SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2000 Commission file number 1-4858
--------------------------------------------------------------
INTERNATIONAL FLAVORS & FRAGRANCES INC.
(Exact Name of Registrant as specified in its charter)
New York 13-1432060
---------------------------------------- ---------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) identification No.)
521 West 57th Street, New York, N.Y. 10019-2960
---------------------------------------- ---------------------------
(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 9, 2000: 102,820,344
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
3/31/00 12/31/99
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash & Cash Equivalents ...................................... $ 51,063 $ 62,135
Short-term Investments ....................................... 709 836
Trade Receivables ............................................ 308,554 290,118
Allowance For Doubtful Accounts .............................. (10,318) (10,013)
Inventories: Raw Materials .................................. 212,076 229,896
Work in Process ................................ 9,255 7,423
Finished Goods ................................. 165,994 177,950
----------- -----------
Total Inventories .............................. 387,325 415,269
Other Current Assets ......................................... 73,624 77,069
----------- -----------
Total Current Assets ......................................... 810,957 835,414
----------- -----------
Property, Plant & Equipment, At Cost ............................ 947,758 948,920
Accumulated Depreciation ........................................ (430,096) (425,004)
----------- -----------
517,662 523,916
Other Assets .................................................... 28,730 42,165
----------- -----------
Total Assets .................................................... $1,357,349 $1,401,495
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank Loans ................................................... $ 33,000 $ 29,274
Commercial Paper ............................................. 105,172 63,200
Accounts Payable-Trade ....................................... 51,934 71,989
Dividends Payable ............................................ 39,153 39,882
Income Taxes ................................................. 55,720 54,497
Other Current Liabilities .................................... 98,980 110,860
----------- -----------
Total Current Liabilities .................................... 383,959 369,702
----------- -----------
Other Liabilities:
Deferred Income Taxes ........................................ 30,691 32,785
Long-term Debt ............................................... 14,834 3,832
Retirement and Other Liabilities ............................. 137,824 136,679
----------- -----------
Total Other Liabilities ......................................... 183,349 173,296
----------- -----------
Shareholders' Equity:
Common Stock (115,761,840 shares issued) ..................... 14,470 14,470
Capital in Excess of Par Value ............................... 133,215 134,480
Retained Earnings ............................................ 1,216,413 1,211,790
Accumulated Other Comprehensive Income:
Cumulative Translation Adjustment ......................... (72,177) (57,135)
----------- -----------
1,291,921 1,303,605
Treasury Stock, at cost - 12,771,746 shares in '00
and 10,939,915 in '99 ..................................... (501,880) (445,108)
----------- -----------
Total Shareholders' Equity ................................... 790,041 858,497
----------- -----------
Total Liabilities and Shareholders' Equity ...................... $1,357,349 $1,401,495
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
INTERNATIONAL FLAVORS & FRAGRANCES INC. 2
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
(Unaudited)
3 Months Ended 3/31
-------------------------
2000 1999
--------- ----------
Net Sales .......................................... $ 369,912 $ 367,765
--------- ----------
Cost of Goods Sold ................................. 201,085 206,469
Research and Development Expenses .................. 26,812 25,925
Selling and Administrative Expenses ................ 65,341 63,580
Nonrecurring Charges ............................... 9,354 --
Interest Expense ................................... 2,137 991
Other (Income) Expense, Net ........................ (329) (2,554)
--------- ----------
304,400 294,411
--------- ----------
Income Before Taxes on Income ...................... 65,512 73,354
Taxes on Income .................................... 21,736 24,574
--------- ----------
Net Income ......................................... 43,776 48,780
Other Comprehensive Income:
Foreign Currency Translation Adjustments ........ (15,042) (30,697)
--------- ----------
Comprehensive Income ............................... $ 28,734 $ 18,083
========= ==========
Net Income Per Share - Basic ....................... $0.42 $0.46
Net Income Per Share - Diluted ..................... $0.42 $0.46
Average Number of Shares Outstanding - Basic ....... 104,264 105,907
Average Number of Shares Outstanding - Diluted ..... 104,285 106,128
Dividends Paid Per Share ........................... $0.38 $0.38
See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL FLAVORS & FRAGRANCES INC. 3
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
3 Months Ended 3/31
--------------------------
2000 1999
--------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income ....................................................... $ 43,776 $ 48,780
Adjustments to Reconcile to Net Cash
Provided by Operations:
Depreciation ............................................... 14,500 12,658
Deferred Income Taxes ...................................... (2,116) 7,456
Changes in Assets and Liabilities:
Current Receivables ..................................... (22,400) (26,707)
Inventories ............................................. 20,713 7,320
Current Payables ........................................ (26,644) (8,049)
Other, Net .............................................. 15,626 5,215
--------- ----------
Net Cash Provided by Operations .................................. 43,455 46,673
--------- ----------
Cash Flows From Investing Activities:
Proceeds From Sales/Maturities of Short-term Investments ......... 127 221
Purchases of Short-term Investments .............................. -- (392)
Additions to Property, Plant & Equipment,
Net of Minor Disposals ......................................... (14,460) (34,445)
--------- ----------
Net Cash Used in Investing Activities ............................ (14,333) (34,616)
--------- ----------
Cash Flows From Financing Activities:
Cash Dividends Paid to Shareholders .............................. (39,882) (40,301)
Increase in Bank Loans ........................................... 5,060 21,243
Proceeds from Issuance of Commercial Paper ....................... 41,972 --
Increase in Long-Term Debt ....................................... 11,374 --
Decrease in Long-Term Debt ....................................... (235) (214)
Proceeds From Issuance of Stock Under Stock Option Plans ......... 1,116 646
Purchase of Treasury Stock ....................................... (59,174) (847)
--------- ----------
Net Cash Used in Financing Activities ............................ (39,769) (19,473)
--------- ----------
Effect of Exchange Rate Changes on Cash and Cash Equivalents ..... (425) (5,699)
--------- ----------
Net Change in Cash and Cash Equivalents .......................... (11,072) (13,115)
Cash and Cash Equivalents at Beginning of Year ................... 62,135 114,960
--------- ----------
Cash and Cash Equivalents at End of Period ....................... $ 51,063 $ 101,845
========= ==========
Interest Paid .................................................... $ 2,323 $ 801
Income Taxes Paid ................................................ $ 20,934 $ 19,725
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
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 1999 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.
As described in Note 2 of the Notes to the Consolidated Financial Statements
included in the Company's 1999 Annual Report to Shareholders, in June 1999, the
Company announced a program to streamline the Company's operations worldwide by
improving operating efficiencies and asset utilization, enabling significant
cost savings and enhanced profitability. The program includes the closure of
selected manufacturing, distribution and sales facilities in all geographic
areas in which the Company operates.
In connection with this program, in January 2000, the Company initiated a
voluntary early retirement incentive program for United States-based employees
meeting certain eligibility requirements. The nonrecurring charge of $9,354,000
($6,248,000 after tax) in the first quarter 2000 represents the costs associated
with approximately 70 employees who elected to participate in the early
retirement program. There were no significant non-cash related elements included
in the first quarter charge.
At March 31, 2000, the Company had substantially completed the restructuring
program. Since the program's inception, total nonrecurring and other one-time
pretax charges of approximately $50,300,000 have been recorded ($40,900,000 of
pretax charges were recorded in 1999); non-cash charge amounts approximated
$11,700,000. The Company anticipates annual savings on completion of this
program of approximately $15,000,000; approximately $2,500,000 in savings from
the program were realized in the first quarter of 2000.
Movements in the reserve resulting from nonrecurring charges were as follows:
<TABLE>
<CAPTION>
EMPLOYEE- ASSET -
RELATED RELATED TOTAL
-----------------------------------------------------
<S> <C> <C> <C>
Balance December 31, 1999 ........... $ 9,622,000 $ 1,586,000 $ 11,208,000
Additional Reserves ................. 9,354,000 -- 9,354,000
Utilized in 2000 .................... (1,987,000) (137,000) (2,124,000)
------------ ------------- -------------
Balance March 31, 2000 .............. $ 16,989,000 $ 1,449,000 $ 18,438,000
============ ============= =============
</TABLE>
The balance of the reserve is expected to be utilized in the remainder of 2000
upon final decommissioning and disposal of affected equipment, and as severance
and other benefit obligations to affected employees are satisfied.
<PAGE>
5
The Company's reportable segment information, based on geographic area, for the
first three months of 2000 and 1999 follows. Certain prior year amounts have
been reclassified for comparative purposes.
<TABLE>
<CAPTION>
North Latin Asia-
2000 (Dollars in thousands) America EAME America Pacific Eliminations Consolidated
- -------------------------------------- ------------ ------------ ------------ ------------ ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 114,747 $ 150,067 $55,244 $49,854 $ -- $ 369,912
Transfers between areas 12,377 32,258 312 2,981 (47,928) --
------------ ------------ ------------ ------------ --------------- --------------
Total sales $ 127,124 $ 182,325 $55,556 $52,835 $(47,928) $ 369,912
============ ============ ============ ============ =============== ==============
Operating profit $ 16,627 $ 48,900 $10,595 $10,432 $ (1,264) $ 85,290
============ ============ ============ ============ ===============
Corporate and other unallocated
expenses (8,616)
Nonrecurring charges (9,354)
Interest expense (2,137)
Other income (expense), net 329
--------------
Income before taxes on income $ 65,512
==============
<CAPTION>
North Latin Asia-
1999 (Dollars in thousands) America EAME America Pacific Eliminations Consolidated
- -------------------------------------- ------------ ------------ ------------ ------------ ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated customers $ 118,509 $ 157,504 $48,540 $43,212 $ -- $ 367,765
Transfers between areas 14,105 31,047 148 2,492 (47,792) --
------------ ------------ ------------ ------------ -------------- --------------
Total sales $ 132,614 $ 188,551 $48,688 $45,704 $ (47,792) $ 367,765
============ ============ ============ ============ ============== ==============
Operating profit $ 15,738 $ 47,670 $ 7,202 $ 7,728 $ 1,639 $ 79,977
============ ============ ============ ============ ==============
Corporate and other unallocated
expenses (8,186)
Interest expense (991)
Other income (expense), net 2,554
--------------
Income before taxes on income $ 73,354
==============
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
OPERATIONS
Worldwide net sales for the first quarter of 2000 were $369,912,000, compared to
$367,765,000 in the 1999 first quarter, an increase of 1%. Local currency sales
for the 2000 first quarter increased approximately 5% over the 1999 first
quarter. For the quarter, fragrance sales were strong in all geographic areas,
led by Europe, Africa and the Middle East ("EAME") and Asia-Pacific, with local
currency sales increases of 8% and 14%, respectively; North America fragrance
sales increased 5% while Latin America sales rose 4%. Flavor sales were
strongest in Asia-Pacific, achieving a 10% local currency sales increase, and in
Latin America where sales also increased 10%. North America flavor sales
declined 5% and EAME flavor sales, in local currency, were flat with the prior
year quarter, reflecting the relatively weak conditions among many of the
Company's food customers in these geographic areas.
<PAGE>
6
The percentage relationship of cost of goods sold and other operating expenses
to sales for the first quarter 2000 and 1999 are detailed below.
FIRST QUARTER
---------------
2000 1999
---- ----
Cost of Goods Sold .............................. 54.4% 56.1%
Research and Development Expenses ............... 7.2% 7.0%
Selling and Administrative Expenses ............. 17.7% 17.3%
Cost of goods sold, as a percentage of net sales, decreased from the prior year
primarily due to improved pricing conditions for aroma chemicals and improved
economic and pricing conditions in Latin America, principally Brazil. In 1999,
the impact of the currency devaluation and economic disruption in Brazil
affected the Company's near-term ability to pass on price increases to its
customers in that market.
Research and development expenses are somewhat higher due to increased
activities in this area. Selling and administrative expenses were somewhat
higher in 2000 due to increased depreciation and other costs associated with new
computer systems and equipment, partially offset by elimination of costs
incurred in 1999 in connection with the Company's Y2K program.
Net income for the first quarter of 2000, including the nonrecurring charges
discussed below, totaled $43,776,000 compared to $48,780,000 in the prior year
first quarter. Income for the first quarter ended March 31, 2000, excluding the
one-time charges, was $50,024,000.
As described in Note 2 of the Notes to the Consolidated Financial Statements
included in the Company's 1999 Annual Report to Shareholders, in June 1999, the
Company announced a program to streamline the Company's operations worldwide by
improving operating efficiencies and asset utilization, enabling significant
cost savings and enhanced profitability. The program includes the closure of
selected manufacturing, distribution and sales facilities in all geographic
areas in which the Company operates.
In connection with this program, in January 2000, the Company initiated a
voluntary early retirement incentive program for United States-based employees
meeting certain eligibility requirements. The nonrecurring charge of $9,354,000
($6,248,000 after tax, or approximately $.06 per share) in the first quarter
2000 represents the costs associated with approximately 70 employees who elected
to participate in the early retirement program. There were no significant
non-cash related elements included in the first quarter charge.
At March 31, 2000, the Company had substantially completed the restructuring
program. Since the program's inception, total nonrecurring and other one-time
pretax charges of approximately $50,300,000 have been recorded ($40,900,000 of
pretax charges were recorded in 1999); non-cash charge amounts approximated
$11,700,000. The Company anticipates annual savings on completion of this
program of approximately $15,000,000; approximately $2,500,000 in savings from
the program were realized in the first quarter of 2000.
Movements in the reserve resulting from nonrecurring charges were as follows:
<TABLE>
<CAPTION>
EMPLOYEE- ASSET-
RELATED RELATED TOTAL
-----------------------------------------------------
<S> <C> <C> <C>
Balance December 31, 1999 ............ $ 9,622,000 $ 1,586,000 $11,208,000
Additional Reserves .................. 9,354,000 -- 9,354,000
Utilized in 2000 ..................... (1,987,000) (137,000) (2,124,000)
------------ ------------- -----------
Balance March 31, 2000 ............... $ 16,989,000 $ 1,449,000 $18,438,000
============ ============= ===========
</TABLE>
<PAGE>
7
The balance of the reserve is expected to be utilized in the remainder of 2000
upon final decommissioning and disposal of affected equipment, and as severance
and other benefit obligations to affected employees are satisfied.
The effective tax rate for the first quarter of 2000 was 33.2%, compared to
33.5% for the comparable period in 1999. The lower effective rate reflects the
effects of lower tax rates in various tax jurisdictions in which the Company
operates.
FINANCIAL CONDITION
The financial condition of the Company continued to be strong. Cash, cash
equivalents and short-term investments totaled $51,772,000 at March 31, 2000,
and working capital was $426,998,000 compared to $465,712,000 at December 31,
1999. Gross additions to property, plant and equipment during the first quarter
of 2000 were $17,852,000. Long-term debt (all Japan) increased $11,000,000 in
the first quarter 2000. The new loan is payable in full in 2005 and bears
interest at a rate of 1.74%. Proceeds from the loan were used to repay certain
short-term borrowings and for general corporate purposes.
In January 2000, the Company paid a quarterly cash dividend of $.38 per share to
shareholders. In April 2000, 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 had been in effect since 1996, was
completed in the first quarter of 2000. 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. The Company anticipates that its growth, capital spending
and share repurchase plan will be funded from internal sources and credit
facilities currently in place.
The accumulated comprehensive income component of Shareholders' Equity,
comprised principally of the cumulative translation adjustment, at March 31,
2000, was ($72,177,000) compared to ($57,135,000) at December 31, 1999. 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.
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this Management's Discussion and Analysis which are not historical
facts or information are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, and are subject to risks and
uncertainties that could cause the Company's actual results to differ materially
from those expressed or implied by such forward-looking statements. Risks and
uncertainties with respect to the Company's business include general economic
and business conditions, the price and availability of raw materials, and
political and economic uncertainties, including the fluctuation or devaluation
of currencies in countries in which the Company does business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There are no material changes from the disclosures in Form 10-K filed with the
Securities and Exchange Commission as of December 31, 1999.
<PAGE>
8
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
NUMBER
10 Separation Agreement dated as of March 1, 2000
between Registrant and Eugene P. Grisanti, former
Chairman and President of Registrant.
27 Financial Data Schedule (EDGAR version only).
(b) REPORTS ON FORM 8-K
During the quarter for which this report on Form 10-Q is
filed, Registrant filed a report on Form 8-K, dated March 22,
2000, describing the provisions of a new shareholder rights
protection agreement.
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 15, 2000 By: /s/ DOUGLAS J. WETMORE
-------------------------------
Douglas J. Wetmore,
Vice-President and Chief
Financial Officer
Dated: May 15, 2000 By: /s/ STEPHEN A. BLOCK
-------------------------------
Stephen A. Block,
Senior Vice-President,
General Counsel and Secretary
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (this "Agreement") is entered into as of the 1st
day of March, 2000 between Eugene P. Grisanti ("Mr. Grisanti"), and
International Flavors & Fragrances Inc., a New York corporation (the
"Company").
WITNESSETH:
WHEREAS, Mr. Grisanti was employed by the Company as its President and
Chief Executive Officer, and served as its Chairman of the Board of
Directors (the "Board") pursuant to the terms and conditions of an agreement
dated as of January 1, 1997 between the Company and Mr. Grisanti (the
"Employment Agreement"); and
WHEREAS, on December 14, 1999, Mr. Grisanti retired as Chairman, President
and Chief Executive Officer, although he has remained employed by the Company;
and
WHEREAS, pursuant to a notice letter to Mr. Gisanti from the Company dated
as of February 9, 2000, which was provided under the terms of the Employment
Agreement, the Company has notified Mr. Grisanti that pursuant to Section 1 of
the Employment Agreement, it has terminated the "executive period" as of
February 15, 2000; and
WHEREAS, Mr. Grisanti has agreed, pursuant to the terms of the Employment
Agreement, to serve the Company in a consulting capacity for the period
commencing on March 1, 2000 through February 28, 2010; and
WHEREAS, Mr. Grisanti and the Company now desire to enter into an agreement
concerning the separation of Mr. Grisanti from the Company as hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual promises contained in this
Agreement, Mr. Grisanti and the Company agree as follows;
1. TERMINATION OF EMPLOYMENT RELATIONSHIP; RESIGNATION FROM DIRECTORSHIPS.
The Parties hereto agree that Mr. Grisanti's employment with the Company, and
with all entities controlled directly or indirectly by the Company (the "Company
Group"), has terminated effective as of February 29, 2000. Mr. Grisanti further
agrees that he hereby voluntarily resigns as a director and/or officer in each
Company Group entity in which he
<PAGE>
has served as a director prior to the date of this Agreement; from the Company's
Pension Committee and as a Trustee of the Company's Pension Plan; and from the
Administrative Committee of the Company's Retirement Investment Fund Plan, all
effective as of February 29, 2000. The Employment Agreement is hereby terminated
and cancelled effective as of the effective date of this Agreement, with no
compensation, benefits, damages, obligations or other payments owing to Mr.
Grisanti thereunder (other than as specifically set forth in this Agreement).
2. CONSIDERATION TO MR. GRISANTI. The Company shall make the following
payments and provide the following additional benefits and consideration to Mr.
Grisanti, subject to Section 5 hereof:
(a) COMPENSATION CONTINUATION. Pursuant to Section 1 of the Employment
Agreement, in full payment of his base salary for the period March 1, 2000
through and including February 28, 2001, Mr. Grisanti shall receive a lump sum
payment of $947,200, which Mr. Grisanti acknowledges and agrees is equivalent
to $975,000 payable over one year, discounted at the rate of 6% to reflect its
payment in a lump sum.
(b) BONUS. Mr. Grisanti shall receive the gross amount of $390,000
(representing 40% of Mr. Grisanti's 1999 base salary), which was accrued and
payable under the Company's Management Incentive Compensation Plan (the "MICP")
with respect to the year 1999, which shall be paid in one lump sum as previously
directed by Mr. Grisanti under the terms of the MICP. No Bonus or other
incentive compensation (whether under the MICP or otherwise) is or shall be
awarded to Mr. Grisanti with respect to any period after 1999.
(c) RESTRICTED SHARES. With respect to the 150,000 restricted shares of
common stock of the Company, par value $.12 1/2, granted to Mr. Grisanti by the
Company on January 1, 1997 pursuant to Section 5 of the Employment Agreement as
to which, as of the date of termination of the Employment Agreement the
restrictions had not terminated (it being specifically acknowledged and agreed
by Mr. Grisanti that the "Restricted Period" with respect to the 50,000 share
installment the restrictions on which were to have terminated on February 28,
2000 did not terminate) (the "Restricted Shares"), the restrictions contained in
Section 5 as to 50,000 of such 150,000 Restricted Shares shall be deemed to have
lapsed, and promptly after execution and delivery of this Agreement and the
Schedules attached hereto the Company shall deliver to Mr. Grisanti certificates
representing such shares, such certificates to be without any legends or other
restrictions that, subject to any limitation imposed by law on Mr. Grisanti's
sale or other transfer of such shares, would preclude Mr. Grisanti's immediate
2
<PAGE>
sale or other transfer of such shares. The other 100,000 Restricted Shares shall
be forfeited to, and reacquired by, the Company (and Mr. Grisanti shall take any
action deemed necessary of appropriate by the Company to cause such shares to be
transferred to and reacquired by the Company).
(d) OPTIONS. The parties hereto agree and acknowledge that Mr. Grisanti has
currently outstanding options (the "Options") to purchase a total of 422,100
shares of common stock of the Company pursuant to the terms and conditions of
the Company's 1988 Employee Stock Option Plan, the Company's 1992 Employee Stock
Option Plan, and the Company's 1997 Employee Stock Option Plan (such plans, the
"Plans"), 288,767 of which are currently vested, and 133,333 of which remain
unvested as of the execution of this Agreement. For purposes of the Option
Plans, the Compensation Committee of the Board has determined to treat Mr.
Grisanti as on an authorized "leave of absence" through December 31, 2001 under
the applicable provisions of, and therefore to be deemed an employee of the
Company through such date for purposes of, the Option Plans (but not for any
other purposes, including for purposes of the Employment Contract, the IFF
Pension Plan and any related supplemental plan and all other Company employee or
retiree benefit plans or programs.) The parties hereto acknowledge that the
effect of the foregoing shall be to permit Mr. Grisanti (subject to his
compliance with the terms of this Agreement): (i) to become vested in the
currently unvested Options to purchase 93,333 shares of common stock in
accordance with their schedules (the Options as to the remaining 40,000 shares
shall be immediately forfeited), and (ii) to exercise his vested Options until
three months after the end of Mr. Grisanti's period of leave of absence(i.e.,
until March 31, 2002) at which time all remaining vested but then unexercised
Options shall expire.
(e) PENSION AND OTHER BENEFITS. Mr. Grisanti shall be entitled to the
benefits that he has accrued through February 29, 2000 pursuant to the IFF
Pension Plan (including all related supplemental plans), the IFF Retirement
Income Fund Plan (and all related supplemental plans), the MICP (as to amounts
earned with respect to 1999 and prior years and deferred), and the medical plan
for retired employees. The Company shall continue dental coverage through
February 28, 2010 for Mr. Grisanti and his eligible dependents to the same
extent as benefits are provided to active employees of the Company.
(f) AUTOMOBILES. Promptly after the execution and delivery of this
Agreement, the Company shall transfer to Mr. Grisanti ownership of the 1989
Mercedes Benz 560 SL automobile currently provided to him by the Company (the
"Company Car"). In addition, through December 31, 2000, Mr. Grisanti shall be
entitled to the use of the Lincoln Town Car owned by the Company
3
<PAGE>
and to the services of John McGowan or, in his absence, another Company
employee, as chauffeur. Although Mr. Grisanti shall be entitled to first
preference during such period for use of such car and driver, Mr. Grisanti
understands and acknowledges that such use shall not be exclusive.
(g) INDEMNIFICATION; D&O INSURANCE. Notwithstanding his termination of
employment with the Company, Mr. Grisanti (i) shall continue to be entitled to
indemnification in accordance with the By-laws of the Company in effect at any
time, and (ii) shall remain covered under the Company's Directors' and Officers'
Insurance ("D&O Insurance") policy until December 31, 2007 with respect to acts
occurring prior to February 16, 2000, to the extent that the Company maintains
any D&O Insurance for any of its officers or directors generally until such
date. Nothing in this Agreement shall require the Company to continue to
maintain D&O Insurance with respect to any occurrences or any period.
(h) DEATH BENEFIT. Notwithstanding his termination of employment with the
Company, Mr. Grisanti's beneficiaries shall be entitled to receive the benefits
established pursuant to the Supplemental Death Benefit Agreement between the
Company and Mr. Grisanti dated as of October 24, 1999 and Schedule I thereto
(the "Death Benefit Agreement"). The terms and conditions of the Death Benefit
Agreement are hereby incorporated into this Agreement by reference.
(i) ATTORNEY'S FEES. The Company agrees to pay directly to Joseph E.
Bachelder, Esq., counsel to Mr. Grisanti, upon presentation to the Company of an
invoice therefor, the sum of $50,000 in respect of his fees and out-of-pocket
expenses in respect of his representation of Mr. Grisanti in connection with the
negotiation and execution of this Agreement and all matters associated with Mr.
Grisanti's retirement from the Company and the termination of the Employment
Agreement. All other fees and disbursements of Mr. Bachelder, and all fees and
disbursements of any other counsel or other advisor retained by Mr. Grisanti,
whether in connection with his retirement, the termination of the Employment
Agreement, or any other purpose (except as provided in subsection (g) of this
Section 2 and in Section 7 of this Agreement), shall be Mr. Grisanti's sole
responsibility.
3. CONSULTING RELATIONSHIP.
(a) GENERAL. Pursuant to the provisions of Section 2 of the Employment
Agreement, Mr. Grisanti shall serve the Company Group for a period of ten (10)
years, commencing March 1, 2000 and ending February 28, 2010 (the "Consulting
Period"), in such consulting capacity as the Company may reasonably request,
subject to Mr. Grisanti's own schedule and in no event more than thirty (30)
days in any one (1) year, in order that the Company
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<PAGE>
may continue to have the benefit of Mr. Grisanti's experience. The length of the
Consulting Period shall not be affected by the disability of Mr. Grisanti during
such period. During the Consulting Period, Mr. Grisanti shall be free to devote
the greater part of his time to other pursuits. For his services as a
consultant, the Company shall pay Mr. Grisanti a total annual fee, in equal
monthly installments, in the gross amount of $150,000 (the "Consulting Fee").
Mr. Grisanti shall receive no other fee in connection with such consulting
services, except as set forth herein. Notwithstanding the foregoing, the
Consulting Period shall terminate in the event of Mr. Grisanti's death; the
Consulting Fee shall terminate effective as of Mr. Grisanti's date of death; and
none of his legal representatives, heirs, legatees or distributees shall have
any right to any portion of such Consulting Fee with respect to any period after
such date of death.
(b) OFFICE; SECRETARY; FURNITURE. The Company shall lease for Mr. Grisanti
an office at 1270 Avenue of the Americas, New York, NY and shall pay rent
thereon not exceeding $5,007 per month (subject to adjustments in accordance
with the lease that are applicable to tenants of the building generally), for
the period May 1, 2000 through October 31, 2002 (the "Lease Period"). The
Company shall also pay up to an aggregate $25,000 during the Lease Period for
(i) costs of necessary refurbishing of such office and (ii) ongoing expenses
incurred by Mr. Grisanti in operating such office. In addition, secretarial
support shall be provided to Mr. Grisanti during the Lease Period by a secretary
selected by Mr. Grisanti and reasonably acceptable to the Company. Such
secretary shall be a full-time employee of the Company for the duration of the
Lease Period. To the extent that Mr. Grisanti elects to renew the lease on the
office (or lease another office) and/or continue the services of such (or
another) secretary after expiration of the Lease Period, all rent and other
expenses of such office, and all salary, benefit and other costs in respect of
such secretary, in either case incurred after the Lease period, shall be Mr.
Grisanti's sole responsibility. In addition, the Company shall permit Mr.
Grisanti to use for the Lease Period the furniture from his Company office,
described on the list attached to this Agreement as Schedule II (the "Office
Furniture"). At any time during, or at the expiration of, the Lease Period, Mr.
Grisanti may elect to cause the Company to transfer to him title to the Office
Furniture. In such event, Mr. Grisanti shall employ the services of a furniture
appraiser acceptable to the Company at the Company's expense for purposes of
valuing the Office Furniture. The Company shall also provide for use by Mr.
Grisanti's secretary during the Lease Period suitable office furniture and
equipment (including computer, copying and telecopying equipment). At the
expiration of the Lease Period, Mr. Grisanti will return all such furniture and
equipment to the Company.
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<PAGE>
(c) NONCOMPETITION; NONSOLICITATION. During the Consulting Period, Mr.
Grisanti agrees that he shall not engage directly or indirectly in any business
which is competitive to that of the Company Group, but this shall not prevent
Mr. Grisanti from owning a beneficial interest in less than five percent (5%) of
the outstanding capital stock of any publicly owned competitive company.
Additionally, during the Consulting Period, Mr. Grisanti agrees that he shall
not solicit, induce, or attempt to influence any individual who is an employee
of the Company Group to terminate his or her employment relationship with the
Company Group, or to become employed by him or his affiliates or any person by
which he is employed, or interfere in any other way with the employment, or
other relationship, of the Company Group and any employee thereof. Mr. Grisanti
also agrees that during the Consulting Period he shall not, in any way that
interferes with the business of the Company or with the relationship between the
Company and any such entity, solicit or canvass the trade, business or patronage
of, or sell to or buy from, any persons or entities that are either (i)
customers of or suppliers to the Company Group, or (ii) actual or prospective
customers of or suppliers to the Company Group with respect to which a sales
effort, presentation or proposal was made.
4. ENTIRE CONSIDERATION. Mr. Grisanti understands and agrees that the
payments and benefits provided for in this Agreement are in excess of those to
which he otherwise would be entitled, and that they are being provided to him in
consideration for his signing of this Agreement, which consideration he agrees
is adequate and satisfactory to him.
5. RELEASES. As a condition to Mr. Grisanti's entitlement to the
compensation, payments and benefits provided for in Section 2 hereof, Mr.
Grisanti shall have executed and delivered to the Company a release in the form
attached hereto as Schedule III (the "Release"), and such Release shall have
become irrevocable. If Mr. Grisanti exercises his right to revoke the Release in
accordance with the terms thereof, then this Agreement shall become null and
void ab initio. The Company shall execute and deliver to Mr. Grisanti a release
in the form attached hereto as Schedule IV (the "Company Release").
6. NON-DISPARAGEMENT. Each of Mr. Grisanti and the Company agree that at no
time will either Mr. Grisanti or any officer, director, employee or other
representative of the Company in any way denigrate, demean or otherwise say or
do anything, whether in oral discussions or in writing, that would cause any
third party, including but not limited to suppliers, customers and competitors
of the Company, to lower its perception about the integrity, public or private
image, professional competence, or quality of products or service, of the other
or,
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<PAGE>
in the case of the Company, of any officer, director, employee or other
representative of the Company. Notwithstanding the foregoing, nothing in this
Section 6 shall prohibit any person from making truthful statements when
required by order of a court or other body having jurisdiction.
7. COOPERATION AND ASSISTANCE. Mr. Grisanti acknowledges that he may have
historical information or knowledge that may be useful to the Company in
connection with current or future legal, regulatory or administrative
proceedings. Mr. Grisanti will cooperate with the Company in the defense or
prosecution of any such claims that relate to events or occurrences that
transpired during Mr. Grisanti's employment with the Company. Mr. Grisanti's
cooperation in connection with such claims or actions shall include being
reasonably available, subject to his other business and personal commitments, to
meet with counsel to prepare for discovery or trial and to testify truthfully as
a witness when reasonably requested by the Company at reasonable times and with
reasonable advance notice to Mr. Grisanti. The Company shall reimburse Mr.
Grisanti for any out-of-pocket expenses, including the reasonable fees of Mr.
Grisanti's personal attorney, which he incurs in connection with such
cooperation.
8. RETURN OF PROPERTY. Except as otherwise provided in this Section 8, Mr.
Grisanti expressly agrees that, upon his execution of this Agreement, he will
return to the Company all property of the Company Group including, but not
limited to, any and all files, computers, computer equipment and software and
diskettes, documents, papers, records, accords, notes, agenda, memoranda, plans,
calendars and other books and records of any kind and nature whatsoever
containing information concerning the Company Group or their customers or
operations. Mr. Grisanti affirms that he has not retained and will not retain
copies of any such property or other materials. Notwithstanding the foregoing,
Mr. Grisanti shall not be required to return the laptop computer, docking
station, monitor, keyboard and accessories therefor that were in his Company
office on December 14, 1999, his rolodexes, personal diaries and correspondence,
or his philanthropic correspondence. In addition, Mr. Grisanti presently has in
storage on the Company's premises at 521 West 56th Street, New York, New York
approximately 180 file boxes containing personal papers, possessions and
mementos included among Company correspondence covering a period of more than 30
years of his employment with the Company. The Company hereby agrees that Mr.
Grisanti shall be able to remove his personal property and belongings therefrom
and agrees not to dispose of such files boxes prior to January 1, 2001.
9. NON-DISCLOSURE. Under Mr. Grisanti's Security Agreement with the
Company, A copy of which is attached to this
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Agreement as Schedule IV, and under applicable trade secret law, Mr. Grisanti is
obliged to keep in confidence all trade secrets and proprietary and confidential
information of the Company Group, whether patentable or not which he learned or
of which he became aware or informed during his employment by the Company
(except to the extent disclosure (i) is or may be required by a statute, by a
court of law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body (including
a committee thereof) with apparent jurisdiction to order him to divulge,
disclose or make accessible such information or (ii) necessary in carrying out
his duties as a consultant pursuant to Section 3), and not to directly or
indirectly publish, disclose, market or use, or authorize, advise, hire, counsel
or otherwise procure any other person or entity, directly or indirectly, to
publish, disclose, market or use, any such information. Both under such Security
Agreement and under applicable law, such obligations continue not only while Mr.
Grisanti is employed by the Company, but after cessation of that employment. In
amplification and not in limitation of the foregoing, Mr. Grisanti acknowledges
that during his employment with the Company, he has or may have acquired
proprietary and confidential knowledge and information of the Company Group,
including, but not limited to, fragrance and flavor formulae, secret processes
and products, qualities and grades of flavor and fragrance ingredients and raw
materials, including but not limited to aroma chemicals, perfumery and flavor
and fragrance compounding "know-how" and other technical data belonging to or
relating to the Company Group, and the identity of customers and suppliers of
the Company Group and the quantities of products ordered by or from and the
prices paid by or to those customers and suppliers. In addition, Mr. Grisanti
has also acquired similar confidential knowledge and information belonging to
customers of the Company Group and provided to the Company Group in confidence
under written and oral secrecy agreements. Mr. Grisanti agrees to abide by the
terms and conditions of the Security Agreement and of this Section 9 both during
the Consulting Period and thereafter. Anything to the contrary notwithstanding,
this Section 9 shall not apply to any knowledge or information that has become
generally known in the industry or by the public (other than through a breach of
this Agreement by Mr. Grisanti).
10. NO ADMISSION. Nothing in this Agreement shall be deemed to constitute
an admission or evidence of any wrongdoing or liability on the part of the
Company or Mr. Grisanti and the parties agree that neither this Agreement nor
any of the terms or conditions contained herein may be used in any future
dispute or proceeding except one to enforce the terms of this Agreement.
11. TAX AND WITHHOLDING. Any Federal, State and/or local income, personal
property, franchise, excise or other taxes
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owed by Mr. Grisanti as a result of the payments or benefits provided under the
terms of this Agreement shall be the sole responsibility and obligation of Mr.
Grisanti. The parties hereto agree and acknowledge that Company shall have the
right to withhold from any payments made to Mr. Grisanti any and all amounts
that are necessary to enable the Company to satisfy any withholding or other tax
obligation that arises in connection with such payments or benefits, and the
Company shall report any such amounts that it determines are compensation income
on a Form W-2, including, but not limited to the value of the Company Car, the
Office Furniture (if title thereto is transferred to Mr. Grisanti), Mr.
Grisanti's use of the Lincoln Town Car (provided, however, that not more than
50% of the salary and benefits of Mr. McGowan or any other Company chauffeur may
be deemed by the Company as compensation income to Mr. Grisanti), and
reimbursement of Mr. Grisanti's attorney's fees.
12. NO ORAL MODIFICATION. This Agreement may not be changed orally and no
modification, amendment or waiver of any provision contained in this Agreement,
or any future representation, promise or condition in connection with the
subject matter of this Agreement shall be binding upon any party hereto unless
made in writing and signed by such party.
13. RESOLUTION OF DISPUTES. Any disputes under or in connection with this
Agreement shall, at the election of either party, be resolved by arbitration, to
be held in New York, New York in accordance with the rules and procedures of the
American Arbitration Association then in effect. Judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction.
Each party shall bear its own costs, including but not limited to attorneys'
fees, of the arbitration or of any litigation arising out of this Agreement.
Pending the resolution of any arbitration or litigation, the Company shall
continue payment of all amounts due Mr. Grisanti under this Agreement and all
benefits to which Mr. Grisanti is entitled at the time the dispute arises.
14. SEVERABILITY. In the event that any provision of this Agreement or the
application thereof should be held to be void, voidable, unlawful or, for any
reason, unenforceable, the remaining portion and application shall remain in
full force and effect, and to that end the provisions of this Agreement are
declared to be severable.
15. GOVERNING LAW. This Agreement is made and entered into, and shall be
subject to, governed by, and interpreted in accordance with the laws of the
State of New York and shall be fully enforceable in the courts of that state,
without regard to principles of conflict of laws.
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<PAGE>
16. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective heirs,
administrators, representatives, executors, successors and assigns, including
but not limited to (i) with respect to the Company, any entity with which the
Company may merge or consolidate or to which the Company may sell all or
substantially all of its assets, and (ii) with respect to Mr. Grisanti, his
executors, administrators, heirs and legal representatives.
17. COUNTERPARTS. This Agreement may be executed in counterparts, and each
counterpart, when executed, shall have the effect of a signed original.
18. ACKNOWLEDGEMENT OF KNOWING AND VOLUNTARY RELEASE; REVOCATION RIGHT. Mr.
Grisanti certifies that he has read the terms of this Agreement. The execution
hereof by Mr. Grisanti shall indicate that this Agreement conforms to Mr.
Grisanti's understandings and is acceptable to him as a final agreement. It is
further understood and agreed that Mr. Grisanti has had the opportunity to
consult with counsel of his choice, that he has in fact consulted with his own
counsel with respect to this Agreement, and that he has been given a reasonable
and sufficient period of time of no less than 21 days in which to consider and
return this Agreement.
WHEREFORE, intending to be legally bound, the parties have agreed to the
aforesaid terms and indicate their agreement by signing below.
/s/ EUGENE P. GRISANTI March 9, 2000
- ------------------------ ----------------
Eugene P. Grisanti Date
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By: /s/ STEPHEN A. BLOCK March 9, 2000
- ------------------------------- ----------------
Stephen A. Block Date
Senior Vice-President
General Counsel
and Secretary
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SCHEDULE I
SUPPLEMENTAL DEATH BENEFIT AGREEMENT
Agreement made as of this 24th day of October
1999 between INTERNATIONAL FLAVORS & FRAGRANCES
INC. (herein called "Employer") and Eugene P.
Grisanti, an employee of said Employer (herein
called "Participant").
WHEREAS, the Participant has delivered to the employer a signed written
notice of his or her intent to retire pursuant to Section 4.01 of the Executive
Death Benefit Plan effective July 1, 1990 of the Employer (herein called "the
Plan"); and he(she) will qualify upon the indicated retirement date as a
"Retired Participant" under the provisions of Section 2.12 of the Plan: OR
WHEREAS, the Participant has reached his(her) 70th birthday and remains in
active employment with the Employer pursuant to Section 4.01 of the Executive
Death Benefit Plan effective July 1, 1990 of the Employer, and he(she) will
qualify upon the indicated birth date as a "Senior Participant" under the
provisions of Section 2.13 of the Plan.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
described below, the Employer, for itself and its successors and assigns, and
the Participant, for himself or herself and for his or her heirs, executors or
administrators and assigns, agree as follows:
1) DEFINITIONS: All terms expressly defined in the Plan shall have the
same meanings when used in this agreement. This agreement is subject to the
provisions of the Plan.
2) EFFECTIVE DATE: The Effective Date of this agreement shall be (a) the
date that the Participant retires from the employ of Employer with eligibility
to receive an immediate Early, Normal, or Deferred Pension, or upon attaining
age 65, a Disability Pension from the Employer's qualified pension plan, or (b)
the Participant's 70th birthday, whichever date shall first occur.
3) EMPLOYER'S PROMISE TO PAY DEATH BENEFIT: Upon the death of the
Participant on or after the Effective Date, the Employer hereby promises to pay
to the Participant's Beneficiary(ies) designated in accordance with Section 4.03
of the Plan a death benefit in an amount calculated in the manner set forth in
Schedule I hereto. Such death benefit will be paid in the form of a lump sum,
less any taxes required, in the Employer's opinion, to be withheld, within sixty
(60) days after the date of the Participant's death.
4) ASSETS: The Employer shall not be required to fund, or otherwise reserve
or set aside monies in respect of, the payment required to be made under
paragraph 3 of this agreement. However, to the extent that the Employer does
acquire or maintain any assets, including annuities or insurance policies,
against the Employer's obligations under this agreement, such assets shall be
considered part of the general assets of employer and not subject to any special
claim by Participant or any Beneficiary(ies).
<PAGE>
5) CHANGE IN BENEFICIARY(IES): The Participant shall have the right to
change, from time to time prior to his or her death, the Beneficiary(ies) of the
death benefit provided in this agreement in accordance with Section 4.03 of the
Plan.
6) RESTRICTION ON ALIENATION: The rights and interests under this agreement
of the Participant and his or her Beneficiary(ies) shall not be subject to
assignment, alienation, anticipation, pledge, sale or transfer in any manner,
nor be resorted to appropriated, or seized in any proceeding at law, in equity
or otherwise. No Beneficiary shall have the power in any manner to transfer,
encumber, assign, or alienate the right of such Beneficiary to receive any
payment which may become payable hereunder, and any attempt to do so shall
automatically terminate the rights and interests hereunder of the Beneficiary
making such attempt.
7) WAIVER OF CERTAIN BENEFITS: Participant hereby waives any death benefit
to which or she or his or her heirs, executors, administrators or assigns might
otherwise be entitled under the "Basic Insurance Plan" as defined in Section
2.02 of the Plan, in excess of Fifty Thousand dollars ($50,000.00) if and while
he or she has the status of a Senior Participant under the Plan, provided,
however, that the minimum combined death benefits payable under this agreement
and the Basic Insurance Plan to the Beneficiary(ies) of a Senior Participant (if
death occurs while he or she is in the status of Senior Participant) shall be
One Hundred Thirty-Five Thousand Dollars ($135,000.00) and, to the extent that
such combined benefits are less than such sum, then the Employer shall pay the
difference as part of the death benefit under this agreement.
8) DELEGATION OF DUTY: The Employer's obligations to pay death benefits
under this agreement may be delegated, irrevocably or otherwise, to a third
party who may be an insurance company.
9) PLAN ADMINISTRATOR: The Plan Committee shall be responsible for the
interpretation, control and administration of the Plan and this agreement as
provided in Section 5.01 of the Plan.
10) MISCELLANEOUS: Nothing contained in this agreement shall be construed
as giving any Senior Particpant the right to be retained in the employment of
the Employer or to limit the power of the Employer to assign such a Senior
Participant to other duties or responsibilities or to terminate the Plan at any
time.
11) AMENDMENT: This agreement may be amended by a writing signed by the
Employer and the Participant and attached hereto.
12) SUCCESSORS: This agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors, assigns, heirs and legal
representatives.
13) STATE LAW: This agreement shall be governed by and construed in
accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands, effective as
of the date first above written, intending to be legally bound hereby.
INTERNATIONAL FLAVORS & FRAGRANCES INC.
[SEAL]
By: /s/ JAMES P. HUETHER
-------------------------------------
Employer (Signature)
TREASURER
-------------------------------------
Employer (Title)
By: /s/ EUGENE P. GRISANTI
-------------------------------------
Participant Name (Type or Print)
<PAGE>
INTERNATIONAL FLAVORS & FRAGRANCES INC.
EXECUTIVE DEATH BENEFIT PLAN
SCHEDULE I
SCHEDULE OF DEATH BENEFIT PAYABLE TO PARTICIPANT'S BENEFICIARY
A. BENEFIT PAYABLE TO PARTICIPANT'S BENEFICIARY: The death benefit to the
Participant's Beneficiary(ies) under Paragraph 3 of this Supplemental Death
Benefit Agreement in the event of the Participant's death shall be an
amount determined in accordance with the following steps:
1. For a Participant who, immediately prior to attaining the status of
Retired Participant or Senior Participant (which ever shall first
occur), was a Participant in the Employer's Management Incentive
Compensation Plan, calculate a sum equal to two times the
Participant's Annual Base Salary on the first day of the Plan Year
immediately prior to his or her attaining such status of Retired
Participant or Senior Participant (as the case may be) rounded to the
next highest multiple of $1,000.00.
2. For a Participant who, immediately prior to attaining the status of
Retired Participant or Senior Participant (whichever shall first
occur), was a Participant in the Employer's Special Executive Bonus
Plan, calculate a sum equal to one times the Participant's Annual Base
Salary on the first day of the Plan Year immediately prior to his or
her attaining such status of Retired Participant or Senior Participant
(as the case may be) rounded to the next highest multiple of $1,000.00
3. Subtract from the result obtained in Step 1 or 2, whichever is
applicable, (a) in the case of a Retired Participant $12,500.00 of
noncontributory life insurance provided by the Employer under the
Basic Insurance Plan, and (b) in the case of a Senior Participant
$50,000.00 of noncontributory life insurance provided by the Employer
under the Basic Insurance Plan if death shall occur while he or she is
in Senior Participant status, and $12,500.00 of such under the Basic
Insurance Plan if death shall occur after he or she attains the status
of Retired Participant. The resultant difference shall be the death
benefit under this agreement except as provided in step 4 below and
as provided in paragraph 7 of the agreement.
4. In the event of the death of a Retired Participant who did not have 20
or more years of employment with the Employer and any of its
subsidiaries at the date of his or her retirement, reduce the sum
derived by application of Steps 1 and 2 and 3 above at the rate of
five percent (5%) for each year or fraction thereof that such years of
employment were less than twenty (20), but not beyond a 50% reduction
in such sum. No reduction shall be made under this step 4 in the
benefit paid under the Basic Insurance Plan.
<PAGE>
SCHEDULE II
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Office Furniture
Chinese screen
Desk
Desk chair
Glass table
4 Suede chairs
Couch
Curtains
<PAGE>
SCHEDULE III
------------
RELEASE
-------
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned, Eugene P.
Grisanti, of 118 Delafield Island Road, Darien, Connecticut 06820 (hereinafter
referred to as "Employee"), for and in consideration of certain benefits
heretofore paid or to be paid or provided to him by International Flavors &
Fragrances Inc., a New York corporation with a place of business at 521 West
57th Street, New York, New York 10019 (hereinafter referred to as "IFF Inc."),
as such benefits are set forth in a Separation Agreement dated As of March 1,
2000 ("Separation Agreement"), DOES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
TO RELEASE, WAIVE AND FOREVER DISCHARGE, except as otherwise provided in this
Release, IFF Inc. and all of its subsidiaries, affiliates, successors and
assigns and their respective directors, officers, employees and agents
(hereinafter referred to as "Releasees") from all "Claims", as hereinafter
defined, and Employee waives, releases and covenants not to sue Releasees or to
file any lawsuit or any claim with any Federal, state or local administrative
agency asserting or in respect of any of such Claims.
<PAGE>
As used in this Release, the term "Claims" means and includes all charges,
complaints, claims, liabilities, obligations, promises, agreements, damages,
actions, causes of action, rights, costs, losses and expenses (including
attorneys' fees and costs actually incurred) of any nature whatsoever, known or
unknown, suspected or unsuspected, which Employee now has, or claims to have, or
which Employee at any earlier time had, or claimed to have had, or which
Employee at any future time may have, or claim to have, against each or any of
the Releasees as to any matters relating to or arising out of this employment
and/or service on the Board of Directors of IFF Inc. or any subsidiary or
affiliate thereof or the termination of such employment or Board of Directors
service, and occurring or arising on or before the date this Release is executed
by Employee. The Claims Employee is releasing under this Release include, but
are not limited to, rights arising out of alleged violations of any contracts,
express or implied, written or oral, and any Claims for wrongful discharge,
fraud, misrepresentation, infliction of emotional distress, or any other tort,
and any other Claims relating to or arising out of Employee's employment,
compensation and benefits with IFF Inc. or the termination thereof, and any
Claim for violation of any Federal, state or other
2
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governmental statute, regulation or ordinance including, but not limited to, the
following, each as amended to date: (1) Title VII of the Civil Rights Act of
1964, 42 U.S.C. (section section) 2000e et seq.; (2) Section 1981 of the Civil
Rights Acts of 1866, 42 U.S.C. (section) 1981; (3) the Americans with
Disabilities Act, 42 U.S.C. (section) 12101 et. seg. (4) the Age Discrimination
in Employment Act, 29 U.S.C. (section section) 621-634; (5) the Equal Pay Act of
1963, 29 U.S.C. (section) 206; (6) Executive Order 11246; (7) Executive Order
11141; (8) Section 503 of the Rehabilitation Act of 1973, 29 U.S.C. (section
section) 701 et seq.; (9) the Employee Retirement Income Security Act of 1974,
29 U.S.C. (section section) 1001 et seq.; and (10 any applicable New York or
Connecticut law, statute, regulation, ordinance, or constitutional or public
policy provisions. Anything in this Release to the contrary notwithstanding, it
is agreed that the Employee does not waive his rights to coverage under any
directors and officers insurance policy, for indemnification pursuant to IFF
Inc.'s By-laws as in effect on the date of this Release for acts or omissions
occurring or alledged to have occurred during Employee's employment or other
service to IFF Inc., or to enforce the Separation Agreement or any rights under
any employee or retirement benefit plan, program or policy of IFF Inc., the
Nominee Agreement entered into between the Employee and IFF Inc. on
3
<PAGE>
May 23, 1994, as amended, the Nominee Agreement of this same date (the "2000
Nominee Agreement"), or the Release of this same date under which IFF Inc. is
releasing claims, if any, that it may assert against Employee.
Employee hereby represents that neither he nor anyone acting at his
discretion or on his behalf has filed any complaints, charges, claims, demands
or lawsuits with respect to any Claim (an "Action") against any Releasee with
any governmental agency or any court; that he will not file or pursue any Action
at any time hereafter; and that if any such agency or court assumes jurisdiction
of any Action, against any Releasee on behalf of Employee, he will request such
agency or court to withdraw the matter. If any such Action is filed by the
Employee, he further agrees that he will not seek any relief from the Releasees,
however that relief might be called, whether reinstatement, back pay,
compensatory, punitive or exemplary damages, claims for emotional distress or
pain and suffering, or claims for attorneys' fees, reimbursement of expenses or
otherwise, on the basis of any such claim. Neither this Release nor the
undertaking in this paragraph shall limit Employee from pursuing Claims for the
sole purpose of enforcing his rights under the Separation Agreement or the
4
<PAGE>
2000 Nominee Agreement or under any employment or retiree benefit plan or
program of IFF Inc.
For the purpose of implementing a full and complete release and discharge
of claims, the Employee expressly acknowledges that this Release is intended to
include in its effect, without limitation, all the claims described in the
preceding paragraphs, whether known or unknown, apparent or concealed, and that
this Release contemplates the extinction of all such claims, including claims
for attorney's fees. Employee expressly waives any right to assert after the
execution of this Release that any such claim, demand, obligation, or cause of
action has, through ignorance or oversight, been omitted from the scope of the
Release.
This Release is made and entered into, and shall be subject to, governed by
and interpreted in accordance with the laws of the State of New York and shall
be fully enforceable in the courts of that state, without regard to principles
of conflict of laws.
Employee hereby represents that he has been given a period of twenty-one
(21) days to review and consider this Release before signing it. Employee
further understands
5
<PAGE>
that he may use none or as much of this 21-day period as he wishes prior to
signing.
Employee is advised that he has the right to and should consult with an
attorney before signing this Release. Employee understands that whether or not
to do so is the Employee's decision. Employee has exercised his right to consult
with an attorney to the extent, if any, that he desired.
Employee may revoke this Release within seven (7) days after he signs it.
Revocation can be made by delivering a written notice of revocation to Stephen
A. Block, Senior Vice President, General Counsel and Secretary. IFF Inc., 521
West 57th Street, New York, New York 10019. For such revocation to be effective,
written notice must be received by Mr. Block not later than the close of
business on the seventh day after the day on which Employee executes this
Release. If Employee revokes this Release, it shall not be effective and the
Separation Agreement shall be null and void ab initio.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS RELEASE, UNDERSTANDS IT AND IS
VOLUNTARILY EXECUTING IT AND THAT NO REPRESENTATIONS, PROMISES OR INDUCEMENTS
HAVE BEEN MADE TO EMPLOYEE EXCEPT AS SET FORTH IN THIS RELEASE VOLUNTARILY,
6
<PAGE>
AND THAT HE INTENDS TO BE LEGALLY BOUND BY ITS TERMS, WITH FULL UNDERSTANDING OF
ITS CONSEQUENCES.
PLEASE READ THIS RELEASE CAREFULLY. IT COVERS ALL KNOWN AND UNKNOWN CLAIMS
INCLUDING CLAIMS UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT.
Executed at New York, New York on March 9, 2000.
/s/ EUGENE P. GRISANTI
----------------------
Eugene P. Grisanti
7
<PAGE>
SCHEDULE IV
-----------
RELEASE
-------
KNOW ALL PERSONS BY THESE PRESENTS that International Flavors & Fragrances
Inc., a New York corporation with a place of business at 521 West 57th Street,
New York, New York 10019 (hereinafter referred to as "IFF Inc."), for itself and
all of its subsidiaries, affiliates, successors and assigns and their respective
directors, officers, employees and agents, for and in consideration of the
execution and delivery by Eugene P. Grisanti, of 118 Delafield Island Road,
Darien, Connecticut 06820 (hereinafter referred to as "Releasee") of a
Separation Agreement dated as of March 1, 2000 (the "Separation Agreement"),
DOES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE TO RELEASE, WAIVE AND
FOREVER DISCHARGE, except as otherwise provided in this Release, Releasee from
all "Claims", as hereinafter defined, and IFF Inc. waives, releases and
covenants not to sue Releasee or to file any lawsuit or any claim with any
Federal, state or local administrative agency asserting or in respect of any of
such Claims.
As used in this Release, the term "Claims" means and includes all charges,
complaints, claims, liabilities,
<PAGE>
obligations, promises, agreements, damages, actions, causes of action, rights,
costs, losses and expenses (including attorneys' fees and costs actually
incurred) or any nature whatsoever, known or unknown, suspected or unsuspected,
which IFF Inc. now has, or claims to have, or which IFF Inc. at any earlier time
had, or claimed to have had, or which IFF Inc. at any future time may have, or
claim to have, against the Releasee as to any matters relating to or arising out
of his employment and/or service on the Board of Directors of IFF Inc. or
any subsidiary or affiliate thereof or the termination of such employment or
Board of Director service, and occuring or arising on or before the date this
Release is executed by IFF Inc. The Claims IFF Inc. is releasing under this
Release include, but are not limited to, rights arising out of alleged
violations of any contracts, express or implied, written or oral.
IFF Inc. hereby represents that neither it nor anyone acting at its
discretion or on its behalf has filed any complaints, charges, claims, demands
or lawsuits with respect to any Claim (an "Action") against the Releasee with
any governmental agency or any court; that it will not file or pursue any Action
at any time hereafter; and that if any such agency or court assumes jurisdiction
of any Action against the Releasee on behalf of IFF Inc., IFF Inc.
2
<PAGE>
will request such agency or court to withdraw the matter. Neither this Release
nor the undertaking in this paragraph shall limit IFF Inc. from pursuing Claims
for the sole purpose of enforcing its rights under the Separation Agreement, the
Nominee Agreement of this same date, and the Release of this same date under
which the Releasee releases Claims, if any, that he might assert against IFF
Inc., or under the Nominee Agreement entered into between the Releasee and IFF
Inc. on May 23, 1994.
For the purpose of implementing a full and complete release and discharge
of claims, IFF Inc. expressly acknowledges that this Release is intended to
include in its effect, without limitation, all the claims described in the
preceding paragraphs, whether known or unknown, apparent or concealed, and that
this Release contemplates the extinction of all such claims, including claims
for attorney's fees. IFF Inc. expressly waives any right to assert after the
execution of this Release that any such claim, demand, obligation, or cause of
action has, through ignorance or oversight, been omitted from the scope of the
Release.
This Release is made and entered into, and shall be subject to, governed by
and interpreted in accordance with
3
<PAGE>
the laws of the State of New York and shall be fully enforceable in the courts
of that state, without regard to principles of conflict of laws.
Executed at New York, New York on March 9, 2000.
INTERNATIONAL FLAVORS &
FRAGRANCES INC.
BY: /s/ STEPHEN A. BLOCK
------------------------------------
Stephen A. Block
Senior Vice-President
General Counsel and
Secretary
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27 - Financial Data Schedule
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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 51,063
<SECURITIES> 709
<RECEIVABLES> 308,554
<ALLOWANCES> 10,318
<INVENTORY> 387,325
<CURRENT-ASSETS> 810,957
<PP&E> 947,758
<DEPRECIATION> 430,096
<TOTAL-ASSETS> 1,357,349
<CURRENT-LIABILITIES> 383,959
<BONDS> 14,834
0
0
<COMMON> 14,470
<OTHER-SE> 775,571
<TOTAL-LIABILITY-AND-EQUITY> 1,357,349
<SALES> 369,912
<TOTAL-REVENUES> 369,912
<CGS> 201,085
<TOTAL-COSTS> 293,238
<OTHER-EXPENSES> 9,025
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,137
<INCOME-PRETAX> 65,512
<INCOME-TAX> 21,736
<INCOME-CONTINUING> 43,776
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43,776
<EPS-BASIC> 0.42
<EPS-DILUTED> 0.42
</TABLE>
