SEPARATION AGREEMENT
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This SEPARATION AGREEMENT (this "Agreement") is entered into
as of the 31st day of March, 2003 between Xxxxxx X. Xxxxxx (the "Employee"), and
International Flavors & Fragrances Inc., a New York corporation (the "Company").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Employee is employed by the Company as Vice
President, Global Account Sales; and
WHEREAS, the Company and the Employee have agreed that the
Employee's employment with the Company shall terminate on September 30, 2005
(the "Separation Date"); and
WHEREAS, the Employee and the Company now desire to enter into
an agreement in respect of the Employee's separation from the Company as
hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual promises
contained in this Agreement, the Employee and the Company agree as follows:
1. CONTINUATION OF EMPLOYMENT; DUTIES. Until the Separation
Date, the Employee shall remain a full-time employee of the Company. Effective
immediately, however, the Employee shall resign as Vice President, Global
Account Sales, and as a director and/or officer of all entities controlled
directly or indirectly by the Company (together with the Company, the "Company
Group") of which he has served as a director and/or officer prior to the date of
this Agreement. The Employee understands that from and after April 30, 2003 the
Company will no longer maintain an office for the Employee at the Hazlet, New
Jersey or any other Company Group facility. Thereafter, until the earlier of the
Separation Date or until the Employee obtains new "Employment," as hereinafter
defined, the Employee shall perform such duties commensurate with his skills as
Xxxxxxx X. Xxxxxxxxx, Chairman and Chief Executive Officer, may reasonably
assign to him, provided that such duties shall not unreasonably interfere with
the Employee's other activities.
2. TERMINATION OF EMPLOYMENT RELATIONSHIP. On the Separation
Date the Employee's employment with all members of the Company Group shall
terminate.
3. CONSIDERATION TO THE EMPLOYEE. The Company shall make the
following payments and provide the following additional benefits and
consideration to the Employee, subject to Section 6 hereof:
(a) SALARY AND BENEFITS THROUGH THE SEPARATION DATE.
Through and including the September 30, 2003, the Employee shall continue to be
paid his current base salary of $30,000 per month ($360,000 per year), and shall
continue to be entitled to all of the benefits that he currently enjoys.
(b) INCENTIVE COMPENSATION. The Employee shall not be
entitled to any incentive compensation award in respect of 2003 under the
Company's Annual Incentive Plan ("AIP"), promulgated under the Company's Stock
Award and Incentive Plan ("SAIP"). The Employee shall be entitled to receive the
full amount of any award that is paid to others with the same target award as
the Employee in respect of Cycle I under the Company's Long-Term Incentive Plan
("LTIP") under the SAIP, and 50% of any award that is paid to others with the
same target award as the Employee in respect of Cycle II under the LTIP. The
Employee acknowledges that, in accordance with the preceding sentence, the
amounts that he would be paid were target award levels attained for Cycle I and
Cycle II of the LTIP would be $520,000 and $87,500, respectively. Any earned
Cycle I and Cycle II awards under the LTIP shall be paid to the Employee in
early 2004 and 2005 at the same times as awards under such cycles of the LTIP
are paid to other participants in such LTIP cycles. The Employee shall not be
entitled to any other incentive compensation, whether under the AIP, LTIP or any
other plans or programs, in respect of any other year.
(c) PAYMENTS. Commencing October 1, 2003 and continuing
through and including September 30, 2005 (the "Severance Period"), the Employee
shall receive monthly payments of $35,750, which is equal to the sum of (i) his
current monthly base salary ($30,000) and (ii) $5,750, which is an amount equal
to one-twelfth of the average of his AIP awards in respect of 2001 and 2002
("Severance"). As a result, the Employee's Severance over the 24-month period
shall aggregate $858,000. Payments of Severance shall be paid semi-monthly at
the same times as compensation is paid to exempt United States employees of the
Company. In recognition of the fact that the Employee has been employed in
various positions with the Company for more than 25 years, the Severance Period
will be 24 months rather than 18 months as provided for in the Company's
Executive Separation Policy.
(d) UNUSED VACATION. Within thirty (30) days after the
Separation Date, the Company shall pay the Employee for unused vacation earned
in respect of 2003 through September 30, 2003. The Employee shall not be
entitled to vacation pay in respect of 2004, 2005 or any other year.
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(e) STOCK OPTIONS. The Employee has received a stock
option award for 35,000 shares in respect of 2003. The Employee shall not be
entitled to any stock option awards in respect of 2004 and 2005. The
exercisability, lapsing and forfeiture of the Employee's stock options shall be
governed by the provisions of various Stock Option Agreements between the
Employee and the Company.
(f) PENSION. The Employee shall be vested in the pension
benefit (the "Pension") that he accrues through the Separation Date under the
Company's Third Country National Pension Plan (the "TCN Plan"). The Employee
agrees and acknowledges that he is not entitled to any pension benefit under any
other pension plan or program maintained by any member of the Company Group. Not
later than ninety (90) days prior to the Separation Date, the Employee shall
elect, by written notice to the Company's Compensation and Benefits Department,
whether he will take his pension (the "Pension") (i) in the form of a monthly
annuity (the "Monthly Annuity Option")--which shall be $14,340 should he
commence such payments at age 65 or $5,736 should he commence such payments at
age 55--in accordance with the terms of the TCN Plan, or (ii) in lieu of any
benefits to which he might otherwise be entitled under the TCN Plan, to receive
from the Company within thirty (30) days following the Separation Date a lump
sum equal to the present value of his Pension under the TCN Plan as of the
Separation Date (the "Lump Sum Option"). Should the Employee elect the Lump Sum
Option, he agrees and acknowledges that the amount of the Lump Sum Option shall
be calculated as of the Separation Date using the methodology then applicable
under the General Agreement on Tariffs and Trade. Notwithstanding the foregoing,
the Employee and the Company agree and acknowledge that, were the amount of the
Lump Sum Option, calculated as of the Separation Date, to be paid as of the date
of this Agreement, the Lump Sum Option payment would be $740,912. Whether the
Employee elects to take the Pension pursuant to the Monthly Annuity Option or
the Lump Sum Option, the Pension will not be reduced by an offset for Argentine
Social Security, as is contemplated by the TCN Plan.
(g) OTHER BENEFITS. The Employee acknowledges that he does
not participate in the Company's Retirement Investment Fund Plan, Deferred
Compensation Plan or the Global Employee Stock Purchase Plan. For the shorter of
the Severance Period or until the Employee becomes eligible to participate in
medical, dental and/or life insurance plans upon his commencement of new
"Employment," as hereinafter defined (the "Supplemental Benefits Period"), the
Employee and his eligible dependents shall either continue to participate in the
Company's CIGNA international medical and dental plans and to be covered under
the Company's group life insurance plan, under the same terms and conditions,
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and at the same contribution levels, as are applicable to active employees of
the Company. Should the Company change or eliminate any of such benefits for
employees of the Company generally, the Employee's benefits will likewise be
affected. Should the Company institute new benefits for employees of the Company
between the date of this Agreement and the Separation Date, the Employee shall
not be entitled, and the Employee waives all rights to participate, in any of
such new benefits unless such participation is required by law. For the purpose
of this Agreement, "Employment" shall mean the Employee's substantially
full-time participation for monetary compensation as an officer, employee,
partner, principal or individual proprietor in any entity or business. At the
expiration of the Supplemental Benefits Period the Employee shall be able to
continue coverage under the Company's medical plan in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") for up to
eighteen (18) months after the expiration of the Supplemental Benefits Period by
paying the applicable monthly premiums.
(h) LEASED AND PURCHASED CARS. Through and including the
earliest of September 30, 2003, the date on which the lease on the automobile
that he is currently leasing (the "Leased Car") terminates, or the date on which
he permanently leaves the United States in connection with the relocation
contemplated by Section 3(k) of this Agreement, the Company shall continue to
pay to the Employee the monthly automobile allowance that he currently receives.
The Company shall also arrange and pay any costs required to terminate, at the
earliest possible date, the lease on the Leased Car. In addition, the Company
shall reimburse the Employee for the difference between the price he paid for
the automobile that he purchased following his relocation to New Jersey (the
"Purchased Car") and 90% of the "fair market value" of the Purchased Car. For
purposes of this Agreement the "fair market value" of the Purchased Car shall be
the average of the values of the Purchased Car as reported in the Xxxxx Blue
Book and the NADA for the two-week period during which the Purchased Car is
sold. The Employee shall have the responsibility for arranging for and selling
the Purchased Car.
(i) FINANCIAL PLANNING/ADVICE. Until the expiration of the
Supplemental Benefits Period, the Employee may continue to use the financial
planning and advice services of The Ayco Company under the same terms and
conditions as he is currently eligible for such services. Should the Employee
wish to continue such services or the services of any other financial
advisor/consultant after the expiration of the Supplemental Benefits Period, all
costs and expenses in respect of such services shall be the sole responsibility
of the Employee.
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(j) OUTPLACEMENT. The Company shall arrange for the
Employee to have the outplacement services of a firm selected by the Company and
reasonably acceptable to the Employee, and shall pay all fees associated
therewith. The Company agrees to cause such outplacement services to be
continued until the earlier of the expiration of the Supplemental Benefits
Period.
(k) REIMBURSEMENT FOR NEW JERSEY HOUSE RENOVATION;
RELOCATION. The Company acknowledges that, in connection with the Employee's
transfer from London, England to the United States, the Employee purchased a
residence in Westfield, New Jersey, for $870,000 (the "New Jersey House"), and
that he renovated and furnished the New Jersey House at an additional cost to
him of $62,259, as evidenced by receipted invoices that he has provided to the
Company. The Employee intends to sell the New Jersey House and become a resident
of a country other than the United States (the "New Resident Country"). The
Company agrees that, if the selling price of the New Jersey House is less than
$932,259, the Company will pay to the Employee an amount equal to the difference
between $932,259 and the actual selling price. The Company also agrees to
provide the Employee with the following benefits in connection with his and his
eligible dependents' relocation to the New Resident Country:
(i) one business class round trip airplane fares from New
Jersey to the New Resident Country for the Employee, his
wife and one son living with them in New Jersey (the
"Employee's Family"), together with six days' living
expenses (hotel, meals, rental car and other reasonable
incidental expenses) to look for a residence to purchase
or rent (the "New Residence"), plus business class
airplane fares to the New Resident Country when the
Employee, his wife and son relocate permanently;
(ii) all usual and customary expenses (including but not
limited to brokerage fees, mortgage fees and transfer
taxes) in connection with the sale of the New Jersey
House and the purchase or rent of the New Residence;
(iii) all usual and customary expenses of moving the
Employee's Family household goods from New Jersey to the
New Resident Country, including storage expenses for up
to 90 days for such household goods;
(iv) for the Employee's Family, one week of temporary living
accommodations in New Jersey immediately prior to, and
60 days of
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temporary living accommodations in the New Resident
Country immediately following, the relocation to the New
Resident Country;
(v) a miscellaneous allowance of $30,000 in connection with
the renovation and furnishing of the New Residence; and
(vi) reimbursement for up to $10,000 for up to five round
trip coach airline tickets between London, England and
the New Resident Country, to be used by either or both
of the Employee's two sons studying in the United
Kingdom.
Notwithstanding Section 11 of this Agreement, the Company agrees fully to
gross-up any income taxes to which the Employee may be subject as a result of
the costs and expenses to be paid and/or reimbursed by the Company pursuant to
this Section 3(k).
4. NONCOMPETITION; NONSOLICITATION. During the Severance
Period, the Employee agrees that he shall not engage directly or indirectly in
any business which is competitive to that of the Company Group, except that
Employee shall not be prevented 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 Severance Period, the Employee
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. The Employee also agrees that during the Severance 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 customers of or suppliers to the Company Group.
5. ENTIRE CONSIDERATION. The Employee understands and
agrees that the payments and benefits provided for in this Agreement (a) are the
only ones to which he is entitled relating to his employment and/or in
connection with the termination of his employment with the Company, and (b) 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 and the
"Release," as defined in Section 6, which consideration he agrees is adequate
and satisfactory to him.
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6. RELEASE. As a condition to the Employee's entitlement
to the compensation, payments and benefits provided for in Sections 1 and 3
hereof, the Employee shall have executed and delivered to the Company a release
in the form attached hereto as Schedule I (the "Release"), and such Release
shall have become irrevocable. If the Employee exercises his right to revoke the
Release in accordance with the terms thereof, then this Agreement shall become
null and void ab initio. The Employee agrees to execute another release,
identical in form to the Release, as of the Retirement Date, and shall not be
entitled to receive the final $10,000 of Severance until such release has been
executed and delivered to the Company.
7. NON-DISPARAGEMENT. Each of the Employee and the
Company agrees that at no time will either the Employee 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, in the case of the Company, of
any officer, director, employee or other representative of the Company. If the
Company is asked by a prospective employer for a reference with respect to a new
position for which the Employee is being considered, without the Employee's
prior written consent the Company will do no more than confirm the Employee's
dates of employment and salary history.
8. COOPERATION AND ASSISTANCE. The Employee 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. The Employee will cooperate with the Company, both during the
Severance Period and thereafter, in the defense or prosecution of any such
claims that relate to events or occurrences that transpired during the
Employee's employment with the Company. The Employee'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 the Employee. The Company shall reimburse the Employee for any out-of-pocket
expenses, including the reasonable fees of the Employee's personal attorney,
which he incurs in connection with such cooperation.
9. RETURN OF PROPERTY. Except as otherwise provided in
this Section 9, the Employee expressly agrees that, on the
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Separation Date, 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. The Employee affirms that he will not retain copies of
any such property or other materials. Notwithstanding the foregoing, the
Employee shall not be required to return his company-provided laptop computer,
or his rolodexes, personal diaries and correspondence; however, the Company may
require the Employee to provide such laptop computer to the Company so that any
proprietary Company information and/or programs may be purged from such laptop
computer.
10. NON-DISCLOSURE. Under the Employee's Security
Agreement with the Company, a copy of which is attached to this Agreement as
Schedule II, and under applicable trade secret law, the Employee 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 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, 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 the
Employee is employed by the Company, but after cessation of that employment. In
amplification and not in limitation of the foregoing, the Employee 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, the Employee
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. The Employee agrees to
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abide by the terms and conditions of the Security Agreement and of this Section
10 both during the Severance Period and thereafter.
11. TAX AND WITHHOLDING. Except as provided in
Section 3(k), any Federal, State and/or local income, personal property,
franchise, excise or other taxes owed by the Employee in any country as a result
of the payments or benefits provided under the terms of this Agreement shall be
the sole responsibility and obligation of the Employee. All payments to the
Employee under this Agreement shall be made in United States Dollars in the
country in which the Employee is residing at the time such payments are due and
shall be made by a member of the IFF Group selected by the Company. The paying
member of the Company Group shall have the right to withhold from any payments
made or benefits provided to the Employee any and all amounts that are necessary
to enable such member of the Company Group to satisfy any withholding or other
tax obligation that arises in connection with such payments or benefits, and
such member of the Company Group shall report to the appropriate taxing
authorities any such amounts that it determines are required to be reported
under the laws of the country in which such payment are made or benefits
provided. The Employee agrees to inform the Company, in writing, no later than
30 days after the date he becomes a nonresident of the United States, of the
date of his change in residency and his New Resident Country. If the Employee
fails to provide such notice, until such notice is provided, the Employee will
be deemed to remain a United States resident and the Company will withhold
income taxes on all payments on that basis.
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. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties and supersedes any and all previous agreements of
any kind whatsoever between them, whether written or oral.
14. 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
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of any arbitration or litigation, the Company shall continue payment of all
amounts due the Employee under this Agreement and all benefits to which the
Employee is entitled at the time the dispute arises.
15. 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.
16. 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.
17. 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 the Employee, his
executors, administrators, heirs and legal representatives.
18. NOTICES. All notices required pursuant to this
Agreement shall be in writing and shall be deemed given if mailed, postage
prepaid, or if delivered by fax or by hand, to a party at the address set forth
below:
If to the Employee:
Xx. Xxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
If to the Company:
International Flavors & Fragrances Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Secretary
Any change in address by either party shall be effective when notified to the
other party as aforesaid.
19. COUNTERPARTS. This Agreement may be executed in
counterparts, and each counterpart, when executed, shall have the effect of a
signed original.
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20. ACKNOWLEDGMENT OF KNOWING AND VOLUNTARY RELEASE;
REVOCATION RIGHT. The Employee certifies that he has read the terms of this
Agreement. The execution hereof by the Employee shall indicate that this
Agreement conforms to the Employee's understandings and is acceptable to him as
a final agreement. It is further understood and agreed that the Employee 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 45 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.
XXXXXX X. XXXXXX
/s/ XXXXXX X. XXXXXX 5/30/03
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Xxxxxx X. Xxxxxx Date
INTERNATIONAL FLAVORS & FRAGRANCES INC.
By: /s/ XXXXXX X. XXXXXXX 5/27/03
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Xxxxxx X. Xxxxxxx Date
Senior Vice President
Global Human Resources
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