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EXHIBIT 5
BUSH BOAKE ALLEN INC.
SUCCESS BONUS INCENTIVE ARRANGEMENT
August 2, 2000
In the event Bush Boake Allen Inc. (the "Company") enters into or is
otherwise the subject of a "Business Transfer" (as defined below), the Board
of Directors of the Company has determined it to be in the best interests of
the Company and its shareholders for the Company to agree to pay and to be
obligated to pay a "Success Bonus" to those key officers of the Company
identified on Schedule I as the "Executive Focus Team" and to those certain
other key officers of the Company identified on Schedule I as the "Key Officer
Group," respectively.
The purpose of this Success Bonus Incentive Arrangement is to:
(i) Create an incentive for such key officers to assist and cooperate in
seeking to realize the highest transaction value in any Business
Transfer;
(ii) Seek to keep such key officers focused on achieving such highest
transaction value by maintaining a cooperative and committed
attitude; and
(iii) Provide a measure of retention of such key officers during any
period of time prior to, at the time of, and following the
consideration and/or consummation of any such Business Transfer.
As a result, and subject to the terms of this Success Bonus Incentive
Arrangement, the Company agrees to pay a "Success Bonus" to each of those
executives in the "Executive Focus Group" identified on Schedule I in an
amount equal to such executive's base annual salary from the Company
(determined at the highest annual rate in effect at any time on or after June
1, 2000) multiplied by the Success Rate.
In addition, and subject to the terms of this Success Bonus Incentive
Arrangement, the Company agrees to pay a "Success Bonus" to each of those
executives in the "Key Officer Group" identified on Schedule I in an amount
equal to fifty percent (50%) of such executive's base annual salary
(determined at the highest level in effect for such executive on and after
June 1, 2000) multiplied by the Success Rate.
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The "Success Rate" is the following percentage:
<TABLE>
<CAPTION>
Success Rate Per Share Consideration
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Percentage
Range Dollar Range
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Equal To Or Greater Than But Less Than
------------------------ -------------
<S> <C> <C>
9%- 19.2% $38.00 $39.00
19.2%- 38.5% 39.00 40.00
38.5%- 57.7% 40.00 41.00
57.7%- 76.9% 41.00 42.00
76.9%- 96.2% 42.00 43.00
96.2%-115.4% 43.00 44.00
115.4%-134.6% 44.00 45.00
134.6%-153.8% 45.00 46.00
153.8%-173.1% 46.00 47.00
173.1%-192.3% 47.00 48.00
192.3%-211.5% 48.00 49.00
211.5%-230.8% 49.00 50.00
230.8%-250.0% 50.00 51.00
250.0% If 51.00 pr above
</TABLE>
The exact Success Rate within each of the above percentage ranges will be
proportionate to the range between the corresponding dollar figure.
For purposes of this Success Bonus Incentive Arrangement, the following
terms have the meanings given:
"Business Transfer" means any one (or a series) of the following: (i) any
merger or consolidation of the Company or of any direct or indirect subsidiary
of the Company, (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of the assets of the Company or any of its subsidiaries not
in the normal course; (iii) any transaction which results in the direct or
indirect transfer by International Paper Company of the beneficial ownership
of any of the capital stock of the Company; (iv) any tender offer or exchange
offer involving the capital stock of the Company or its subsidiaries; or (v)
any other transaction not in the normal course resulting in a change in
control or transfer or disposition of the assets or earning power or voting
control of the Company and its subsidiaries taken as a whole; provided that
such transaction (or series of transactions) involves in the aggregate 50% or
more of the Company and its subsidiaries taken as a whole.
"Per Share Consideration" means the aggregate of all Consideration realized
in any Business Transfer, divided by the shares of common stock of the Company
for which the Consideration was paid. The determination of Per Share
Consideration will be equitably and appropriately adjusted by the Incumbent
Directors in the event of the occurrence, after June 1, 2000, of any stock
split, stock combination, recapitalization, reorganization, stock dividend,
special or extraordinary dividend, exchange or substitution of shares, or
merger or consolidation in which the Company is the surviving entity.
"Consideration" means the sum of the value of all cash, securities and other
assets (including contingent consideration, but only if and when paid) paid or
payable, directly or indirectly, as consideration for the consummation of a
Business Transfer as well as any special dividend paid or distribution of
assets made in connection with any Business Transfer, whether in one
transaction or a series of transactions.
"Incumbent Directors" means the directors of the Company who were such
directors as of June 1, 2000.
If any part of the Consideration payable in connection with any Business
Transfer is in a form other than cash or marketable securities, the value of
such consideration shall be exclusively determined in good faith by a majority
of the Incumbent Directors. If any part of the Consideration payable in
connection with any Business Transfer includes marketable securities, the
value of such securities shall be exclusively determined in good faith
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by a majority of the Incumbent Directors based on the market value of such
securities, as of the date of the consummation of such Business Transfer, on
the principal exchange or principal automated quotation system on which such
marketable securities are then traded.
The "Success Bonus" will be payable to each executive as follows:
(iv) fifty percent (50%) after one (1) year of continued employment of the
executive with the Company or its successor following a Business
Transfer; and
(v) fifty percent (50%) after two (2) years of continued employment of the
executive with the Company or its successor following such Business
Transfer;
provided that if the executive is terminated without "Cause" or terminates his
employment for "Good Reason" (as each of those terms is defined in such
executive's Change in Control Agreement with the Company dated December 2,
1996 or, in the case of Mr. Landis, February 18, 1997, or, in the case of Mr.
Chia, May 6, 1998) ("Change in Control Agreement"), then the entire amount of
such Success Bonus shall be immediately payable to the executive in full upon
such termination, and provided further that if the executive is terminated for
"Cause" or terminates his employment without "Good Reason" prior to the date
all or any part of his Success Bonus is payable, then such executive will be
deemed to have automatically forfeited any remaining unpaid portion of such
Success Bonus.
Notwithstanding anything in this Arrangement to the contrary, each executive
shall be expected, throughout any consideration of, preparation for,
consummation of and giving effect to any Business Transfer, to exhibit and
provide:
(i) Positive Leadership on behalf of the Company, including setting an
example to the organization by remaining positive in all comments,
discussions and activities related to the Company and any actual or
proposed Business Transfer transaction as well as with respect to any
proposed parties to such Business Transfer; and
(ii) Teamwork, including promoting teamwork within the organization to
accomplish business objectives, ensuring cooperation and open lines
of communication, initiating activities to build morale and providing
positive energy within the organization.
The Incumbent Directors and the Chief Executive Officer of the Company may
determine, as to each executive other than the Chief Executive Officer (and
the then Incumbent Directors alone may make such determination as to the Chief
Executive Officer), whether such executive provided such Positive Leadership
and Teamwork attributes during such Business Transfer process and their
determination, if any, shall be conclusive and binding on all parties; in the
event that a determination is made that an executive failed satisfactorily to
provide such attributes, any Success Bonus payable to such executive may be
reduced by up to forty percent (40%), with the particular percentage reduction
to be exclusively determined by the then Incumbent Directors as to the Chief
Executive Officers and by the then Incumbent Directors and Chief Executive
Officer as to all other executives. Such determination shall be made prior to
the consummation of such Business Transfer.
This Success Bonus Incentive Arrangement shall be effective as of August 2,
2000 and shall continue in effect until the date specified in a written notice
of termination of this Arrangement given by a majority vote of the then
directors not less than twenty-four (24) months prior to such termination
date, provided that the rights and obligations of the Company and covered
employees under this Arrangement shall continue in effect following any such
termination with respect to any Business Transfer entered into or consummated
prior to such termination.
All determinations of whether a particular transaction constitutes a
"Business Transfer" hereunder, the amount or value of the Consideration in any
Business Transfer and the calculation of the Success Bonus payable hereunder,
shall be exclusively made in good faith by a majority of the Incumbent
Directors and their
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determination shall be conclusive and binding on all parties. All such
determinations shall be made immediately prior to the consummation of any
Business Transfer. In the event this is not possible and a determination is
required when no Incumbent Director remains, the parties shall mutually agree
on such determination, or will arbitrate same as set forth below.
This Success Bonus Incentive Arrangement is intended to cover the sale or
other transfer or disposition (whether in a single sale transaction or in a
series of transactions, whether by issuance or transfer of stock or assets,
merger, or otherwise) of the Company and its subsidiaries taken as a whole,
but not any subsequent or further sale, transfer or disposition of the
Company, and this Arrangement shall be interpreted and administered by the
then Incumbent Directors in order to give effect to such limited purpose.
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) expressly to assume and agree to
perform this Success Bonus Incentive Arrangement in the same manner and to the
same extent that the Company would be required to perform it if no succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Arrangement and, in addition to all other remedies, shall entitle each
executive to receive, immediately upon the effectiveness of such succession,
all of the Success Bonus to which he would be entitled hereunder.
All amounts payable to an executive of the Company under this Success Bonus
Arrangement shall be in addition to amounts received by such executive under
his Change of Control Agreement, such amount specifically not being limited by
Section 4(iii)(b) of such Change of Control Agreement, and shall be deemed a
payment pursuant to which such executive shall be entitled to the benefits of
such executive's Gross Up Payments under and pursuant to the terms of Section
4(iv) of such executive's Change in Control Agreement with the Company.
No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made which are not
expressly set forth herein.
The validity, interpretation, construction and performance of this Success
Bonus Incentive Arrangement shall be governed by the laws of the State of New
Jersey without regard to its conflicts of laws principles.
All payments provided for hereunder shall be net of any applicable
withholding required under federal, foreign, state or local law.
The existence of this Success Bonus Incentive Arrangement shall not be
interpreted to preclude, reduce, limit or restrict any other benefit or
compensation (including without limitation, any severance and/or change in
control compensation) to which any executive may be entitled.
The invalidity or unenforceability of any provision of this Arrangement
shall not affect the validity or enforceability of any other provision of this
Arrangement which shall remain in full force and effect.
Any dispute or controversy arising under or in connection with this Success
Bonus Incentive Arrangement shall be settled exclusively by arbitration in
Montvale, New Jersey or such other location as the parties agree, in
accordance with the commercial rules of the American Arbitration Association
then in effect. The Company shall bear all cost and expenses arising in
connection with any such arbitration proceeding (including the reasonable
legal costs and expenses of the executive(s), other than as to any claims
asserted by such executive(s) in bad faith). Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
This Success Bonus Incentive Arrangement sets forth the entire agreement of
the parties with respect to the subject matter hereof and supersedes the
provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, with
respect to such subject matter.
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SCHEDULE I
Executive Focus Team
Julian Boyden, Chairman, President and CEO
Dennis Meany, VP, General Counsel and Secretary
Fred Brown, VP Finance and CFO
Ronald Landis, VP Human Resources & Safety
Key Officer Group
Bruce J. Edwards, VP International Region
P.C. Mathew, VP Aroma & Terpene Chemicals
James H. Dunsdon, EVP, Americas Region
Chia Siang Ee, VP, Asia Pacific Region
John R. Wright, VP, Commerce & Technology
