SEPARATION AGREEMENT
EXHIBIT
10.1
This
SEPARATION AGREEMENT
(the “Agreement”) is entered into as of the date signed by the second party
hereto between Xxxxxx X. Xxxx (the “Employee”), and International
Flavors & Fragrances Inc., a New York corporation (the
“Company”).
WITNESSETH
WHEREAS, the Employee was
employed by the Company as Chief Executive Officer and served as the Company’s
Chairman of the Board of Directors; and
WHEREAS, the Employee’s
employment with the Company and service as a director terminated on September
30, 2009 (the “Separation Date”);
NOW, THEREFORE, in
consideration of the mutual promises contained in this Agreement, the Employee
and the Company agree as follows:
1. Termination
of Employment Relationship; Resignation of Officerships and
Directorships. On the Separation Date the Employee’s
employment with the Company and all of its affiliates terminated, and the
Employee resigned from his service as Chairman of the Board of the Company and
as a director of the Company and all of its affiliates.
2. Consideration
to the Employee. The Company shall make the following payments
and provide the following additional benefits and consideration to the Employee,
subject to the Employee complying with Sections 3, 4, 6 and 7
hereof:
(a) Salary
through the Separation Date. Through and including the
Separation Date, the Employee was paid his current base salary of $41,666.67 per
semi-monthly pay period ($1,000,000 per year).
(b) Incentive
Compensation. The Employee shall be entitled to his annual
incentive compensation award in respect of 2009 under the Company’s Annual
Incentive Plan (“AIP”), subject to achievement of the applicable performance
objectives; provided, however, the 2009 AIP award shall be determined for the
Employee as a percentage of his 2009 AIP target on the same basis as if he had
been employed during all of 2009 (and without the Board exercising any negative
discretion with respect to his award), and his 2009 AIP award shall be prorated
to reflect the time that the Employee served in 2009 through the Separation Date
(i.e., 75% of the 2009 AIP award). Any earned 2009 AIP award shall be
paid to the Employee in 2010 at the same time as incentive compensation awards
under the AIP are paid to employees of the Company generally. The
Employee shall also be entitled to receive, subject to achievement of the
applicable performance objectives, a percentage of his awards under the
Company’s Long-Term Incentive Plan (“LTIP”) in accordance with the following
chart:
|
2007-2009
Cycle
|
|
|
Performance
Period
|
Proration
%
|
|
Segment
1: 1/1/07 – 12/31/07
|
100.00%
|
|
Segment
2: 1/1/08 – 12/31/08
|
100.00%
|
|
Segment
3: 1/1/09 – 12/31/09
|
75.00%
|
|
Segment
4: 1/1/07 – 12/31/09
|
91.67%
|
|
2008-2010
Cycle
|
|
|
Performance
Period
|
Proration
%
|
|
Segment
1: 1/1/08 – 12/31/08
|
100.00%
|
|
Segment
2: 1/1/09 – 12/31/09
|
75.00%
|
|
Segment
3: 1/1/10 – 12/31/10
|
0.00%
|
|
Segment
4: 1/1/08 – 12/31/10
|
58.33%
|
|
2009-2011
Cycle
|
|
|
Performance
Period
|
Proration
%
|
|
Segment
1: 1/1/09 – 12/31/09
|
75.00%
|
|
Segment
2: 1/1/10 – 12/31/10
|
0.00%
|
|
Segment
3: 1/1/11 – 12/31/11
|
0.00%
|
|
Segment
4: 1/1/09 – 12/31/11
|
25.00%
|
Any
earned 2007–2009, 2008–2010 and 2009–2011 performance cycle awards under the
LTIP shall be paid to the Employee in 2010, 2011 and 2012, respectively, 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) Severance
Payments. The “Severance Period” shall be October 1, 2009
through and including September 30, 2011. The Employee shall receive
semi-monthly severance payments (“Severance Payments”) over the Severance
Period, except as set forth below, of $83,331.67, which is equal to the sum of
(i) his current semi-monthly base salary of $41,666.67 and
(ii) $41,665.00, which is an amount equal to one-twenty-fourth (1/24th) of
his 2006, 2007, and 2008 AIP averaged over the period of time between July 1,
2006 through December 31, 2008. As a result, the Employee’s Severance
Payments over the 24-month period shall aggregate to
$3,999,920. Severance Payments shall be made semi-monthly at the same
times as compensation is paid to exempt United States employees of the
Company. Payments shall commence at the beginning of the 7th month
after the Separation Date (April 1, 2010), and the first payment due shall be
equal to $999,980 (representing 6 months of severance payments at $166,663.34
per month). Thereafter, payments shall be made
semi-monthly.
(d) Unused
Vacation. The Company shall pay the Employee promptly after
execution of this Agreement an amount equal to 5 days of accrued but unused
vacation as of the Separation Date.
(e) Equity
Compensation. The exercisability, lapsing and forfeiture of
the Employee’s purchased restricted stock (“PRS”) and stock settled appreciation
rights (“SSARs”)
2
shall be
governed by the provisions of various equity award agreements between the
Employee and the Company except as otherwise provided in this
Section 2(e). With respect to equity granted under the Equity
Choice Program in 2007 and 2008, these PRS and SSARs shall become vested on a
pro-rated basis for days worked during the particular vesting period, that being
the three years ended May 8, 2010 and May 6, 2011,
respectively. Specifically, PRS granted in 2007 shall vest pro-rated
at 80.1%, and SSARs granted in 2008 shall vest pro-rated at 46.8%.
(f) Other
Benefits. Subject to the Employee’s continued co-payment of
premiums, the Employee and eligible dependents shall continue to participate for
the Severance Period in all welfare benefit plans under which the Employee (and
eligible dependents) participated immediately prior to the Separation Date upon
the same terms and conditions (except for the requirements of continued
employment) in effect for active employees of the Company; provided that if such
benefits are not available to former employees of the Company, the Employee
shall receive the value thereof. Notwithstanding the foregoing, in
the event the Employee obtains other employment that offers comparable benefits
as to any particular Company welfare plan, the coverage by the Company for such
welfare plan under this subsection shall be reduced by such comparable
subsequent employer benefits. The continuation of health benefits
under this Section 2(f) shall reduce and count against the Employee’s rights
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”). 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.
(g) Financial
Planning / Advice. Until the expiration of the Severance
Period, the Company shall reimburse the Employee up to a maximum of $50,000 for
financial, tax and estate planning advice. Reimbursement requests
must include appropriate receipts from an appropriate advisor and shall be sent
to the Company’s Senior Vice President, Human Resources.
(h) Outplacement. The
Company shall arrange for the Employee to have the outplacement services of a
firm selected by the Company 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 Severance Period or the
date on which the Employee accepts Employment. Alternatively, the
Employee may select an outplacement service provider of his choosing and the
Company will reimburse such fees for outplacement services up to a maximum
amount of $40,000. Reimbursement requests shall be handled as
above.
(i) Legal
Fees. The Company shall reimbursement the Employee up a
maximum of $10,000 for legal fees incurred in negotiation and preparation of
this Agreement.
(j) Retirement
Plans. The Employee’s benefits and rights under the Company’s
Retirement Investment Fund Plan (401(k) plan) and Deferred Compensation Plan
shall be determined under the applicable provisions of such plans.
3. Conditions. Any
payments or benefits made or provided pursuant to Section 2 (other than
Accrued Amounts) are subject to the Employee’s:
3
(a) compliance
with the restrictive covenant provisions of Section 4 hereof;
(b) delivery
to the Company of an executed General Release (the “General Release”), which
shall be substantially in the form attached hereto as Attachment B (with
such changes therein or additions thereto as needed under then applicable law to
give effect to its intent and purpose) within twenty-one (21) days of
presentation thereof by the Company to the Employee; and
(c) delivery
to the Company of a resignation from all offices, directorships and fiduciary
positions with the Company, its affiliates and employee benefit
plans.
4. Restrictive
Covenants
(a) Non-Competition. During
the Non-Competition Period (defined below), the Employee shall not, acting alone
or with others, directly or indirectly, either as employee, employer,
consultant, advisor, or director, or as an owner, investor, partner, or
shareholder unless the Employee’s interest is insubstantial, engage in or become
associated with a “Competitive Activity.” For this purpose,
(A) the “Non-Competition Period” means the period of time during which the
Employee is employed by the Company and the two-year period following the
Employee’s Separation Date; and (B) the term “Competitive Activity” means
any business or other endeavor that engages in a line of business in any
geographic location that is substantially the same as either (1) any line
of operating business which the Company or a subsidiary engages in, conducts,
or, to the Employee’s knowledge, has definitive plans to engage in or conduct,
or (2) any operating business that has been engaged in or conducted by the
Company or a subsidiary and as to which, to the Employee’s knowledge, the
Company or subsidiary has covenanted in writing, in connection with the
disposition of such business, not to compete therewith. The
Compensation Committee of the Board of Directors (the “Committee”) shall, in the
reasonable exercise of its discretion, determine which lines of business the
Company and its subsidiaries conduct as of the Employee’s termination date and
which third parties may reasonably be deemed to be in competition with the
Company and its subsidiaries. For purposes of this Section 4(a),
the Employee’s interest as a shareholder is insubstantial if it represents
beneficial ownership of less than five (5%) percent of the outstanding stock,
and the Employee’s interest as an owner, investor, or partner is insubstantial
if it represents ownership, as determined by the Committee in its discretion, of
less than five (5%) percent of the outstanding equity of the
entity.
(b) Non-Solicitation. During
the Non-Competition Period, the Employee, acting alone or with others, directly
or indirectly, shall not (A) induce any customer or supplier of the Company
or a subsidiary or affiliate, or other company with which the Company or a
subsidiary or affiliate has a business relationship, to curtail, cancel, not
renew, or not continue his or her or its business with the Company or any
subsidiary or affiliate; or (B) induce, or attempt to influence, any
employee of or service provider to the Company or a subsidiary or affiliate to
terminate such employment or service.
(c) Confidentiality. The
Employee shall not at any time disclose, use, sell, or otherwise transfer any
confidential or proprietary information of the Company or any subsidiary or
affiliate, including but not limited to information regarding the Company’s
current and
4
potential
customers, organization, employees, finances, and methods of operation and
investments, so long as such information has not otherwise been disclosed to the
public or is not otherwise in the public domain, except as required by law or
pursuant to legal process.
(d) Cooperation. The
Employee shall provide reasonable cooperation with the Company or any subsidiary
or affiliate by making himself available (consistent with the Employee’s
reasonable commitments) to testify on behalf of the Company or such subsidiary
or affiliate in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and otherwise assist the Company or any
subsidiary or affiliate in any such action, suit, or proceeding by providing
information and meeting and consulting with members of management of, other
representatives of, or counsel to, the Company or such subsidiary or affiliate,
as reasonably requested. The Company shall reimburse the Employee for
any out-of-pocket expenses which the Employee incurs in connection with such
cooperation; provided that if such cooperation requires the Employee’s time
commitment of more than 3 days (8 hours per day) within a 30 days rolling
period, the Company shall pay the Employee a per diem amount equal to the daily
amount of the Employee’s annual base salary.
(e) Non-Disparagement. Each
of the Employee and the Company agrees that at no time shall 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.
(f) Effect of
Failure to Comply with Obligations. The Company shall have no
obligations to make payments or provide benefits to the Employee under this
Agreement if he has failed or fails to comply with the obligations set forth in
Sections 3(a) through 3(e) during or prior to the Severance Period, other
than inadvertent and inconsequential events constituting
non-compliance.
(g) Clawback
Provision. If the Employee has failed to comply with the
obligations under Sections 3(a), 3(b), 3(c) or 3(d) (other than an
inadvertent and inconsequential event constituting non-compliance) during his
employment with the Company or the Severance Period, all of the following
forfeitures shall result:
(i) The
unexercised portion of any option or SSAR, whether or not vested, and any other
award not then vested shall be immediately forfeited and canceled.
(ii) The
Employee shall be obligated to repay to the Company, in cash, within ten (10)
business days after demand is made therefor by the Company,
(1) the total
amount of any cash payments made to the Employee under Sections 2(c) and
(f);
(2) other
cash amounts paid to the Employee under any AIP and LTIP awards since the date
two years prior to the Separation Date; and
5
(3) the Award
Gain (as defined below) realized by the Employee upon each exercise of an option
or SSAR or settlement of a PRS or restricted stock unit award (regardless of any
elective deferral) since the date two years prior to the Separation
Date. For purposes of this Section 4, the term “Award Gain”
shall mean (i), in respect of a given option or SSAR exercise, the product of
(X) the fair market value per share of stock at the date of such exercise
(without regard to any subsequent change in the market price of shares) minus
the exercise price times (Y) the number of shares or stock appreciation
rights as to which the option or SSAR was exercised at that date, and (ii), in
respect of any other settlement of an award granted to the Employee, the fair
market value of the cash or stock paid or payable to the Employee (regardless of
any elective deferral) less any cash or the fair market value of any stock or
property (excluding any payment of tax withholding) paid by the Employee to the
Company as a condition of or in connection with such settlement.
(h) Equitable
Relief and Other Remedies. The Employee acknowledges and
agrees that the Company’s remedies at law for a breach or threatened breach of
any of the provisions of this Section 4 would be inadequate and, in
recognition of this fact, the parties agree that, in the event of such a breach
or threatened breach, in addition to any remedies at law, the other party,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be
available.
(i) Reformation. If
it is determined by a court of competent jurisdiction in any state that any
restriction in this Section 3 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it is the intention
of the parties that such restriction may be modified or amended by the court to
render it enforceable to the maximum extent permitted by the law of that
state.
5. Entire
Consideration. The Employee understands and agrees that the
payments and benefits provided for in this Agreement (a) are the only
payments and benefits 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 being provided to him in consideration for his signing of the
Agreement and the “Release,” as defined in Section 6, which consideration
he agrees is adequate and satisfactory to him.
6. Release. As
a condition to the Employee’s entitlement to the compensation, payments and
benefits provided for in Section 2 hereof (other than subsections (a), (d)
and (g) thereof), 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.
7. Return of
Property. Except as otherwise provided in this Section 7,
the Employee expressly agrees that, on or before the Separation Date, he shall
return to the Company all property of the Company and its affiliates including,
but not limited to, any and all files, computers, computer equipment and
software and diskettes, blackberries, documents,
6
papers,
records, accords, notes, agenda, memoranda, plans, calendars and other books and
records of any kind and nature whatsoever containing information concerning the
Company and its affiliates or their customers or operations. The
Employee affirms that he shall not retain copies of any such property or other
materials. Notwithstanding the foregoing, the Employee shall not be
required to return his rolodexes, personal diaries and
correspondence.
8. Tax and
Withholding. Any Federal, State and/or local income, personal
property, franchise, excise or other taxes owed by the Employee 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. The parties
hereto agree and acknowledge that the Company shall withhold from any payments
made or benefits provided to the Employee 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.
9. No Oral
Modification; Controlling Document. 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. If
there is a conflict between any provision of this Agreement and any provision of
any other agreement, policy, plan or other document, the provision of this
Agreement shall control.
10. Resolution
of Disputes. Except as provided in Section 4, any disputes
under or in connection with this Agreement shall 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. The Company shall pay for the cost of the
arbitrator. Otherwise, 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; provided that the Company shall pay the
Employee’s reasonable attorneys fees if he prevails on a material issue in
dispute in the arbitration. Pending the resolution of any arbitration
or litigation, the Company shall continue payment of all amounts due the
Employee under this Agreement and all benefits to which he is entitled at the
time the dispute arises.
11. 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.
12. 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.
13. Successors
and Assigns. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective heirs,
administrators,
7
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.
14. 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:
Xxxxxx X.
Xxxx
At the
most recent address found in the Company records
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.
15. Counterparts. This
Agreement may be executed in two counterparts, each of which shall be deemed to
be an original and which together shall constitute one and the same
instrument. Signatures delivered by facsimile (including scanned
signatures delivered by e-mail) shall be considered for all purposes under this
letter agreement to be original signatures.
16. Acknowledgement
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 not less than 21 days
in which to consider and return this Agreement.
17. Indemnification;
Liability Insurance. The Company agrees to indemnify the
Employee and hold him harmless to the fullest extent permitted by applicable law
and under the by-laws of the Company against and in respect to any and all
actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including reasonable attorneys’ fees), losses, and damages resulting from his
good faith performance of his duties and obligations to the
Company. The Company shall cover the Employee under directors and
officers liability insurance after the Separation Date while potential liability
exists in the same amount and to the same extent as the Company covers its other
officers and directors.
8
WHEREFORE, intending to be
legally bound, the parties have agreed to the aforesaid terms and indicate their
agreement by signing below.
|
/s/ Xxxxxx X.
Xxxx
Xxxxxx X.
Xxxx
|
October 13,
2009
Date
|
|
INTERNATIONAL
FLAVORS & FRAGRANCES INC.
/s/ Xxxxxx X.
Xxxxxxxx
Name: Xxxxxx
X. Xxxxxxxx
Title:
Lead Director
|
October 14,
2009
Date
|
9
SCHEDULE I
GENERAL
RELEASE
In
consideration for the severance benefits described in Section 2 of the
Separation Agreement, dated September 30, 2009, to which this General Release is
attached, I hereby irrevocably and unconditionally release, acquit and forever
discharge the Company, its successors, assigns, agents, directors, officers,
executives, representatives, subsidiaries, divisions, parent corporations and
affiliates, and all other persons acting by, through or in concert with any of
them (collectively, the “Releasees”) from any and
all charges, complaints, claims, liabilities, obligations, promises, agreements,
actions, damages, expenses (including attorneys’ fees and costs actually
incurred), or any rights of any and every kind or nature, accrued or unaccrued,
known or unknown, which I have or claim to have arising out of facts and
circumstances which have occurred or existed prior to, or which are occurring
and do exist as of, the date of my execution of this Agreement against each or
any of the Releasees. This release (the “Release”) pertains to,
but is in no way limited to, all matters relating to or arising out of my
employment and the cessation of my employment with the Company and all claims
for severance benefits or other payments which are not express obligations of
the Company under this Agreement, or otherwise. The Release further
pertains to, but is in no way limited to, rights and claims under the Age
Discrimination in Employment Act of 1967, as amended, Title VII of the
Civil Rights Act, as amended, the Americans With Disabilities Act, the Family
Medical Leave Act, and all other federal, state, local or municipal fair
employment and discrimination laws, and all claims under common law, whether
based in tort or contract, law or equity.
Notwithstanding
anything herein to the contrary, this General Release does not apply
to: (i) claims that arise after my Separation Date (as defined in the
Separation Agreement); (ii) my rights under any tax-qualified pension plan or
claims for accrued, vested benefits under any other employee benefit plan,
policy or arrangement maintained by the Company or under COBRA; (iii) worker’s
compensation claims and any other claims that cannot be waived by law; (iv) my
rights to enforce the Separation Agreement; or (v) my rights as a
stockholder.
This
Agreement is not intended to and does not interfere with the Equal Employment
Opportunity Commission’s right to enforce anti-discrimination laws or to seek
relief that shall benefit the public and any victim of unlawful employment practices who has not waived his or her
claims. Therefore, by signing the Release, I waive any right to
personally recover against the Company, but I am not prevented from filing a
charge with, or testifying, assisting, or participating in any proceeding
brought by the EEOC, concerning an alleged discriminatory practice of the
Company.
I hereby
represent that I have been given a period of twenty-one (21) days to review and
consider this Release before signing it. I further understand that I
may use none or as much of this twenty-one (21) day period as I wish prior to
signing.
I
acknowledge that I have consulted with an attorney before signing this
Release.
I
acknowledge that I may revoke this Release within seven (7) days after I sign it
by delivering a written notice of revocation to: Xxxxxx X. Xxxxx,
Senior Vice President, General Counsel &
SCHEDULE
I – Page 1
Secretary,
International Flavors & Fragrances Inc., 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000. I acknowledge that, for such revocation to be
effective, Xxxxxx X. Xxxxx must receive written notice not later than the close
of business on the seventh day after the day on which I execute this
Release. If I revoke this Release, it shall not be effective and
shall be null and void.
I
ACKNOWLEDGE THAT I HAVE READ THIS RELEASE, UNDERSTAND IT AND AM VOLUNTARILY
EXECUTING IT.
(PLEASE
READ THIS RELEASE CAREFULLY. IT COVERS ALL KNOWN AND UNKNOWN
CLAIMS.)
IN
WITNESS WHEREOF, I have executed this General Release this 13th day of October,
2009.
|
/s/
Xxxxxx X. Xxxx
|
|
|
Xxxxxx
X. Xxxx
|
|
Signature
of Witness:
|
||
|
Print
Name of Witness:
|
||
|
Address
of Witness:
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SCHEDULE
I – Page 2
