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 June 30, 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 incorporation (IRS Employer
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 August 4, 2000: 99,891,344
PART I. FINANCIAL INFORMATION 1
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
6/30/00 12/31/99
------------ ------------
(Unaudited)
Assets
Current Assets:
Cash & Cash Equivalents ..................... $ 52,403 $ 62,135
Short-term Investments ...................... 983 836
Trade Receivables ........................... 334,870 290,118
Allowance For Doubtful Accounts ............. (10,393) (10,013)
Inventories: Raw Materials ................. 211,291 229,896
Work in Process ............... 8,652 7,423
Finished Goods ................ 150,500 177,950
------------ ------------
Total Inventories ....... 370,443 415,269
Other Current Assets ........................ 80,481 77,069
------------ ------------
Total Current Assets ........................ 828,787 835,414
------------ ------------
Property, Plant & Equipment, At Cost ........... 960,232 948,920
Accumulated Depreciation ....................... (439,679) (425,004)
------------ ------------
520,553 523,916
Other Assets ................................... 35,247 42,165
------------ ------------
Total Assets ................................... $ 1,384,587 $ 1,401,495
============ ============
Liabilities and Shareholders' Equity
Current Liabilities:
Bank Loans .................................. $ 44,157 $ 29,274
Commercial Paper ............................ 144,287 63,200
Accounts Payable-Trade ...................... 55,982 71,989
Dividends Payable ........................... 38,630 39,882
Income Taxes ................................ 62,068 54,497
Other Current Liabilities ................... 117,536 110,860
------------ ------------
Total Current Liabilities ................... 462,660 369,702
------------ ------------
Other Liabilities:
Deferred Income Taxes ....................... 29,622 32,785
Long-term Debt .............................. 17,002 3,832
Retirement and Other Liabilities ............ 141,019 136,679
------------ ------------
Total Other Liabilities ........................ 187,643 173,296
------------ ------------
Shareholders' Equity:
Common Stock (115,761,840 shares issued) .... 14,470 14,470
Capital in Excess of Par Value .............. 133,113 134,480
Retained Earnings ........................... 1,226,699 1,211,790
Accumulated Other Comprehensive Income:
Cumulative Translation Adjustment ........ (72,363) (57,135)
------------ ------------
1,301,919 1,303,605
Treasury Stock, at cost - 14,810,496
shares in '00 and 10,939,915 in '99 ...... (567,635) (445,108)
------------ ------------
Total Shareholders' Equity .................. 734,284 858,497
------------ ------------
Total Liabilities and Shareholders' Equity ..... $ 1,384,587 $ 1,401,495
============ ============
See Notes to Consolidated Financial Statements
2
INTERNATIONAL FLAVORS & FRAGRANCES INC.
CONSOLIDATED STATEMENT OF INCOME
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(Unaudited)
3 Months Ended 6/30
------------------------
2000 1999
--------- ---------
Net Sales $ 368,759 $ 371,079
--------- ---------
Cost of Goods Sold ................................. 199,292 205,210
Research and Development Expenses .................. 26,945 25,943
Selling and Administrative Expenses ................ 66,024 64,214
Nonrecurring Charges ............................... -- 28,758
Interest Expense ................................... 3,074 1,208
Other (Income) Expense, Net ........................ 203 4,599
--------- ---------
295,538 329,932
--------- ---------
Income Before Taxes on Income ...................... 73,221 41,147
Taxes on Income .................................... 24,305 13,713
--------- ---------
Net Income ......................................... 48,916 27,434
Other Comprehensive Income:
Foreign Currency Translation Adjustments ........ (186) (17,304)
--------- ---------
Comprehensive Income ............................... $ 48,730 $ 10,130
========= =========
Net Income Per Share - Basic ....................... $0.48 $0.26
Net Income Per Share - Diluted ..................... $0.48 $0.26
Average Number of Shares Outstanding - Basic ....... 102,359 105,928
Average Number of Shares Outstanding - Diluted ..... 102,387 106,127
Dividends Paid Per Share ........................... $0.38 $0.38
6 Months Ended 6/30
------------------------
2000 1999
--------- ---------
Net Sales .......................................... $ 738,671 $ 738,844
--------- ---------
Cost of Goods Sold ................................. 400,377 411,679
Research and Development Expenses .................. 53,757 51,868
Selling and Administrative Expenses ................ 131,365 127,794
Nonrecurring Charges ............................... 9,354 28,758
Interest Expense ................................... 5,211 2,199
Other (Income) Expense, Net ........................ (126) 2,045
--------- ---------
599,938 624,343
--------- ---------
Income Before Taxes on Income ...................... 138,733 114,501
Taxes on Income .................................... 46,041 38,287
--------- ---------
Net Income ......................................... 92,692 76,214
Other Comprehensive Income:
Foreign Currency Translation Adjustments ........ (15,228) (48,001)
--------- ---------
Comprehensive Income ............................... $ 77,464 $ 28,213
========= =========
Net Income Per Share - Basic ....................... $0.90 $0.72
Net Income Per Share - Diluted ..................... $0.90 $0.72
Average Number of Shares Outstanding - Basic ....... 103,311 105,917
Average Number of Shares Outstanding - Diluted ..... 103,336 106,127
Dividends Paid Per Share ........................... $0.76 $0.76
See Notes to Consolidated Financial Statements
INTERNATIONAL FLAVORS & FRAGRANCES INC. 3
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(Unaudited)
6 Months Ended 6/30
--------------------------
2000 1999
---------- ----------
Cash Flows From Operating Activities:
Net Income ....................................... $ 92,692 $ 76,214
Adjustments to Reconcile to Net Cash
Provided by Operations:
Depreciation ............................... 29,694 27,094
Deferred Income Taxes ...................... (8,102) 5,112
Changes in Assets and Liabilities:
Current Receivables ..................... (50,320) (50,497)
Inventories ............................. 38,671 (2,973)
Current Payables ........................ 1,608 36,500
Other, Net .............................. 11,211 6,462
--------- ---------
Net Cash Provided by Operations .................. 115,454 97,912
--------- ---------
Cash Flows From Investing Activities:
Proceeds From Sales/Maturities of
Short-term Investments ......................... 124 485
Purchases of Short-term Investments .............. (273) (828)
Additions to Property, Plant & Equipment,
Net of Minor Disposals ......................... (32,290) (63,093)
--------- ---------
Net Cash Used in Investing Activities ............ (32,439) (63,436)
--------- ---------
Cash Flows From Financing Activities:
Cash Dividends Paid to Shareholders .............. (79,035) (80,598)
Increase in Bank Loans ........................... 15,680 22,889
Proceeds from Issuance of Commercial Paper ....... 81,087 --
Increase in Long-term Debt ....................... 13,747 --
Decrease in Long-term Debt ....................... (541) (420)
Proceeds From Issuance of Stock Under
Stock Option Plans ............................. 1,319 2,436
Purchase of Treasury Stock ....................... (125,213) (847)
--------- ---------
Net Cash Used in Financing Activities ............ (92,956) (56,540)
--------- ---------
Effect of Exchange Rate Changes on
Cash and Cash Equivalents ...................... 209 (7,003)
--------- ---------
Net Change in Cash and Cash Equivalents .......... (9,732) (29,067)
Cash and Cash Equivalents at Beginning
of Year ........................................ 62,135 114,960
--------- ---------
Cash and Cash Equivalents at End of Period ....... $ 52,403 $ 85,893
========= =========
Interest Paid .................................... $ 4,195 $ 2,265
Income Taxes Paid ................................ $ 45,039 $ 35,363
See Notes to Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENT 4
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. These interim statements are unaudited. In the opinion of the
Company's management, all normal recurring adjustments necessary for a fair
presentation 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. There were no charges in the second quarter 2000.
At June 30, 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 $5,000,000 in savings from
the program were realized in the first six months of 2000.
Movements in the reserve resulting from nonrecurring charges were as follows:
EMPLOYEE- ASSET-
RELATED RELATED TOTAL
------------ ----------- ------------
Balance December 31, 1999 ..... $ 9,622,000 $ 1,586,000 $ 11,208,000
Additional Reserves ........... 9,354,000 -- 9,354,000
Utilized in 2000 .............. (10,038,000) (736,000) (10,774,000)
------------ ----------- ------------
Balance June 30, 2000 ......... $ 8,938,000 $ 850,000 $ 9,788,000
============ =========== ============
The balance of the reserve is to be utilized upon final decommissioning and
disposal of affected equipment, and as severance and other benefit obligations
to affected employees are satisfied.
5
The Company's reportable segment information, based on geographic area, for the
first half of 2000 and 1999 follows. Certain prior year amounts have been
reclassified for comparative purposes.
North Latin Asia-
2000 (Dollars in thousands) America EAME America Pacific Eliminations Consolidated
- - -------------------------------------- ------------ ------------ ------------ ------------ ---------------- --------------
Sales to unaffiliated customers $ 235,946 $ 287,216 $ 113,014 $ 102,495 $ -- $ 738,671
Transfers between areas 27,616 58,637 768 6,193 (93,214) --
------------ ------------ ------------ ------------ --------------- --------------
Total sales $ 263,562 $ 345,853 $ 113,782 $ 108,688 $ (93,214) $ 738,671
============ ============ ============ ============ =============== ==============
Operating profit $ 34,382 $ 92,602 $ 23,066 $ 22,322 $ 323 $ 172,695
============ ============ ============ ============ ===============
Corporate and other unallocated
expenses (19,523)
Nonrecurring charges (9,354)
Interest expense (5,211)
Other income (expense), net 126
-------------
Income before taxes on income $ 138,733
==============
North Latin Asia-
1999 (Dollars in thousands) America EAME America Pacific Eliminations Consolidated
- - -------------------------------------- ------------ ------------ ------------ ------------ ---------------- --------------
Sales to unaffiliated customers $ 244,963 $ 304,407 $ 99,311 $ 90,163 $ -- $ 738,844
Transfers between areas 28,396 64,218 345 5,095 (98,054) --
------------ ------------ ------------ ------------ --------------- --------------
Total sales $ 273,359 $ 368,625 $ 99,656 $ 95,258 $ (98,054) $ 738,844
============ ============ ============ ============ =============== ==============
Operating profit $ 35,503 $ 94,358 $ 15,739 $ 16,214 $ 2,554 $ 164,368
============ ============ ============ ============ ===============
Corporate and other unallocated
expenses (16,865)
Nonrecurring charges (28,758)
Interest expense (2,199)
Other income (expense), net (2,045)
-------------
Income before taxes on income $ 114,501
==============
Included in the 1999 operating profit for EAME are second quarter one-time
charges totalling $1,619,000 for accelerated depreciation on assets to be
disposed.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
OPERATIONS
Worldwide net sales for the second quarter of 2000 were $368,759,000, compared
to $371,079,000 in the 1999 second quarter, a decrease of 1%. Local currency
sales for the 2000 second quarter increased approximately 3% over the 1999
second quarter. However, such local currency growth was unfavorably effected by
translation into the stronger U.S. dollar. In local currency, fragrance sales in
Europe, Africa and the Middle East ("EAME") increased 4% for the quarter, while
Asia-Pacific increased 7%. Fragrance sales in North America and Latin America
rose 3% and 14%, respectively. EAME and Asia-Pacific reported increased flavor
sales, with respective local currency increases of 5% and 9%, while North
America and Latin America flavor sales declined 11% and 1%, respectively. The
weak flavor sales in North America reflect the continued weak business
conditions facing many of the Company's flavor customers.
For the first six months of 2000, worldwide net sales totaled $738,671,000,
compared to $738,844,000 for the comparable 1999 period. On a country of
destination basis, local currency sales for the six months ended June 30, 2000
were strongest in Asia-Pacific, where sales increased 10% over 1999. Local
currency sales in EAME increased 5% in comparison to the prior year period,
while sales in Latin America increased 8%. Sales in North
6
America declined 2% in comparison to the prior year, mainly as a result of the
continued weak business conditions facing many of the Company's flavor
customers. For the six-month period ended June 30, 2000, the local currency
growth was mitigated on translation into the stronger U.S. dollar. Had exchange
rates been the same during 2000 and 1999, consolidated sales for the six-month
period ended June 30, 2000 would have increased approximately 4% in comparison
to the prior year period.
The percentage relationship of cost of goods sold and other operating expenses
to sales for the first half 2000 and 1999 are detailed below.
FIRST HALF
----------
2000 1999
---- ----
Cost of Goods Sold .............................. 54.2% 55.7%
Research and Development Expenses ............... 7.3% 7.0%
Selling and Administrative Expenses ............. 17.8% 17.3%
Cost of goods sold, as a percentage of net sales, decreased from the prior year
primarily due to improved economic and pricing conditions in Latin America,
principally Brazil, and stabilized pricing conditions for aroma chemicals. 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 were 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, as well as certain costs incurred in connection
with an employment contract. These costs were partially offset by elimination of
costs incurred in 1999 in connection with the Company's Y2K program.
Net income for the second quarter of 2000, totaled $48,916,000 compared to
$27,434,000 in the prior year second quarter; net income for the first six
months of 2000 totaled $92,692,000 compared to $76,214,000 for the comparable
1999 period. The amounts for the first six months of 2000 and 1999 include the
effect of the nonrecurring charges discussed below. Excluding these charges,
income for the second quarter and six months ended June 30, 2000 was $48,916,000
and $98,940,000, respectively, compared to $50,579,000 and $99,359,000 for the
comparable periods in 1999.
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. There were no charges in the second quarter 2000.
In the second quarter 1999, the Company recorded charges of $35 million ($23
million after tax). Certain elements of those charges, relating primarily to
accelerated depreciation on assets to be disposed of, were
7
recognized in cost of goods sold ($666,000) and selling and administrative
expenses ($953,000). In addition, $4,480,000 associated primarily with facility
closure was included in other income and expense. The balance of the charges,
representing employee separation and asset-related costs, were recorded as
nonrecurring charges in the Consolidated Statement of Income.
Of the total pretax charges in the second quarter of 1999, approximately
$25,400,000 were for EAME, principally employee separation costs associated with
the rationalization of certain operations and facilities in the United Kingdom,
the Netherlands and France. For North America, Latin America and Asia-Pacific,
1999 charges totaled approximately $3 million each and relate to employee
separations and closure of operations.
At June 30, 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 $5,000,000 in savings from
the program were realized in the first six months of 2000.
Movements in the reserve resulting from nonrecurring charges were as follows:
EMPLOYEE ASSET-
RELATED RELATED TOTAL
---------------------------------------------
Balance December 31, 1999 ..... $ 9,622,000 $ 1,586,000 $ 11,208,000
Additional Reserves ........... 9,354,000 -- 9,354,000
Utilized in 2000 .............. (10,038,000) (736,000) (10,774,000)
----------- ----------- ------------
Balance June 30, 2000 ......... $ 8,938,000 $ 850,000 $ 9,788,000
============ =========== ============
The balance of the reserve is to be utilized upon final decommissioning and
disposal of affected equipment, and as severance and other benefit obligations
to affected employees are satisfied.
The effective tax rates for the second quarter and first six months of 2000 was
33.2%, compared to 33.3% and 33.4% for the comparable periods 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 $53,386,000 at June 30, 2000, and
working capital was $366,127,000 compared to $465,712,000 at December 31, 1999.
Gross additions to property, plant and equipment during the first half of 2000
were $36,562,000.
At June 30, 2000, the Company's outstanding commercial paper had an average
interest rate of 6.5%. Commercial paper maturities did not extend beyond
November 30, 2000. Long-term debt increased $13,747,000 in the first six months
of 2000 due to a loan in Japan; the 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 each of January and April 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.
8
The accumulated comprehensive income component of Shareholders' Equity,
comprised principally of the cumulative translation adjustment, at June 30,
2000, was ($72,363,000) 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.
9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
2000 Annual Meeting
- - -------------------
At the annual meeting of Registrant's shareholders held Thursday, May 18, 2000,
at which 91,888,860 shares, or 89.1%, of Registrant's Common Stock, were
represented in person or by proxy, the ten nominees for director of Registrant,
as listed in Registrant's proxy statement dated March 29, 2000 previously filed
with the Commission, were duly elected to Registrant's Board of Directors. There
was no solicitation of proxies in opposition to these nominees.
At such annual meeting, the shareholders also voted with respect to the two
other matters submitted for shareholder consideration as follows, the votes
being legally sufficient in each case to adopt the proposal:
Proposal to approve Registrant's 2000 Stock Option Plan
for Non-Employee Directors, covering up to 450,000 shares
of Registrant's Common Stock
-----------------------------------------------------------
No. of Shares
-------------
FOR 87,534,991
AGAINST 3,994,738
ABSTAIN AND NON-VOTING 359,131
Proposal to approve Registrant's 2000 Stock Award and
Incentive Plan, covering up to 4.5 million shares of
Registrant's Common Stock
-----------------------------------------------------------
No. of Shares
-------------
FOR 86,610,429
AGAINST 4,909,236
ABSTAIN AND NON-VOTING 369,195
10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Number
3 Amendments to Registrant's By-laws adopted April 13, 2000
and May 18, 2000.
10(a) Memorandum of Understanding between Registrant and Richard
A. Goldstein, Chairman and Chief Executive Officer of
Registrant, approved by Registrant's Board of Directors on
April 13, 2000.
10(b) Registrant's Executive Separation Policy adopted April 13,
2000.
10(c) Amended and Restated 364-day Credit Agreement dated as of
May 30, 2000 among Registrant as Borrower, certain Initial
Lenders, Citibank, N.A. as Agent and Salomon Smith Barney
Inc., as Arranger.
27 Financial Data Schedule (EDGAR version only).
(b) REPORTS ON FORM 8-K
Registrant filed no report on Form 8-K during the quarter for
which this report on Form 10-Q is filed.
11
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: August 14, 2000 By: /s/ DOUGLAS J. WETMORE
----------------------------------
Douglas J. Wetmore, Vice-President
and Chief Financial Officer
Dated: August 14, 2000 By: /s/ STEPHEN A. BLOCK
----------------------------------
Stephen A. Block, Senior Vice-
President, General Counsel
and Secretary
AMENDMENT TO REGISTRANT'S BY-LAWS
ADOPTED BY BOARD OF DIRECTORS
ON APRIL 13, 2000
RESOLVED that Article II, Section 2 of the
By-laws of the Corporation, as amended, is hereby
further amended, effective May 18, 2000, by
changing the word "twelve" appearing therein
to "ten."
AMENDMENT TO REGISTRANT'S BY-LAWS
ADOPTED BY BOARD OF DIRECTORS
ON MAY 18, 2000
RESOLVED that Article II, Section 2 of the
By-laws of the Corporation, as amended, is hereby
further amended, effective immediately, by
changing the word "ten" appearing therein to
"eleven."
MEMORANDUM OF UNDERSTANDING
This Memorandum sets forth an outline of the terms of an Employment
Contract pursuant to which International Flavors & Fragrances Inc. ("IFF")
will employ Richard Goldstein ("Executive") as its Chairman and CEO.
I. Term: Five years from date first employed.
II. Annual Compensation
Salary: Not less than $900,000.
Bonus: Based on performance. First year
guarantee $590,000 (which represents 60%
of salary), under plan to be adopted by
IFF shareholders at annual meeting. No
proration.
Long Term Incentive: Based on performance. First year
guarantee $720,000 (which represents 80%
of salary), under plan to be adopted by
IFF shareholders at annual meeting. No
proration.
Annual Stock Option First year 100,000 shares. Thereafter
Grant: annual stock option grant of shares with
Black-Scholes value of $590,000. First
year grant will be made after IFF
shareholders have approved new stock
option plan at annual meeting.
Expenses: $120,000 per year to cover incidental
business related expenses.
Benefits: Participate in IFF programs for its
executives. IFF will provide Executive
supplemental individual life insurance,
group life insurance, long term
disability, accidental death, etc. in
order that total benefits provided to
Executive by IFF will be equivalent to
benefits provided to Executive by
Unilever (Executive's current employer).
III Sign on Stock Option 500,000 shares. This grant will be made
Grant: upon date of employment to the extent
shares are available under existing
stock option plan. Balance of grant will
be made after IFF shareholders have
approved new plan at annual meeting.
IV. Forfeiture Makeups: When Executive leaves Unilever,
Executive will be required to give up
certain grants. To keep Executive whole,
IFF will provide the following:
(a) Payment of $2,118,750, payable
when Unilever would have made identical
payments under Unilever's long term
incentive plan.
(b) Payment of $871,000 to compensate
Executive for loss of ability to
exercise "in the money" vested options
which Unilever has the right to cancel.
If Unilever permits exercise of these
options, the amount would not be due
from IFF. It is understood that, if this
amount is due to Executive from IFF,
Executive will have the right to take
amount in IFF stock and/or cash.
(c) Grant of stock option for 100,000
shares under new plan approved by IFF
shareholders at annual meeting. This is
to compensate executive for loss of his
remaining Unilever stock options which
are under water and unvested.
V. Pension Make-up: In no event will Executive receive less
pension on his retirement from IFF after
five (5) years than he would have
received had he staved at Unilever for
another five (5) years. If retirement
from IFF occurs prior to five (5) years,
the five (5) year pension credit will
be calculated based on Executive's
earnings at IFF and, before IFF, at
Unilever during the five (5) years
immediately preceding such retirement.
VI. Severance: If Executive's employment is terminated
prior to five (5) years by the Company
"without cause" or by the Executive for
"good reason":
(a) Executive will receive salary, bonus
and benefits for the remaining term of
his employment contract, but not for
less than two years. For example:
Year of Period of
Termination Receipt
----------- -------
Year 1 5 years
Year 2 4 years
Year 3 3 years
Year 4 2 years} Payable under IFF
Year 5 2 years} normal severance
policy
(b) Sign on stock option grant will
become/remain fully exercisable for
its full term.
(c) Pension benefit payable to Executive
under Section V above will remain
fully in force.
If Executive's employment is terminated
(i) after five (5) years or (ii) prior
to five (5) years other than by the
Company "without cause" or by the
Executive for "good reason", any
payments to Executive will be determined
under then normal IFF policy.
INTERNATIONAL FLAVORS &
FRAGRANCES INC
By:/s/ RICHARD M. FURLAUD /s/ RICHARD A. GOLDSTEIN
------------------------------ ---------------------------------
Richard A. Goldstein
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
INTERNATIONAL FLAVORS & FRAGRANCES INC.
Executive Separation Policy Document
INTERNATIONAL FLAVORS & FRAGRANCES INC.
- - --------------------------------------------------------------------------------
Executive Separation Policy
- - --------------------------------------------------------------------------------
Page
1. Purpose ................................................................. 1
2. Definitions ............................................................. 1
3. Eligibility ............................................................. 6
4. Severance Payments and Benefits ......................................... 6
5. Acceleration of Equity Awards Upon a Change in Control;
Certain Provisions Applicable to Equity Awards ........................ 15
6. Excise Tax Gross-Up; Limited Reduction in Severance
Payments to Avoid Excise Taxes ........................................ 16
7. Employee Obligations and Conditions to Receipt of Payments
and Benefits .......................................................... 18
8. Other Provisions Applicable to Severance Payments and
Benefits .............................................................. 20
9. Other Plans and Policies; Non-Duplication of Payments
or Benefits ........................................................... 21
10. Miscellaneous ........................................................... 22
INTERNATIONAL FLAVORS & FRAGRANCES INC.
Executive Separation Policy
1. Purpose. The purpose of this International Flavors & Fragrances Inc.
Executive Separation Policy (the "Policy") is to provide certain severance
payments and benefits to designated officers and other key executives and
employees of the Company and its subsidiaries (each, an "Employee") in the event
of termination of employment (i) prior to or more than three years after a
Change in Control or (ii) within three years after a Change in Control. This
Policy shall not affect the right of the Company or a subsidiary to terminate an
Employee's employment with or without Cause.
2. Definitions. The following definitions are applicable for purposes of
this Policy, in addition to terms defined in Section 1 above:
(a) "Annual Compensation" means the sum of salary and annual incentive
compensation, calculated as follows:
(i) Salary shall be calculated as the Employee's annual salary
with the Company and its subsidiaries at the highest rate in effect at
any time during the five years preceding termination of employment;
and
(ii) Annual incentive shall be calculated as the greater of
Employee's average annual incentive award paid for performance in the
three years preceding the year of termination under the AIP or the
Employee's target annual incentive for the year of termination.
(b) "AIP" means any plan or arrangement of the Company providing
cash-denominated bonuses for annual performance.
(c) "Beneficiary" means any family member or members, including by
marriage or adoption, any trust in which the Employee or any family member
or members have more than 50% of the beneficial interest, and any other
entity in which the Employee or any family member or members own more than
50% of the voting interests, in each case designated by the Employee in his
most recent written Beneficiary designation filed with the Committee as
entitled to receive payments or benefits in connection with this Policy or,
if there is no surviving designated Beneficiary, then the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive payments or benefits in connection with this Policy on behalf or in
lieu of such non-surviving designated Beneficiary.
(d) "Cause" means (i) the willful and continued failure by the
Employee to perform substantially his duties with the Company (other than
any such failure resulting from the Employee's incapacity due to physical
or mental illness) after a written demand for substantial performance is
delivered to the Employee by the Chairman of the Board of Directors or the
President of the Company which specifically identifies the manner in which
the Employee has not substantially performed his duties, (ii) the willful
engagement by the Employee in conduct which is not authorized by the Board
of Directors of the Company or within the normal course of the Employee's
business decisions and is known by the Employee to be materially
detrimental to the best interests of the Company or any of its
subsidiaries, or (iii) the willful engagement by the Employee in illegal
conduct or any act of serious dishonesty which adversely affects, or, in
the reasonable estimation of the Board of Directors of the Company, could
in the future adversely affect, the value, reliability or performance of
the Employee to the Company in a material manner. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by
the Board of Directors of the Company or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the
Company. Notwithstanding the foregoing, an Employee shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to the Employee a copy of the resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board of Directors after reasonable notice to the Employee and an
opportunity for him, together with his counsel, to be heard before the
Board of Directors, finding that, in the good faith opinion of the Board of
Directors, the Employee was guilty of the conduct set forth above in (i),
(ii) or (iii) of this Section 2(c) and specifying the particulars thereof
in detail.
(e) A "Change in Control" shall be deemed to have occurred if, after
the Effective Date and while the affected Employee is employed by the
Company or a subsidiary, there shall have occurred any of the following:
(i) Any "person," as such term is used in Section 13(d) and 14(d)
of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company), acquires voting securities
of the Company and immediately thereafter is a "40% Beneficial Owner."
For purposes of this provision, a "40% Beneficial Owner" shall mean a
person who is the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the
Company's then-outstanding voting securities; provided, however, that
the term "40% Beneficial Owner" shall not include any person who was a
beneficial owner of outstanding voting securities of the Company at
February 20, 1990, or any person or persons who was or becomes a
fiduciary of any such person or persons who is, or in the aggregate,
are a "40% Beneficial Owner" (an "Existing Shareholder"), including
any group that may be formed which is comprised solely of Existing
Shareholders, unless and until such time after February 20, 1990 as
any such Existing Shareholder shall have become the beneficial owner
(other than by means of a stock dividend, stock split, gift,
inheritance or receipt or exercise of, or accrual of any right to
exercise, a stock option granted by the Company or receipt or
settlement of any other stock-related award granted by the Company) by
purchase of any additional voting securities of the Company; and
provided further, that the term "40% Beneficial Owner" shall not
include any person who shall become the beneficial owner of 40% or
more of the combined voting power
2
of the Company's then-outstanding voting securities solely as a result
of an acquisition by the Company of its voting securities, until such
time thereafter as such person shall become the beneficial owner
(other than by means of a stock dividend or stock split) of any
additional voting securities and becomes a 40% Beneficial Owner in
accordance with this Section 2(d)(i).
(ii) During any period of two consecutive years commencing on or
after the Effective Date, individuals who at the beginning of such
period constitute the Board, and any new director (other than a
director designated by a person (as defined above) who has entered
into an agreement with the Company to effect a transaction described
in subsections (i), (iii) or (iv) of this definition) whose election
by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved (the "Continuing Directors") cease for any reason to
constitute at least a majority thereof.
(iii) The shareholders of the Company have approved a merger,
consolidation, recapitalization, or reorganization of the Company, or
a reverse stock split of any class of voting securities of the
Company, or the consummation of any such transaction if shareholder
approval is not obtained, other than any such transaction which would
result in at least 60% of the combined voting power of the voting
securities of the Company or the surviving entity outstanding
immediately after such transaction being beneficially owned by persons
who together beneficially owned at least 80% of the combined voting
power of the voting securities of the Company outstanding immediately
prior to such transaction, with the relative voting power of each such
continuing holder compared to the voting power of each other
continuing holder not substantially altered as a result of the
transaction; provided that, for purposes of this Section 2(d)(iii),
such continuity of ownership (and preservation of relative voting
power) shall be deemed to be satisfied if the failure to meet such 60%
threshold (or to substantially preserve such relative voting power) is
due solely to the acquisition of voting securities by an employee
benefit plan of the Company, such surviving entity or a subsidiary
thereof; and provided further, that, if consummation of the corporate
transaction referred to in this Section 2(d)(iii) is subject, at the
time of such approval by shareholders, to the consent of any
government or governmental agency or approval of the shareholders of
another entity or other material contingency, no Change in Control
shail occur until such time as such consent and approval has been
obtained and any other material contingency has been satisfied.
(iv) The shareholders of the Company have approved a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets (or any transaction having a similar effect);
provided that, if consummation of the transaction referred to in this
Section 2(d)(iv) is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
3
agency or approval of the shareholders of another entity or other
material contingency, no Change in Control shall occur until such time
as such consent and approval has been obtained and any other material
contingency has been satisfied.
(v) Any other event which the Board of Directors of the Company
determines shall constitute a Change in Control for purposes of this
Policy.
Notwithstanding the foregoing, the Board and the Continuing Directors may
determine that no Change in Control shall be deemed to have occurred or
that some or all of the enhancements to the rights of Employees under the
Policy upon a Change in Control, as provided under Sections 4, 5 and 6,
shall not apply if, prior to the later of occurrence of the specified event
that would otherwise constitute a Change in Control under this definition
(the "Event") or the expiration of seven days after the Company has
obtained actual notice that such Event has occurred, the Board and the
Continuing Directors of the Company then in office, each by a majority vote
thereof and in consideration of the circumstances and acting in good faith,
determine that the occurrence of such Event shall not be deemed to be a
Change in Control hereunder, shall not be deemed to be a Change in Control
with respect to one or more specified Employees, or shall not result in
specified enhancements to the rights of one or more Employees that would
otherwise be triggered by the occurrence of a Change in Control. Each
Employee covered by the Policy at the date of such Event and affected by
such action of the Board and Continuing Directors shall be protected by the
legally binding obligation of the Company to maintain the Policy in effect
for at least three years after the Event for the benefit of such Employee,
except to the extent such Employee may agree to a change in or termination
of the Policy.
(f) "Committee" means the Stock Option and Compensation Committee of
the Company's Board of Directors, or such other committee as the Board may
designate to perform administrative functions under the Policy.
(g) "Company" means International Flavors & Fragrances Inc., a New
York corporation, or any successor corporation.
(h) "Designated Awards" means (i) options granted under the Company's
Employee Stock Option Plan of 1988, Employee Stock Option Plan of 1992 and
1997 Employee Stock Option Plan, (ii) any other options granted under a
Plan, whether currently existing or hereafter adopted by the Company, that,
by its terms, does not permit such options to become vested and exercisable
upon occurrence of a Change in Control and to remain outstanding for the
periods provided in Section 5(a), and (iii) restricted stock and other
equity-based awards granted under a Plan or arrangement that, by its terms,
does not permit such awards to become vested and non-forfeitable upon
occurrence of a Change in Control as provided in Section 5(a) in each case
if such options or other awards remain outstanding and held by the Employee
at the date of his termination of employment.
4
(i) "Disability" means a disability entitling the Employee to
long-term disability benefits under the Company's long-term disability
policy as in effect at the date of Employee's termination of employment.
(j) "Effective Date" means the date the Policy became effective, as
set forth in Section 10(i) hereof.
(k) "Excess Benefit Plan" means the Company's Supplemental Retirement
Plan and any supplemental pensions provided to the Employee under any
resolutions adopted by the Board of Directors of the Company or any
subsidiary, and as the same may be modified, replaced or added to by the
Company and its subsidiaries from time to time.
(l) "Good Reason" means the occurrence of any of the following events,
unless the Employee has consented in writing thereto:
(i) a reduction by the Company and its subsidiaries in the
Employee's base salary as in effect immediately prior to the Change in
Control;
(ii) the failure by the Company or a subsidiary to continue in
effect any Plan (as hereinafter defined) in which the Employee was
participating at the time of the Change in Control, unless such Plan
(x) is replaced by a successor Plan providing to the Employee
substantially similar compensation and benefits (which replacement
Plan shall continue to be subject to this provision) or (y) terminates
as a result of the normal expiration of such Plan in accordance with
its terms, as in effect immediately prior to the Change in Control; or
the taking of any other action, or the failure to act, by the Company
or a subsidiary which would materially adversely affect the Employee's
continued participation in any of such Plans as compared to the terms
of such participation on the date of the Change in Control, including
by materially reducing the Employee's benefits in the future under any
such Plans;
(iii) effecting a change in the position of the Employee which
does not represent a position commensurate in level, authority and
responsibilities with or a promotion from Employee's position with the
Company or any of its subsidiaries immediately prior to the date of
the Change in Control, or assigning to the Employee responsibilities
which are materially inconsistent with such prior position; or
(iv) the Company's or a subsidiary's requiring the Employee to be
based anywhere more than 45 miles from the location of Employee's
office or the location of the Company's executive offices immediately
prior to the Change in Control, except that the Company may require
Employee to be based more than 45 miles from such location if the
relocation is to a principal executive office of the Company or
principal office of a major division or subsidiary of the Company,
provided that the Employee is reimbursed, on an after-tax basis, for
all reasonable expenses incurred and losses experienced in respect of
such relocation in accordance with Company's relocation policy prior
to the date of the
5
Change in Control, and except for required travel on the business of
the Company or subsidiaries to an extent substantially consistent with
the business travel obligations which the Employee undertook on behalf
of the Company or subsidiaries prior to the Change in Control;
in each case after notice in writing from the Employee to the Company and a
period of 30 days after such notice during which the Company and its
subsidiaries fail to correct such conduct.
(m) "LTIP" means a long-term performance incentive plan of the
Company.
(n) "Plan" means any compensation plan of the Company or a
subsidiary such as an incentive, stock option or restricted stock plan
or any employee benefit plan of the Company or a subsidiary such as a
pension, profit sharing, medical, dental or life insurance plan.
(o) "Prior Executive Severance Agreement" means an Executive
Severance Agreement between the Employee and the Company in effect
immediately prior to the Effective Date of this Policy.
(p) "Retirement" means retirement after attaining age 65.
(q) "Retirement Plan" means the Company's tax-qualified pension
plan in which the Employee participates, as the same may be modified,
replaced or added to by the Company or a subsidiary from time to time.
3. Eligibility. Each officer of the Company or other key executive or
employee of the Company or its subsidiaries who has been designated in writing
by the Committee shall be eligible for the severance payments and benefits and
other provisions of this Policy if his termination of employment qualifies
hereunder. Eligible persons shall include persons employed outside the United
States, if designated by the Committee and subject to Section 10(h) of this
Policy. As of the date of adoption of this Policy, each executive officer of the
Company listed on Annex I is designated as a Tier 1 participant hereunder.
4. Severance Payments and Benefits. For each Employee or class of Employees
eligible to participate under this Policy, the Committee shall specify the terms
and conditions under which severance payments and benefits will be paid and
other terms and conditions of participation. For Employees designated as Tier 1
level participants, these terms and conditions shall be as set forth in this
Section 4; provided, however, that the Committee may vary these terms or provide
enhanced benefits in a document provided to a participant otherwise designated
as Tier 1, except that the Committee shall not vary such terms and conditions in
a way adverse to a previously designated participant without the written consent
of such participant. A summary of Tier 1 terms and conditions shall be attached
hereto as Attachment A, but if there is any inconsistency between the terms and
conditions of this Section 4 and Attachment A, this Section 4 shall take
precedence. For Employees designated as participants at a level other than Tier
1, the terms and conditions of such participation approved by the Committee
shall be set forth in a matrix or other document and attached hereto as one
6
or more additional attachments. Ambiguities in such terms and conditions shall
be resolved in a manner consistent with the terms of this Section 4.
(a) Termination by the Company Not for Cause Prior to or More than
Three Years After a Change in Control. An Employee who is eligible for Tier
1 severance payments and benefits under this Policy pursuant to Section 3
shall be entitled to receive the payments and benefits from the Company
upon termination of employment at any time prior to a Change in Control or
more than three years following a Change in Control, if such termination is
by the Company (or its subsidiaries) other than for Cause and such
termination is not due to death, Disability or Retirement, or by the
Employee for any reason, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) A lump-sum cash payment of a prorated portion of the
Employee's annual incentive under any AIP that would have become
payable for performance in the year of termination had Employee's
employment continued, with such award prorated based on the number of
days during the year of termination which preceded the Employee's
termination. This amount will be payable at such time as annual
incentives for performance in the year of termination otherwise become
payable.
(iii) For a period terminating on the earliest of 24 months
following the date of termination of employment or the Employee's
attaining age 65, severance payments, paid periodically at the date
annual salary payments would otherwise have been made, at a monthly
rate equal to one-twelfth of the sum of the Employee's annual salary
at the date of termination plus the Employee's average annual
incentive award paid for performance in the three years preceding the
year of termination under any AIP (or averaged over the lesser number
of years during which the Employee was eligible for AIP awards or, if
not eligible before the year of termination, the Employee's target
annual incentive under the AIP for the year of termination).
(iv) Subject to Section 5(b), and unless otherwise determined by
the Committee, the Employee's options which have not vested at the
time of the Employee's termination of employment shall be immediately
forfeited and the Employee's options which have vested at or before
the Employee's termination of employment shall remain outstanding and
exercisable only for 90 days after such termination (but in no event
past the stated expiration date of the option), and at the end of such
period such options shall be canceled.
7
(v) Subject to Section 5(b), and unless otherwise determined by
the Committee, the Employee's restricted stock and stock unit grants
and LTIP awards which have not vested at the time of the Employee's
termination of employment shall be immediately forfeited.
(vi) For a period terminating on the earliest of 24 months
following the date of termination of employment, the commencement of
eligibility for benefits under a new employer's welfare benefits plan,
or the Employee's attaining age 65, the maintenance in effect for the
continued benefit of the Employee and his dependents of:
(A) all insured and self-insured medical and dental benefit
Plans of the Company and subsidiaries in which the Employee was
participating immediately prior to termination, provided that the
Employee's continued participation is possible under the general
terms and conditions of such Plans (and any applicable funding
media) and the Employee continues to pay an amount equal to the
Employee's regular contribution for such participation; and
(B) the group life insurance, group accident insurance, and
group disability insurance policies of the Company and
subsidiaries then in effect and covering the Employee immediately
prior to termination;
provided, however, that if the Company so elects, or if such continued
participation is not possible under the general terms and conditions
of such plans or under such policies, the Company, in lieu of the
foregoing, shall arrange to have issued for the benefit of the
Employee and the Employee's dependents individual policies of
insurance providing benefits substantially similar (on an after-tax
basis) to those described in this Section 4(a)(vi), or, if such
insurance is not available at a reasonable cost to the Company, shall
otherwise provide to the Employee and the Employee's dependents
substantially equivalent benefits (on an after-tax basis); provided
further that, in no event shall the Employee be required to pay any
premiums or other charges in an amount greater than that which the
Employee would have paid in order to participate in the Company's
Plans and policies.
(vii) The Employee's benefits and rights under the Retirement
Plan and any Excess Benefit Plan shall be determined under the
applicable provisions of such Plans.
(b) Termination by the Company for Cause or Voluntary Termination by
the Employee Prior to or More than Three Years After a Change in Control.
An Employee who is eligible for Tier 1 severance payments and benefits
under this Policy pursuant to Section 3 shall be entitled to receive the
payments and benefits from the Company upon termination of employment at
any time prior to a Change in Control or more than three years following a
Change in Control, if such termination is by the Company (or its
subsidiaries) for Cause or is voluntary by the Employee and such
termination is not due to death, Disability or Retirement, and shall be
subject to other terms, as follows:
8
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) No portion of the Employee's annual incentive under any AIP
for the year of termination shall be or become payable.
(iii) Subject to Section 5(b), and unless otherwise determined by
the Committee, the Employee's options which have not vested at the
time of the Employee's termination of employment shall be immediately
forfeited and the Employee's options which have vested at or before
the Employee's termination of employment (A), if termination is by the
Company (or its subsidiaries) for Cause, such options shall be
immediately canceled, and (B), if termination is voluntary by the
Employee, such options shall remain outstanding and exercisable only
for 90 days after such termination (but in no event past the stated
expiration date of the option), and at the end of such period such
options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock and
stock unit grants and LTIP awards which have not vested at the time of
the Employee's termination of employment shall be immediately
forfeited.
(v) The Employee's benefits and rights under any welfare benefit
Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans.
(c) Termination Due to Death, Disability or Retirement Prior to or
More than Three Years After a Change in Control. An Employee who is
eligible for Tier 1 severance payments and benefits under this Policy
pursuant to Section 3 shall be entitled to receive the payments and
benefits from the Company upon termination of employment at any time prior
to a Change in Control or more than three years following a Change in
Control, if such termination is due to death, Disability or Retirement and
is not for Cause, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
9
(ii) A cash payment of a prorated portion of the Employee's
annual incentive under any AIP that would have become payable for
performance in the year of termination had Employee's employment
continued, with such award prorated based on the number of days during
the year of termination which preceded the Employee's termination.
This amount will be payable at such time as annual incentives for
performance in the year of termination otherwise become payable.
(iii) Subject to Section 5(b), the Employee's options which have
not vested at the time of the Employee's termination of employment
shall be immediately fully vested and exercisable, and the Employee's
options shall remain outstanding and exercisable after termination for
the following periods (but in no event past the stated expiration date
of the option): (A) for one year if termination resulted from the
Employee's death, (B) three years if termination resulted from the
Employee's Disability, and (C) for the remaining period until the
stated expiration date of the option if termination resulted from
Retirement. At the end of the applicable post-termination exercise
period, such options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock and
stock unit awards which have not vested at the time of the Employee's
termination of employment shall be immediately fully vested and,
unless waived or deferred by the Employee in the case of termination
due to Disability or Retirement, stock unit awards shall be settled as
promptly as practicable following termination.
(v) A cash payment of a prorated portion of each of the
Employee's LTIP awards that would have become payable for each
performance cycle ongoing at the time of termination had Employee's
employment continued through the end of such performance cycle, with
such LTIP award prorated based on the number of days during the
performance cycle preceding the Employee's termination. This amount
will be payable at such time as the LTIP awards for the applicable
performance cycle otherwise become payable, except the Committee may
instead make a good faith estimate of the actual performance achieved
through the date of termination and rely on this estimate to determine
the amount payable in settlement of such LTIP award, in which case
such payment will constitute full settlement of such LTIP award.
(vi) The Employee's benefits and rights under any welfare benefit
Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans.
(d) Termination by the Company Not for Cause or by Employee for Good
Reason Within Three Years After a Change in Control. An Employee who is
eligible for Tier 1 severance payments and benefits under this Policy
pursuant to Section 3 shall be entitled to receive the payments and
benefits from the Company upon termination of employment within three years
following a Change in Control, if such termination is by the Company (or
its subsidiaries) not for Cause or is by the Employee for Good Reason
10
and such termination is not due to death, Disability or Retirement, and
shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) A cash payment of a prorated portion of the Employee's
annual incentive under any AIP, determined as the greater of the
target annual incentive for the year of termination or the annual
incentive that would have become payable for performance in the year
of termination had Employee's employment continued, with the award so
determined then prorated based on the number of days during the year
of termination which preceded the Employee's termination. The amount
determined based on target annual incentive will be payable as a lump
sum, with any additional amount resulting from performance over the
full year of termination payable at such time as annual incentives for
performance in that year otherwise become payable.
(iii) A lump-sum cash severance payment equal to the product of
the Employee's Annual Compensation, multiplied by 2.5; provided,
however, that if Employee has attained age 62 and one-half at the date
of termination, instead of a multiplier of 2.5 the multiplier shall be
the number of whole months and any partial month from the date of
termination remaining until the Employee attains age 65, divided by
12.
(iv) A cash payment of 100% of each of the Employee's LTIP awards
for each performance cycle ongoing at the time of termination,
determined as the greater of the target LTIP award for that
performance cycle or the LTIP award that would have become payable had
Employee's employment continued through the end of such performance
cycle. The amount determined based on the target LTIP awards will be
payable as a lump sum, with any additional amount resulting from
performance over the full performance cycle payable at such time as
LTIP awards otherwise become payable.
(v) Subject to Section 5(b), the Employee's options which have
not vested at the time of the Employee's termination of employment
shall be immediately fully vested and exercisable, and the Employee's
options shall remain outstanding and exercisable for the remaining
period until the stated expiration date of the option.
(vi) Subject to Section 5(b), the Employee's restricted stock and
stock unit awards which have not vested at the time of the Employee's
termination of employment shall be immediately fully vested and,
unless waived or deferred by
11
the Employee, stock unit awards shall be settled as promptly as
practicable following termination.
(vii) The Employee's Designated Awards, if any, will be subject
to the terms of the Plan under which they were granted, and, in the
case of options which are Designated Awards, Employee will be entitled
to payment pursuant to the limited stock appreciation rights, if any,
that were originally granted to Employee under the Prior Executive
Severance Agreement. These limited stock appreciation rights are
hereby amended and restated to provide that, for each share of the
Company's Common Stock subject to any option which is a Designated
Award that remains outstanding at the date of Employee's termination
subject to this Section 4(d), whether or not such option is then
exercisable, the Company shall pay to Employee the amount determined
by subtracting the exercise price thereof from the highest of (A) the
market price per share of Common Stock on the New York Stock Exchange
at the close of business on the effective day of termination, (B) the
price per share contained in any published tender offer made within
one year before or after the date of the Change in Control, (C) the
price contained in any merger or acquisition agreement entered into by
the Company and any third party within one year before or after the
date of the Change in Control, or (D) the market price per share of
Common Stock on the New York Stock Exchange on the date of the Change
in Control, and, upon such payment, such option shall be deemed
canceled and annulled.
(viii) The Employee will be credited with additional age and
years of service under any Excess Benefit Plan as though the Employee
continued to be employed for a period of 36 months after termination
or until he attains age 65, whichever period is less, and the Employee
will be deemed to be fully vested under any such Excess Benefit Plan,
with the time or times at which benefits are payable under any such
Plan unchanged; provided, however, that if an Excess Benefit Plan does
not permit such additional crediting of age and years of service, then
Employee will be paid in a lump sum the present value of the
additional benefits he would have received under such Plan had
Employee's employment continued at his previous rate of compensation
to the earlier of the third anniversary of his termination or the date
of attainment of age 65; provided further, that the Company's
obligations under any such Excess Benefit Plan shall be fully funded
by deposits into a "rabbi trust" the trustee of which shall be
independent of the Company and the terms of which shall preclude
access by the Company to any of the trust assets, except for
attachments by creditors of the Company upon insolvency or bankruptcy
of the Company, until all obligations to the Employee and his
beneficiaries have been satisfied: and provided further, that the
Company may elect to satisfy all obligations to the Employee and his
beneficiaries by payment, as a lump sum, of the present value of the
accrued benefit under any Excess Plan.
(ix) For a period terminating on the earlier of 36 months
following the date of termination of employment or the commencement of
eligibility for benefits
12
under a new employer's welfare benefits plan, the maintenance in
effect for the continued benefit of the Employee and his dependents
of:
(A) all insured and self-insured medical and dental benefit
plans of the Company and subsidiaries in which the Employee was
participating immediately prior to termination, provided that the
Employee's continued participation is possible under the general
terms and conditions of such plans (and any applicable funding
media) and the Employee continues to pay an amount equal to the
Employee's regular contribution for such participation; and
(B) the group life insurance and group disability insurance
policies of the Company and subsidiaries then in effect for
Employee;
provided, however, that if the Company so elects, or if such
continued participation is not possible under the general terms and
conditions of such plans or under such policies, the Company, in lieu
of the foregoing, shall arrange to have issued for the benefit of the
Employee and the Employee's dependents individual policies of
insurance providing benefits substantially similar (on an after-tax
basis) to those described in this Section 4(d)(ix), or, if such
insurance is not available at a reasonable cost to the Company, shall
otherwise provide the Employee and the Employee's dependents
substantially equivalent benefits (on an after-tax basis); provided
further that, in no event shall the Employee be required to pay any
premiums or other charges in an amount greater than that which the
Employee would have paid in order to participate in the Company's
plans and policies.
(e) Termination by the Company for Cause or Voluntary Termination by
the Employee Within Three Years After a Change in Control. An Employee who
is eligible for Tier 1 severance payments and benefits under this Policy
pursuant to Section 3 shall be entitled to receive the payments and
benefits from the Company upon termination of employment at any time within
three years following a Change in Control, if such termination is by the
Company (or its subsidiaries) for Cause or is voluntary by the Employee not
for Good Reason and such termination is not due to death, Disability or
Retirement, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) No portion of the Employee's annual incentive under any AIP
for the year of termination shall be or become payable.
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(iii) Subject to Section 5(b), and unless otherwise determined
by the Committee, if termination is by the Company (or its
subsidiaries) for Cause all of the Employee's options (vested and
unvested) shall be immediately forfeited and canceled, and if
termination is voluntary by the Employee, all of the Employee's options
which have not vested at the time of his termination shall be
immediately fully vested and exercisable, and all of the Employee's
options which have vested at or before his termination shall remain
outstanding and exercisable for 90 days after such termination (but in
no event past the stated expiration date of the option), and at the end
of such period such options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock
and stock unit grants and LTIP awards which have not vested at the
time of the Employee's termination of employment shall be immediately
forfeited.
(v) The Employee's benefits and rights under any welfare
benefit Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans.
(f) Termination Due to Death, Disability or Retirement Within Three
Years After a Change in Control. An Employee who is eligible for Tier 1
severance payments and benefits under this Policy pursuant to Section 3
shall be entitled to receive the payments and benefits from the Company
upon termination of employment at any time within three years following a
Change in Control, if such termination is due to death, Disability or
Retirement and is not for Cause or voluntary by the Employee for Good
Reason, and shall be subject to other terms, as follows:
(i) Such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee and unreimbursed business expenses reimbursable under Company
policies then in effect; provided, however, that the Company and its
subsidiaries may offset such amounts against obligations and
liabilities of the Employee to the Company and its subsidiaries.
(ii) A cash payment of a prorated portion of the Employee's
annual incentive under any AIP, determined as the greater of the
target annual incentive for the year of termination or the annual
incentive that would have become payable for performance in the year
of termination had Employee's employment continued, with the award so
determined then prorated based on the number of days during the year
of termination which preceded the Employee's termination. The amount
determined based on target annual incentive will be payable as a lump
sum, with any additional amount resulting from performance over the
full year of termination payable at such time as annual incentives for
performance in that year otherwise become payable.
(iii) Subject to Section 5(b), the Employee's options which have
not vested at the time of the Employee's termination of employment
shall be
14
immediately fully vested and exercisable, and the Employee's options
shall remain outstanding and exercisable after termination for the
following periods (but in no event past the stated expiration date of
the option): (A) for one year if termination resulted from the
Employee's death, (B) three years if termination resulted from the
Employee's Disability, (C) for the remaining period until the stated
expiration date of the option if termination resulted from Retirement
or (D), unless otherwise determined by the Committee, for 90 days. At
the end of the applicable post-termination exercise period, such
options shall be canceled.
(iv) Subject to Section 5(b), the Employee's restricted stock and
stock unit awards which have not vested at the time of the Employee's
termination of employment shall be immediately fully vested and,
unless waived or deferred by the Employee in the case of termination
due to Disability or Retirement, stock unit awards shall be settled as
promptly as practicable following termination.
(v) A cash payment of a prorated portion of each of the
Employee's LTIP awards that would have become payable for each
performance cycle ongoing at the time of termination, determined as
the greater of the target LTIP award for that performance cycle or the
LTIP award that would have become payable had Employee's employment
continued through the end of such performance cycle, with each LTIP
award prorated based on the number of days during the performance
cycle preceding the Employee's termination. The amount determined
based on the target LTIP awards will be payable as a lump sum, with
any additional amount resulting from performance over the full
performance cycle payable at such time as LTIP awards otherwise become
payable.
(vi) The Employee's benefits and rights under any welfare benefit
Plan, the Retirement Plan and any Excess Benefit Plan shall be
determined under the applicable provisions of such Plans, except that
the Employee will be deemed to be fully vested under any such Excess
Benefit Plan.
5. Acceleration of Equity Awards Upon a Change in Control; Certain
Provisions Applicable to Equity Awards.
(a) Acceleration Upon Change in Control. In the event of a Change in
Control, the following provisions will apply to any stock options,
restricted stock and other awards based on stock then held by the Employee,
other than Designated Awards and limited stock appreciation rights relating
thereto:
(i) Any such option or other award carrying a right to exercise
that was not previously vested and exercisable shall become fully
vested and exercisable as of the time of the Change in Control.
(ii) All forfeiture conditions, deferral of settlement
conditions, and other restrictions applicable to such restricted stock
and other equity awards shall lapse and such awards shall be fully
payable or settleable as of the time of the Change in Control without
regard to deferral and vesting conditions, except
15
to the extent of any waiver by the Employee or other express Employee
election to defer beyond a Change in Control.
(iii) With respect to such an outstanding equity award subject to
achievement of performance goals and conditions, such performance
goals and conditions shall be deemed to be fully met as of the date of
such Change in Control, unless otherwise expressly provided by the
Committee in the award document governing such award or other
agreement entered into with the Employee after the Effective Date.
Notwithstanding the foregoing, Section 7 shall continue to apply to any
such award in accordance with its terms.
(b) Effect of Policy Terms on Outstanding Options and Awards. If any
option, restricted stock or stock unit award outstanding at the effective
date of this Policy cannot, under the terms of the plan governing such
award, provide for vesting or post-termination exercise on the terms set
forth in Section 4 or this Section 5, or if the modification to the vesting
and post-termination exercise and other terms of such option or award under
Section 4 or this Section 5 would trigger an accounting expense to be
measured and recognized by the Company prior to a Change in Control, such
award shall be modified by Section 4 and this Section 5 only to the extent
that the modification is both permitted under the terms of the plan
governing such award and does not trigger such accounting expense.
(c) More Favorable Terms Apply. If and to the extent that the terms of
an option, restricted stock award, or other award based on stock are more
favorable to the Employee, in the event of a Change in Control, than those
terms provided under this Section 5, those terms shall apply, and this
Section 5 shall not operate in any way to restrict or cut back on the
rights of the Employee with respect to such award.
6. Excise Tax Gross-Up; Limited Reduction in Severance Payments to Avoid
Excise Taxes. If an Employee who has been designated for Tier 1 severance
payments and benefits (and not excluded from benefits under this Section 6) or
is otherwise designated as eligible for benefits under this Section 6 becomes
entitled to one or more payments in connection with a Change in Control or
termination of employment during the three years following a Change in Control,
other than a termination by the Company for Cause, (with a "payment" including,
without limitation, the vesting of an option or other non-cash benefit or
property, including under Section 5 of this Policy) pursuant to any plan,
agreement or arrangement of the Company (together, "Severance Payments") which
are or would be subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (or any similar tax that may be imposed) (the
"Excise Taxes"), the Company shall pay to the Employee an additional amount
("Gross-Up Payment") such that, after the payment by the Employee of all taxes
(including without limitation all income and employment tax and Excise Tax and
treating as a tax the lost tax benefit resulting from the disallowance of any
deduction of the Employee by virtue of the inclusion of the Gross-Up Payment in
the Employee's adjusted gross income), and interest and penalties with respect
to such taxes, imposed upon the Gross-Up Payment, the Employee retains an amount
of the Gross-Up Payment equal to the Excise Taxes imposed upon the Severance
Payments. Notwithstanding the foregoing, if (i) the Severance Payments
16
exceed the Safe Harbor Amount (as defined below) and (ii) a reduction of up to
20% of any cash payments pursuant to Section 4(d)(iii) of this Agreement would
cause the Severance Payments to be equal to the Safe Harbor Amount and thereby
avoid the imposition of any Excise Taxes, the cash payments pursuant to Section
4(d)(iii) of this Agreement shall be reduced to the extent necessary to result
in all remaining Severance Payments equal to the Safe Harbor Amount. "Safe
Harbor Amount" shall mean one dollar less than 300% of the "base amount" as
determined in accordance with Section 280G(b)(3) of the Code.
For purposes of determining whether any of the Severance Payments will be
subject to the Excise Tax and the amount of such Excise Tax:
(i) The Severance Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code
shall be treated as subject to the Excise Tax, unless, and except to the
extent that, in the written opinion of independent compensation
consultants, counsel or auditors of nationally recognized standing
("Independent Advisors") selected by the Company and reasonably acceptable
to the Employee, the Severance Payments (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of
the base amount within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax.
(ii) The amount of the Severance Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Severance Payments or (B) the total amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the Code
(after applying clause (i) above).
(iii) The value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Independent Advisors in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Employee shall be deemed (A) to pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the Gross-Up
Payment is to be made; (B) to pay any applicable state and local income taxes at
the highest marginal rate of taxation for the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes if
paid in such year (determined without regard to limitations on deductions based
upon the amount of the Employee's adjusted gross income); and (C) to have
otherwise allowable deductions for federal, state, and local income tax purposes
at least equal to those disallowed because of the inclusion of the Gross-Up
Payment in the Employee's adjusted gross income. In the event that the Excise
Tax is subsequently determined to be less than the amount taken into account
hereunder at the time the Gross-Up Payment is made, the Employee shall repay to
the Company at the time that the amount of such reduction in Excise Tax is
finally determined (but, if previously paid to the taxing authorities, not prior
to the time the amount of such reduction is refunded to the Employee or
otherwise realized as a benefit by the Employee) the portion of the Gross-Up
Payment that would not have been paid if such Excise Tax had been applied in
17
initially calculating the Gross-Up Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-Up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest and penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.
The Gross-Up Payment provided for above shall be paid on the 30th day (or
such earlier date as the Excise Tax becomes due and payable to the taxing
authorities) after it has been determined that the Severance Payments (or any
portion thereof) are subject to the Excise Tax; provided, however, that if the
amount of such Gross-Up Payment or portion thereof cannot be finally determined
on or before such day, the Company shall pay to the Employee on such day an
estimate, as determined by the Independent Advisors, of the minimum amount of
such payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code), as soon as
the amount thereof can be determined. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Employee, payable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-Up
Payment is made, the amount of each Gross-Up payment shall be computed so as not
to duplicate any prior Gross-Up Payment.
The Company shall have the right to control all proceedings with the
Internal Revenue Service that may arise in connection with the determination and
assessment of any Excise Tax and, at its sole option, the Company may pursue or
forego any and all administrative appeals, proceedings, hearings, and
conferences with any taxing authority in respect of such Excise Tax (including
any interest or penalties thereon); provided, however, that the Company's
control over any such proceedings shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder, and the Employee shall be
entitled to settle or contest any other issue raised by the Internal Revenue
Service or any other taxing authority. The Employee shall cooperate with the
Company in any proceedings relating to the determination and assessment of any
Excise Tax and shall not take any position or action that would materially
increase the amount of any Gross-Up Payment hereunder.
7. Employee Obligations and Conditions to Receipt of Payments and Benefits.
(a) Obligations of the Employee. The following requirements must be
met by the Employee as a condition to his right to receive, continue to
receive, or retain payments and benefits under the Policy, as specified in
Section 7(b), (c) and (d):
(i) The Employee, acting alone or with others, directly or
indirectly, shall not, during the Non-competition Period, 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 prior to a Change in Control and
18
either during Employee's employment or within two years following
termination of such employment with the Company and any subsidiary or
for such shorter period following such termination as may be provided
by applicable law; 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 knowledge of the Executive, 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 knowledge of the Employee, the Company or subsidiary has
covenanted in writing, in connection with the disposition of such
business, not to compete therewith. The Committee shall, in the
reasonable exercise of its discretion, determine which lines of
business the Company and its subsidiaries conduct on any particular
date and which third parties may reasonably be deemed to be in
competition with the Company and its subsidiaries. For purposes of
this Section 7(a) (including clause (ii) below), the Employee's
interest as a shareholder is insubstantial if it represents beneficial
ownership of less than five percent of the outstanding class of 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 percent of the
outstanding equity of the entity.
(ii) 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.
(iii) The Employee shall not disclose, use, sell, or otherwise
transfer, except in the course of employment with or other service to
the Company or any subsidiary or affiliate, 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 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, and the Employee shall not make statements or
representations, or otherwise communicate, directly or indirectly, in
writing, orally, or otherwise, or take any other action which may,
directly or indirectly, disparages or is damaging to the Company or
any of its subsidiaries or affiliates or their respective officers,
directors, employees, advisors, businesses or reputations, except as
required by law or pursuant to legal process.
19
(iv) The Employee shall cooperate with the Company or any
subsidiary or affiliate by making himself available 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 to 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.
(v) The Employee shall deliver promptly to the Company on
termination of the Employee's employment, or at any time the Company
may so request, all documents, memoranda, notes, records, files,
reports, and other materials, and all copies thereof, including
digital versions, relating to the Company and its subsidiaries and
affiliates, and all other property of the company and its subsidiaries
and affiliates, then in the possession of or under the Employee's
control.
(b) Effect of the Employee's Failure to Comply with Obligations. The
Company shall have no obligations to make payments or provide benefits to
the Employee under this Policy if the Employee has failed or fails to
comply with the obligations set forth in Section 7(a), other than
inadvertent and inconsequential events constituting non-compliance, during
the period of two years prior to the Employee's termination of employment
or at any time following such termination of employment.
(c) Employee Obligation to Execute Release and Termination Agreement.
The Company's obligations under this Policy to make payments and provide
benefits conditioned upon the Employee's signing a release and termination
agreement and the expiration of any revocation period set forth therein.
The Committee shall specify the form and content of such agreement, and may
modify such form and content from time to time; provided, however, that,
such agreement shall set forth the obligations in Section 7(a) and the
Employee shall agree to comply therewith, and the Employee shall agree to
the terms of Section 7(d); and provided further, that during the three
years following a Change in Control, such agreement shall not be modified
in a manner that increases the obligations or decreases the rights of the
Employee as compared to the form of such agreement in use prior to the
Change in Control.
(d) Clawback Provision. In the case of any termination of the
Employee's employment prior to a Change in Control, if the Employee has
failed to comply with the obligations under Section 7(a) (other than an
inadvertent and inconsequential event constituting non-compliance) during
the two years prior to termination or during the period following
termination which is the lesser of two years or the period during which the
obligations under Section 7(a) continue to apply, all of the following
forfeitures will result:
(i) The unexercised portion of any option, whether or not vested,
and any other award not then vested will be immediately forfeited and
canceled.
20
(ii) The Employee will be obligated to repay to the Company, in
cash, within five business days after demand is made therefor by the
Company,
(A) the total amount of any cash payments made to the
Employee under this Policy, other than payments under clause (i)
of Sections 4(a) through (f) and cash payments under welfare
benefit plans;
(B) other cash amounts paid to the Employee under any AIP
and LTIP awards since the date two years prior to the Employee's
termination of employment; and
(C) the Award Gain (as defined below) realized by the
Employee upon each exercise of an option or settlement of a
restricted stock or stock unit award (regardless of any elective
deferral) since the date two years prior to Employee's
termination of employment. For purposes of this Section 7(d), the
term "Award Gain" shall mean (1), in respect of a given option
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 as to which the
option 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 such settlement.
8. Other Provisions Applicable to Severance Payments and Benefits.
(a) Timing of Payments. All payments required to be paid as a lump sum
under Section 4 shall be paid not later than the 15th day following the date of
termination of Employee's employment. Other payments shall be made as promptly
as practicable following the earliest date such payments are due.
(b) Limitation of Benefits In Case of Certain Business Dispositions.
Notwithstanding anything in this Policy to the contrary, an Employee shall not
be entitled to any payments or benefits under Section 4(a), (b) or (c) of this
Policy, unless the Committee in its sole discretion provides otherwise, in the
event termination of employment results from the sale or spin-off of a
subsidiary, the sale of a division, other business unit or facility in which the
Employee was employed immediately prior to such sale, and the Employee has been
offered employment with the purchaser of such subsidiary, division, other
business unit or facility or the spun-off entity on substantially the same terms
and conditions under which the Employee worked prior to the sale. Such terms and
conditions must include an agreement or plan binding on such purchaser or
spun-off entity providing that, upon any termination
21
of the Employee's employment with the purchaser or spun-off entity of the kinds
described in Section 4 hereof within three years following such sale or spin-off
(but not past the attainment of age 65 by the Employee), the purchaser or
spun-off entity shall pay to such Employee amounts comparable to the payments
that the Employee would have received under the applicable provision of Section
4 hereof, and provide comparable benefits, as if the Employee had been
terminated in like circumstances at the time of such sale and provided payments
and benefits under this Policy.
(c) Deferrals Included in Salary and Bonus. All references in this Policy
to salary and annual incentive amounts mean those amounts before reduction
pursuant to any deferred compensation plan or agreement.
(d) Payments and Benefits to Beneficiary Upon Employee's Death. In the
event of the death of an Employee, all payments and benefits hereunder due to
such Employee shall be paid or provided to his Beneficiary.
(e) Transfers of Employment. Anything in this Policy to the contrary
notwithstanding, a transfer of employment from the Company to a subsidiary or
vice versa shall not be considered a termination of employment for purposes of
this Policy.
(f) Calculation of Months. Provisions of this Policy which calculate the
number of months remaining until age 65 will treat, for example, the period from
August 16 through October 15 as two whole months, will treat any remaining
partial month as one whole month, and will treat any negative number resulting
from termination after age 65 as zero.
9. Other Plans and Policies; Non-Duplication of Payments or Benefits.
(a) Rights Under Other Plans. Except to the extent that the terms of this
Policy confer rights to severance payments and benefits that are more favorable
to the Employee than are available under any other employee (including
executive) benefit plan or executive compensation plan of the Company or a
subsidiary in which the Employee is a participant, the Employee's rights under
any such employee (including executive) benefit plan or executive compensation
plan shall be determined in accordance with the terms of such plan (as it may be
modified or added to by the Company from time to time), except as otherwise
provided in Section 5.
(b) Superseded Agreements and Rights. This Policy constitutes the entire
understanding between the Company and the Employee relating to severance
payments and benefits to be paid or provided to the Employee by the Company and
its subsidiaries, and supersedes and cancels all prior agreements and
understandings with respect to the subject matter of this Policy, except as
otherwise provided in this Section 9(b). In order for the Employee to be
entitled to any payments or benefits under this Policy, Employee must agree,
within such period after the Committee has designated Employee as eligible to be
covered by the Policy as the Committee may specify, that the Employee shall not
be entitled to benefits under any Prior Executive Severance Agreement between
the Company and the
22
Employee, except to the extent that limited stock appreciation rights may
continue in effect under Section 4(d) and 5(a) hereof. If, however, the Employee
has previously entered or after the Effective Date enters into an employment
agreement with the Company or a subsidiary, that employment agreement will not
be superseded by this Policy unless it specifically so provides.
(c) Non-Duplication of Payments and Benefits. The Employee shall not be
entitled to any payment or benefit under this Policy which duplicates a payment
or benefit received or receivable by the Employee under any other employment
agreement, severance agreement, or other agreement or understanding, or under
any employee (including executive) compensation or benefit plan, of the Company
or a subsidiary.
10. Miscellaneous
(a) Withholding. The Company shall have the right to deduct from all
payments hereunder any taxes required by law to be withheld therefrom.
(b) No Right To Employment. Nothing in this Policy shall be construed as
giving any person the right to be retained in the employment of the Company or
any subsidiary, nor shall it affect the right of the Company or any subsidiary
to dismiss an Employee without any liability except as provided in this Policy.
(c) Legal Fees. The Company shall pay all legal fees and related expenses
incurred by an Employee in seeking to obtain or enforce any payment, benefit or
right provided by this Policy; provided; however, that the Employee shall be
required to repay any such amounts to the Company to the extent that an
arbitrator or a court of competent jurisdiction issues a final, unappeasable
order setting forth a determination that the position taken by the Employee was
frivolous or advanced in bad faith.
(d) Amendment and Termination. The Board of Directors of the Company may
amend or terminate this Policy at any time, provided, however, that, without the
written consent of an affected Employee, (i), during the three years following a
Change in Control, this Policy may not be amended or terminated in any manner
materially adverse to an Employee, and (ii), at any other time, this Policy may
not be amended or terminated in any manner materially adverse to an Employee
except with one year's advance notice to the affected Employee, and no such
amendment or termination shall be effective to limit any right or benefit under
Section 4(d), (e) or (f), 5 or 6 if a Change in Control has occurred prior to
the lapse of such one-year period.
(e) Governing Law; Arbitration. THE VALIDITY, CONSTRUCTION, AND EFFECT OF
THIS POLICY AND ANY RULES AND REGULATIONS RELATING TO THIS POLICY SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS (INCLUDING THOSE GOVERNING CONTRACTS) OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS,
AND APPLICABLE FEDERAL LAW. If any provision hereof shall be held by a court or
arbitrator of competent jurisdiction to be invalid and unenforceable, the
remaining
23
provisions shall continue to be fully effective. Any dispute or controversy
arising under or in connection with this Policy shall be settled exclusively by
arbitration in New York, New York by three arbitrators in accordance with the
rules of the American Arbitration Association in effect at the time of
submission to arbitration. Judgment may be entered on the arbitrators' award in
any court having jurisdiction. For purposes of settling any dispute or
controversy arising hereunder or for the purpose of entering any judgment upon
an award rendered by the arbitrators, the Company and the Employee hereby
consent to the jurisdiction of any or all of the following courts: (i) the
United States District Court for the Southern District of New York, (ii) any of
the courts of the State of New York, or (iii) any other court having
jurisdiction. The Company and the Employee hereby waive, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
such jurisdiction and any defense of inconvenient forum. The Company and the
Employee hereby agree that a judgment upon an award rendered by the arbitrators
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
(f) Nonassignability. Payments and benefits under this Policy may not be
assigned by the Employee. The terms and conditions of this Policy shall be
binding on the successors and assigns of the Company.
(g) No Duty to Mitigate. No employee shall be required to mitigate, by
seeking employment or otherwise, the amount of any payment that the Company
becomes obligated to make under this Policy, and, except as expressly provided
in this Policy, amounts or other benefits to be paid or provided to an Employee
pursuant to this Policy shall not be reduced by reason of the Employee's
obtaining other employment or receiving similar payments or benefits from
another employer.
(h) Foreign Participants. The terms and conditions of participation of any
Employee whose employment is subject to the laws or customs of any jurisdiction
other than the United States or a state thereof may be modified by the Committee
to conform to or otherwise take into account such laws and customs. In no event
shall payments or benefits be payable hereunder if and to the extent that such
benefits would duplicate severance payments or benefits payable in accordance
with such laws and customs, although severance payments and benefits payable
hereunder may supplement those payable under such laws and customs. This Policy
will be of no force or effect to the extent superseded by foreign law.
(i) Effective Date. This Policy is effective as of April 13, 2000.
24
U.S. $300,000,000
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT
Dated as of May 30, 2000
Among
INTERNATIONAL FLAVORS & FRAGRANCES INC.
as Borrower
and
THE INITIAL LENDERS NAMED HEREIN
as Initial Lenders
and
CITIBANK, N.A.
as Administrative Agent
and
SALOMON SMITH BARNEY INC.
as Arranger
AMENDED AND RESTATED 364-DAY CREDIT AGREEMENT
DATED as OF MAY 30, 2000
INTERNATIONAL FLAVORS & FRAGRANCES INC., A New York corporation (the
"BORROWER"), the banks, financial institutions and other institutional lenders
(collectively, the "INITIAL LENDERS") party hereto and CITIBANK, N.A., as
administrative agent (together with any successor thereto appointed pursuant to
Article VII of the Existing Credit Agreement referred to below, the "AGENT") for
the Lenders (as defined in the Existing Credit Agreement referred to below),
hereby agree as follows:
PRELIMINARY STATEMENTS
(1) The Borrower is party to a 364-Day Credit Agreement dated as of June 1,
1999 (the "Existing Credit Agreement") with the banks, financial institutions
and other institutional lenders party thereto and Citibank, N.A., as
Administrative Agent for the Lenders and such other lenders. Capitalized terms
not otherwise defined in this Amendment and Restatement shall have the same
meaning as specified in the Existing Credit Agreement.
(2) The parties to this Amendment and Restatement desire to amend the
Existing Credit Agreement as set forth herein and to restate the Existing Credit
Agreement in its entirety to read as set forth in the Existing Credit Agreement
with the following amendments.
(3) The Borrower has requested that the Lenders agree to extend credit to
it from time to time in an aggregate principal amount of up to $300,000,000 for
general corporate purposes of the Borrower and its Subsidiaries not otherwise
prohibited under the terms of this Agreement. The Lenders have indicated their
willingness to agree to extend credit to the Borrower from time to time in such
amount on the terms and conditions of this Amendment and Restatement.
SECTION 1. Amendments to the Existing Credit Agreement. The Existing Credit
Agreement is, effective as of the date of this Amendment and Restatement and
subject to the satisfaction of the conditions precedent set forth in Section 2,
hereby amended as follows:
(a) Section 1.01 is amended by adding the following new definitions in
appropriate alphabetical order:
"EBITDA" means, for any period, net income (or net loss) plus the sum
of (a) interest expense, (b) income tax expense, (c) depreciation expense
and (d) amortization expense, in each case determined in accordance with
GAAP for such period.
"DEBT FOR BORROWED MONEY" of any Person means all items that, in
accordance with GAAP, would be classified as indebtedness on a Consolidated
balance sheet of such Person.
(b) Section 1.01 is amended by deleting the definitions of "Commitment" and
"Termination Date" set forth therein and replacing them, respectively, with
the following new definitions thereof:
"COMMITMENT" means as to any Lender (a) the amount set forth opposite
such Lender's name on Schedule I hereto under the caption "Commitment", (b)
if such Lender has become a Lender hereunder pursuant to an Assumption
Agreement, the amount set forth in such
Assumption Agreement or (c) if such Lender has entered into an Assignment
and Acceptance, the amount set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 8.07(d), as such
amount may be reduced pursuant to Section 2.05 or increased pursuant to
Section 2.18.
"TERMINATION DATE" means the earlier of (a) May 29, 2001, subject to
the extension thereof pursuant to Section 2.19, and (b) the date of
termination in whole of the aggregate Commitments pursuant to Section 2.05
or 6.01; provided, however, that the Termination Date of any Lender that is
a Non-Consenting Lender to any requested extension pursuant to Section 2.19
shall be the Termination Date in effect immediately prior to the applicable
Extension Date for all purposes of this Agreement.
(c) Section 4.01(i) of the Existing Credit Agreement is deleted in its
entirety.
(d) Section 5.02(e)(ii) of the Existing Credit Agreement is amended by
deleting the figure "$200,000,000" and substituting therefor the figure
"$300,000,000".
(e) Section 5.03 of the Existing Credit Agreement is amended in full
to read as follows:
SECTION 5.03. Financial Covenant. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower will maintain a ratio of Debt for Borrowed Money to
Consolidated EBITDA of the Borrower and its Subsidiaries for the
preceding four fiscal quarters of not more than 3.00 to 1.00.
(f) Schedule I to the Existing Credit Agreement is deleted in its
entirety and replaced with Schedule I to this Amendment and Restatement.
SECTION 2. Conditions of Effectiveness of this Amendment and Restatement.
This Amendment and restatement shall become effective as of the date first
above written (the "RESTATEMENT EFFECTIVE DATE") when and only if:
(a) The Administrative Agent shall have received counterparts of this
Amendment and Restatement executed by the Borrower and all of the Initial
Lenders or, as to any of the Initial Lenders, advice satisfactory to the
Administrative Agent that such Initial Lender has executed this Amendment
and Restatement.
(b) The Administrative Agent shall have received on or before the
Restatement Effective Date the following, each dated such date and (unless
otherwise specified below) in form and substance satisfactory to the
Administrative Agent and in sufficient copies for each Initial Lender:
(i) A certificate of the Secretary or an Assistant Secretary of
the Borrower certifying the names and true signatures of the officers
of the Borrower authorized to sign this Amendment and Restatement and
the Notes, if any, and the other documents to be delivered hereunder
by the Borrower.
(ii) A favorable opinion of Weil, Gotshal & Manges LLP, counsel
for the Borrower, in form and substance reasonably satisfactory to the
Agent.
2
(c) The representations and warranties contained in Section 4.01 of
the Existing Credit Agreement shall be correct on and as of the Restatement
Effective Date, before and after giving effect to the Restatement Effective
Date, as though made on and as of such date.
(d) No event shall have occurred and be continuing, or shall occur as
a result of the occurrence of the Restatement Effective Date, that
constitutes a Default.
SECTION 3. Reference to and Effect on the Existing Credit Agreement and the
Notes. (a) On and after the effectiveness of this Amendment and Restatement,
each reference in the Existing Credit Agreement to "this Agreement",
"hereunder", "hereof" or words of like import referring to the Existing Credit
Agreement, and each reference in the Notes to "the Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Existing Credit
Agreement, shall mean and be a reference to the Existing Credit Agreement, as
amended by this Amendment and Restatement.
(b) The Existing Credit Agreement and the Notes, as specifically amended by
this Amendment and Restatement, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
(c) Without limiting any of the other provisions of the Existing Credit
Agreement, as amended by this Amendment and Restatement, any references in the
Existing Credit Agreement to the phrases "on the date hereof", "on the date of
this Agreement" or words of similar import shall mean and be a reference to the
date of the Existing Credit Agreement (which is June 1, 1999).
SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery and administration,
modification and amendment of this Amendment and Restatement, the Notes and the
other documents to be delivered hereunder (including, without limitation, the
reasonable and documented fees and expenses of counsel for the Administrative
Agent with respect hereto and thereto) in accordance with the terms of Section
8.04 of the Existing Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment and Restatement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment and Restatement by telecopier shall be effective as delivery of a
manually executed counterpart of this Amendment and Restatement.
SECTION 6. Governing Law. This Amendment and Restatement shall be governed
by, and construed in accordance with, the laws of the State of New York.
3
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AMENDMENT AND
RESTATEMENT TO BE EXECUTED BY THEIR RESPECTIVE OFFICERS THEREUNTO DULY
AUTHORIZED, AS OF THE DATE FIRST ABOVE WRITTEN.
THE BORROWER
INTERNATIONAL FLAVORS & FRAGRANCES INC.
BY: /s/ D. J. WETMORE
---------------------------------------
DOUGLAS J. WETMORE
VICE PRESIDENT & CHIEF FINANCIAL OFFICER
THE AGENT
CITIBANK, N.A.
AS ADMINISTRATIVE AGENT
BY: /s/ ROBERT D. WETRUS
---------------------------------------
ROBERT D. WETRUS
VICE PRESIDENT
THE INITIAL LENDERS
CITIBANK, N.A.
BY: /s/ DIANE L. POCKAJ
---------------------------------------
DIANE L. POCKAJ
VICE PRESIDENT
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
BY: /s/ R. L. VAN DE BERGHE
---------------------------------------
R. L. VAN DE BERGHE
VICE PRESIDENT
4
BANCA COMMERCIALE ITALIANA-NEW YORK BRANCH
BY: /s/ CHARLES DAUGHERTY J. CARLANI
---------------------------------------
CHARLES DAUGHERTY J. CARLANI
VICE PRESIDENT VICE PRESIDENT
FIRST UNION NATIONAL BANK
BY: /s/ CHRISTOPHER STRAUSS
---------------------------------------
CHRISTOPHER STRAUSS
VICE PRESIDENT
ABN AMRO BANK N.V.
BY: /s/ DONALD SUTTON
---------------------------------------
DONALD SUTTON
VICE PRESIDENT
FLEET NATIONAL BANK FKA BANKBOSTON, N.A.
BY: /s/ WILLIAM F. HAMILTON
---------------------------------------
WILLIAM F. HAMILTON
DIRECTOR
THE BANK OF NEW YORK
BY: /s/ RUSSELL A. BURR
---------------------------------------
RUSSELL A. BURR
SENIOR VICE PRESIDENT
FORTIS FINANCIAL SERVICES LLC
BY: /s/ JOSEPH FRANZESE
---------------------------------------
JOSEPH FRANZESE
SENIOR VICE PRESIDENT
5
SCHEDULE I TO THE AMENDMENT AND RESTATEMENT
COMMITMENTS AND APPLICABLE LENDING OFFICES
Name of Initial Lender Commitment Domestic Lending Office Eurodollar Lending Office
- - --------------------------------------------------------------------------------------------------------------------------
ABN AMRO BANK N.V. $30,000,000 208 South LaSalle, Suite 1500 208 South LaSalle, Suite 1500
Chicago, IL 60604-1003 Chicago, IL 60604-1003
Attn: Loan Administration Attn: Loan Administration
T: 312 992-5151 T: 312 992-5151
F: 312 992-5156 F: 312 992-5156
- - --------------------------------------------------------------------------------------------------------------------------
FLEET NATIONAL BANK $30,000,000 100 Federal Street 100 Federal Street
(FKA BANKBOSTON, N.A.) Mail Code: 01-10-04 Mail Code: 01-10-04
Boston, MA 02110 Boston, MA 02110
Attn: Deborah Dobbins Attn: Deborah Dobbins
T: 617 434-5455 T: 617 434-5455
F: 617 434-1574 F: 617 434-1574
- - --------------------------------------------------------------------------------------------------------------------------
THE BANK OF NEW YORK $30,000,000 One Wall Street One Wall Street
New York, NY 10286 New York, NY 10286
Attn: Rose Leonard Attn: Rose Leonard
T: 212 635-1471 T: 212 635-1471
F: 212 635-6397/6426 F: 212 635-6397/6426
- - --------------------------------------------------------------------------------------------------------------------------
BANK OF TOKYO- $40,000,000 1251 Avenue of the Americas 1251 Avenue of the Americas
MITSUBISHI TRUST 12th Floor 12th Floor
COMPANY New York, NY 10020 New York, NY 10020
Attn: Mr Rolando Attn: Mr. Rolando
T: 212 782-5637 T: 212 782-5637
F: 212 782-5635 F: 212 782-5635
- - --------------------------------------------------------------------------------------------------------------------------
BANCA COMMERCIALE $40,000,000 One William Street One William Street
ITALIANA-NEW YORK New York, NY 10004 New York, NY 10004
BRANCH Attn: Charles Dougherty Attn: Charles Dougherty
T: 212 607-3656 T: 212 607-3656
F: 212 809-2124 F: 212 809-2124
- - --------------------------------------------------------------------------------------------------------------------------
CITIBANK, N.A. $60,000,000 Two Penns Way Two Penns Way
New Castle, DE 19720 New Castle, DE 19720
Attn: Anne Heironimus Attn: Anne Heironimus
T. 302 894-0034 T: 302 894-0034
F: 302 894-6130 F: 302 894-6130
- - --------------------------------------------------------------------------------------------------------------------------
FIRST UNION NATIONAL $40,000,000 50 Main Street 50 Main Street
BANK White Plains, NY 10606 White Plains, NY 10606
Attn: David Ring Attn: David Ring
T: 914 286-5039 T: 914 286-5039
F: 914 681-8755 F: 914 681-8755
- - --------------------------------------------------------------------------------------------------------------------------
FORTIS FINANCIAL $30,000,000 520 Madison Avenue 520 Madison Avenue
SERVICES LLC New York, NY 10022 New York, NY 10022
Attn: Douglas Riahi Attn: Douglas Riahi
T: 212 481-8736 T: 212 418-8736
F: 212 750-7597 F: 212 750-7597
- - --------------------------------------------------------------------------------------------------------------------------
5
1000
6-MOS
DEC-31-2000
JUN-30-2000
52,403
983
334,870
10,393
370,443
828,787
960,232
439,679
1,384,587
462,660
17,002
0
0
14,470
719,814
1,384,587
738,671
738,671
400,377
585,499
9,228
0
5,211
138,733
46,041
92,692
0
0
0
92,692
0.90
0.90
