for purposes of determining the effectiveness of such
redemption pursuant to this clause (ii), are able to establish the entire
fairness of such redemption and, if applicable, such related Affected
Transaction, and (B) the Company shall have publicly announced the vote of
the Board of Directors approving such redemption and, if applicable, such
related Affected Transaction, which announcement shall set forth the
information prescribed by clauses (i) (B) (II), (III) and (IV) above.
'Value Enhancement Procedures' shall mean:
(1) the selection by the Board of Directors of an independent
financial advisor (the "Independent Advisor") from among financial advisors
which have national standing, have established expertise in advising on
mergers, acquisitions and related matters and have no Interest relating to
an Affected Transaction, and have not during the preceding year provided
services to, been engaged by or been a financing source for any other party
to an Affected Transaction or any Affiliate of any such party or of any
Director (other than the Company and its subsidiaries);
(2) whether or not there is a then-pending Affected
Transaction, the receipt by the Board of Directors from its Independent
Advisor of (a) such advisor's view (expressed in such form and subject to
such qualifications and limitations as the Independent Advisor deems
appropriate) regarding whether redemption of the Rights will serve the best
interests of the Company and its shareholders or (b) such advisor's
statement that it is unable to express such a view, setting forth the
reasons therefor;
(3) if there is a then-pending Affected Transaction,
(A) the establishment and implementation by the Board of
Directors of a process and procedures approved by its Independent
Advisor which the Board of Directors and such advisor conclude would
be most likely to result in the best value reasonably available to
shareholders (regardless of whether such Affected Transaction
involves a "sale of control" or "break-up" of the Company),
(B) the Board of Directors (I) receiving the opinion of its
Independent Advisor, in customary form and content for transactions
of the type involved, that the Affected Transaction is fair to the
Company's shareholders from a financial point of view and (II)
determining, and the Independent Advisor confirming, that it has no
reason to believe that a superior transaction is reasonably available
for the benefit of the Company's shareholders, and
(C) the execution of a definitive transaction agreement and
other definitive documentation necessary to effect the Affected
Transaction."
3. The Agreement is hereby amended by adding at the
end of existing Section 5.4 a new sentence as follows:
"Notwithstanding anything herein to the contrary, this Agreement may not be
supplemented or amended (i) during the Special Period or (ii) to lengthen
the time period during which the Rights may be redeemed at a time when the
Rights are not then redeemable."
4. Except as amended hereby, all of the terms of the Agreement
shall remain and continue in full force and effect and hereby confirmed in
all respects.
5. THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AND APPLICABLE FEDERAL LAW WITHOUT
REGARD TO CHOICE OF LAW RULES.
6. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all the
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the date first above written.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By: /s/ STEPHEN A. BLOCK
--------------------------------------
Stephen A. Block
Senior Vice-President,
General Counsel & Secretary
THE BANK OF NEW YORK, as Rights Agent
By: /s/ JOHN I. SIVERTSEN
--------------------------------------
John I. Sivertsen
Vice-President
