INTERNATIONAL FLAVORS & FRAGRANCES INC.

 

 

 

Restated and Amended

Executive Separation Policy Document

(As Amended through and including December 31, 2007)

 

 

 

 

 

 

 

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INTERNATIONAL FLAVORS & FRAGRANCES INC.

 

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Executive Separation Policy

 

Page

 

1.

Purpose

1

 

2.

Definitions

1

 

3.

Eligibility

5

 

4.

Severance Payments and Benefits

.

5

 

5.

Acceleration of Equity Awards Upon a Change in Control; Certain

 

Provisions Applicable to Equity Awards

5

 

6.

Excise Tax Gross-Up

6

 

7.

Employee Obligations and Conditions to Receipt of Payments and Benefits

8

 

8.

Other Provisions Applicable to Severance Payments and Benefits

10

 

9.

Other Plans and Policies; Non-Duplication of Payments or Benefits

11

 

10.

Special Rules for Compliance with Code Section 409A

12

 

11.

Miscellaneous

17

 

 

 

 

 

 

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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 two years after a Change
in Control or (ii) within two 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 (including in any Annex hereto), 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, including any misconduct that results in material
noncompliance with any financial reporting requirement under the Federal
securities laws if such noncompliance results in an accounting restatement (as
these terms are used in Section

 

 

 

 

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304 of the Sarbanes-Oxley Act of 2002), 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 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;

 

(ii)        Individuals who on September 1, 2000 constitute the Board, and any
new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election consent, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least

 

 

 

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two-thirds (2/3) of the directors then still in office who either were directors
on September 1, 2000 or whose election or nomination for election was previously
so approved or recommended, cease for any reason to constitute at least a
majority thereof;

 

(iii)       There is consummated a merger, consolidation, recapitalization, or
reorganization of the Company, or a reverse stock split of any class of voting
securities of the Company, if, immediately following consummation of any of the
foregoing, either (A) individuals who, immediately prior to such consummation,
constitute the Board do not constitute at least a majority of the members of the
board of directors of the Company or the surviving or parent entity, as the case
may be, or (B) the voting securities of the Company outstanding immediately
prior to such recommendation do not represent (either by remaining outstanding
or by being converted into voting securities of a surviving or parent entity) at
least 60% or more of the combined voting power of the outstanding voting
securities of the Company or such surviving or parent entity; or

 

(iv)       The shareholders of the Company have approved a plan of complete
liquidation of the Company and there occurs a distribution or other substantive
step pursuant to such plan of complete liquidation, or there is consummated an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction have a similar effect), and in each
case all material contingencies to the completion of the transaction have been
satisfied or waived.

 

(f)        "Committee" means the 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; provided,
however, that only awards that were both granted and vested before 2005 are
Designated Awards.

 

(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 11(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

 

 

 

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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 (i.e., with the effect of diminishing the
Employee's compensation or benefits, or his or her opportunity to earn
compensation through service or through satisfaction of performance conditions),
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;

 

(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 immediately
prior to the Change in Control, 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; or

 

(v)        the failure of the Company to obtain the binding agreement of any
successor to the Company expressly to assume and agree to fully perform the
Company's obligations under this Policy, as contemplated in Section 11(f)
hereof;

 

in each case after notice in writing from the Employee to the Company within 90
days after the initial occurrence of the event or initial existence of the
condition constituting Good Reason, and after a period of 30 days after such
notice has been given during which the Company and its subsidiaries fail to
correct such conduct or condition. Immaterial diminutions in compensation or
authority, duties or responsibilities (with materiality determined under
Treasury Regulation § 1.409A-1(n)(ii)) shall not constitute "Good Reason";
unless otherwise required by Section 409A, a diminution of 1% of total direct
compensation shall be deemed material.

 

 

(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

 

 

 

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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 at the election of the Employee after
attaining age 62.

 

(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 11(h) of this
Policy.

 

4.         Severance Payments and Benefits. For each class or tier 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. Such terms and conditions shall be
set forth in an annex hereto that is specific to each such class or tier. The
foregoing and the provisions of any such annex notwithstanding, the Committee
may vary the terms or provide enhanced benefits in a document provided to a
participant otherwise designated as a participant in a specified tier, 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.

 

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, except that if an option or other such
award is intended to be a deferral of compensation fully compliant with Code
Section 409A, the additional restrictions on the exercise of such award under
the applicable plan or award agreement shall also apply.

 

(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 to the extent of any waiver by the Employee or other express Employee
election to defer beyond a Change in Control; provided, however, that, in the
case of an award that constitutes a deferral of compensation under Code Section
409A (excluding any "grandfathered" award), the end of any deferral period and
settlement of the award shall occur only if, in connection with

 

 

 

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the Change in Control, there occurs a change in the ownership of the Company, a
change in effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company (as defined in Treasury
Regulation § 1.409A-3(i)(5)) (but forfeiture conditions relating to such award
will lapse), and any waiver or express election to defer such an award subject
to Section 409A shall be subject to the requirements of Section 10(g)(ii).

 

(iii)       With respect to such an outstanding equity award subject to
achievement of performance goals and conditions, such award will be governed by
the applicable plan, award document(s), or other agreement governing such award.

 

Notwithstanding the foregoing, Section 7 shall continue to apply to any such
award in accordance with its terms.

 

(b)        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. If an Employee who has been designated as
eligible for benefits under this Section 6, as set forth in the Annex hereto
designating the terms of such Employee's participation, becomes entitled to one
or more payments in connection with a Change in Control or termination of
employment during the two 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.
The foregoing notwithstanding, if a reduction of any compensation under Section
4 or vesting of equity awards under Section 5 by an amount not exceeding 10% of
the Safe Harbor Amount would avoid the imposition of the Excise Taxes on
Employee, compensation pursuant to Section 4 and/or vesting of equity awards
under Section 5 of this Agreement shall be reduced to the extent necessary, but
not more than 10% of the Safe Harbor Amount, to result in no imposition of the
Excise Taxes on Employee. This "cut-back" provision shall apply to cash payments
under Section 4 and/or vesting under Section 5 so as to minimize the amount of
compensation that is reduced (i.e., it applies to payments or vesting that to
the greatest extent represent parachute payments), with the amount of
compensation based on vesting to be measured (for purposes of this provision) by
the intrinsic value of the equity award at the date of such vesting. "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

 

 

 

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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 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.

 

Subject to Section 10(a)(iii), 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

 

 

 

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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
during Employee's employment and within two years (or such other period as the
Committee may specify) 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)        During the period prior to a Change in Control and during the
Employee's employment and within two years (or such other period as the
Committee may specify) following termination of such employment with the Company
or any subsidiary or for such shorter period following termination as may be
provided by

 

 

 

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applicable law, 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, disparage or be 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.

 

(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, in the case of an Employee whose employment
terminates prior to a Change in Control, 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 is
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

 

 

 

9

 

 

 

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comply therewith, and the Employee shall agree to the terms of Section 7(d); and
provided further, that during the two 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.

 

(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 (i) such Employee's annual salary that had been payable as of
the date of termination of employment, together with salary, incentive
compensation and benefits which had been earned or become payable as of the date
of termination but which had not yet been paid to the Employee and unreimbursed
business expenses reimbursable under Company policies then in effect, and (ii)
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. Subject to Section 10, all payments required to
be paid as a lump sum under Section 4 and any Annex hereto implementing Section
4 shall be paid not later than the 15th day following the date of termination of
Employee's employment (or the

 

 

 

10

 

 

 

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date such lump sum otherwise became payable hereunder). Other payments shall be
made as promptly as practicable following the earliest date such payments are
due, subject to Section 10.

 

(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 upon a termination of employment prior
to or more than two years after a Change in Control under Section 4, and any
Annex implementing Section 4, unless the Committee in its sole discretion
provides otherwise, in the event such 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 of the Employee's employment with the purchaser or spun-off entity
of the kinds described in Section 4, and any Annex hereto applicable to the
Employee, within two 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 and such Annex, 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

 

 

 

11

 

 

 

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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 Employee. 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.        Special Rules for Compliance with Code Section 409A. This Section 10
serves to ensure compliance with applicable requirements of Code Section 409A.
Certain provisions of this Section 10 modify other provisions of this Policy and
the "Designations of Participants and Terms" annexed to this Policy (the
"Designations"). If the terms of this Section 10 conflict with other terms of
the Policy or the terms of the Designations, the terms of this Section 10
control. This Section 10 is effective as of December 31, 2007, but the Company
generally will apply these rules before that date in connection with its good
faith compliance with Code Section 409A and the guidance thereunder.

 

(a)        Timing of Certain Payments. Payments and benefits specified under
this policy shall be paid at the times specified as follows:

 

 

(i)

Accrued Payments at Termination. Certain provisions of this Policy require
payment of amounts accrued at the date of an Employee's termination of
employment, specifically:

 

The 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.

 

These amounts shall be payable at the date the amounts otherwise would have been
payable under Company policies if the Employee's employment had not terminated,
but in no event more than 60 days after termination of employment.

 

 

(ii)

Performance-Based Payments. Any amount payable at the time a performance-based
incentive award otherwise would be payable if employment had not terminated must
be paid within 60 days after the date such award becomes payable.

 

 

 

12

 

 

 

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(iii)

Gross-Up. Gross-up payments will be made at the time specified in Section 6, and
in any event the gross up must be paid no later than the end of Employee's
taxable year next following Employee's taxable year in which Employee remits the
related taxes to the taxing authorities.

 

 

(iv)

Legal Fees and Expenses. Any legal fees and expenses of Employee payable by the
Company under Section 11(c) shall be paid within 30 days of the date the Company
receives the bill therefore, and in any event the fees and expenses must be paid
or reimbursed no later than the end of Employee's taxable year next following
Employee's taxable year in which the legal fee or expense was incurred.

 

 

(v)

Other Prompt Payments. Any payment or benefit required under Section 8(a) of the
Policy to be paid promptly following a date or event shall be paid within 30
days after such date or event.

 

 

(vi)

No Employee Influence on Year of Payment. In the case of any payment under the
Policy payable during a specified period of time following a termination or
other event, if such permitted payment period begins in one calendar year and
ends in a subsequent calendar year, the Employee shall have no right to elect in
which year the payment will be made, and the Company's determination of when to
make the payment shall not be influenced in any way by the Employee.

 

(b)        Special Rules for Severance Payments. In the case of severance
payments payable solely due to a termination by the Company not for Cause or,
within two years after a Change in Control, by the Employee for Good Reason
("Severance"), the following rules will apply:

 

(i) Separate Payments. Any lump-sum payment and each installment payment of
Severance shall be deemed a separate payment for all purposes, including for
purposes of Section 409A. The portion of a lump-sum payment of Severance payable
for specified terminations in the period of two years following a Change in
Control that exceeds the present value of the installment payments of Severance
that would be payable for a specified termination not within two years following
a Change in Control will be deemed to be a separate payment for all purposes,
including for purposes of Section 409A (the "Separate Lump Sum").

 

 

(ii)

Installment Payment Rules. Installment payments shall be made at the dates
specified in the applicable provision of the Designation, except that, in the
case of any payment of installments in which the third monthly installment would
be in March of the year following termination, such payment will be made between
March 1 and March 15 of that March. Accordingly, the first three installments of
Severance payable in installments shall constitute a short-term deferral under
Treasury Regulation § 1.409A-1(b)(4). Severance payments payable in installments
within six months after the Employee's termination of employment, other than
those deemed to be short-term deferrals (the first three installments), shall be
deemed to be paid under the "two-year/two-times" exclusion from being a deferral
of compensation under Treasury Regulation § 1.409A-1(b)(9)(iii), up to the limit
applicable under that Treasury Regulation. Any other amount payable as Severance
in installments shall be deemed to be a deferral of compensation for purposes of
Section 409A, and shall be subject to the six-month delay rule in Section 10(c).
(Note: For an Employee whose taxable income in each of the two years before 2007
exceeded $225,000, a Severance aggregating up to approximately $3.6 million
could be paid in installments without a delay under the six-month delay rule
upon a termination not for

 

 

 

13

 

 

 

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Cause in 2007).

 

 

(iii)

Lump-Sum Severance Payment Rules. If Severance is payable as a lump-sum payment,
the amount of Severance payable at the date specified in Section 8(a) of the
Policy (i.e., without the six-month delay) shall equal (A) the present value of
the amount of Severance payments that would have been payable in the first three
months assuming Severance were instead payable due to a termination not for
Cause prior to a Change in Control (if this amount qualifies as a short-term
deferral under Code Section 409A), plus (B) the maximum amount of Severance
payable under the under the "two-year/two-times" exclusion from being a deferral
of compensation under Treasury Regulation § 1.409A-1(b)(9)(iii), plus (C) the
Separate Lump Sum identified in Section 10(b)(i) above (if this amount qualifies
as a short-term deferral under Code Section 409A), plus (D), if the six-month
delay rule in Section 10(c) does not apply, all remaining amounts of the
Severance. Any other amounts of such Severance (i.e., amounts subject to the
six-month delay rule) shall be paid at the date six months after the date of
Employee's termination, together with applicable interest.

 

 

(c)

Six-Month Delay Rule.

 

 

(i)

General Rule. The six-month delay rule will apply to certain payments and
benefits under the Policy if all of the following conditions are met:

 

 

(A)

The Employee is a “key employee” (as defined in Code Section 416(i) without
regard to paragraph (5) thereof) for the year in which the separation from
service occurs. The Company will determine status of “key employees” annually,
under administrative procedures applicable to all Section 409A plans and applied
in accordance with Treasury Regulation § 1.409A-1(i).

 

 

(B)

The Company’s stock is publicly traded on an established securities market or
otherwise.

 

 

(C)

The payment or benefit in question is a deferral of compensation and not
excepted or excluded from being such by the short-term deferral rule, or the
"two-years/two-times" rule in Treasury Regulation § 1.409A-1(b)(9)(iii), or any
other exception or exclusion; provided, however, that the exclusion under
Treasury Regulation § 1.409A-1(b)(9)(v)(D) shall apply in the case of Severance
only if and to the extent that it is not necessary to apply to any other payment
or benefit payable within six months after the Employee's separation from
service.

 

 

(ii)

Effect of Rule. If it applies, the six-month delay rule will delay a payment or
benefit which otherwise would be payable under this Policy within six months
after the Employee's separation from service.

 

 

(A)

Any delayed payment or benefit shall be paid on the date six months after the
Employee's separation from service.

 

 

(B)

During the six-month delay period, accelerated payment will occur in the event
of the Employee's death but not for any other reason (including no acceleration
upon a Change in Control)

 

 

(C)

Any payment that is not triggered by a separation from service, or is triggered
by a

 

 

 

14

 

 

 

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separation from service but would be made more than six months after separation
(without applying this six-month delay rule), shall be unaffected by the
six-month delay rule.

 

 

(iii)

Limit to Application of Six-Month Delay Rule. If the terms of any agreement or
other document relating to this Policy impose this six-month delay rule in
circumstances in which it is not required for compliance with Section 409A,
those terms shall not be given effect.

 

(d)        "Termination of Employment" Defined. For purposes of this Policy, a
"termination of employment" means a separation from service within the meaning
of Treasury Regulation § 1.409A-1(h), except for a termination of employment
providing for payments or benefits that are "grandfathered" under Code Section
409A.

 

(e)        Performance-Goal Applies to AIP and LTIP Awards in Certain Cases. In
the case of an Employee's termination of employment within two years after a
Change in Control, if such termination is a Retirement or a termination due to
Disability in which the Employee has elected voluntarily to terminate (but not a
termination due to Disability if the Company has elected such termination), the
payment of any amount (pro rated or otherwise) based on the target annual
incentive under any AIP (as under Section II(f)(ii) of each of the Designations)
or based on the target LTIP award for a performance cycle (as under Section
II(f)(vi) of each of the Designations) shall be made to the Employee only if one
of the following performance conditions, related to the financial success of the
Company, have been satisfied:

 

 

(i)

The minimum performance that is a condition for payment of the incentive award
at the level that would authorize any positive payment under the incentive award
is achieved over the entire performance period; or

 

 

(ii)

For financial reporting purposes, the Company has determined for any quarterly
reporting period ending at or after the date of termination through the end of
the performance period that achievement of the minimum level of performance
specified in (i) is probable (so that accounting expense is accrued relating to
the award); or

 

 

(iii)

The Company's earnings before taxes reportable in its financial statements for
any quarterly reporting period ending at or after the date of termination
through the end of the year of termination or the later end of the performance
period, or for the full year of termination, are positive.

 

The payment of any such amount shall be made within 30 days after the Committee
has determined that any of the performance conditions hereunder has been
achieved.

 

(f)         Settlement of Stock Units. Any provision of the Designations
(including Sections II(c)(iv), II(d)(vi), and II(f)(iv)) providing for
accelerated settlement of restricted stock units or stock units (including
performance-based awards in the nature of stock units), other than stock units
"grandfathered" under Code Section 409A, shall have no effect. However, those
provisions will continue to apply by their terms with respect to the lapse of
the risk of forfeiture of such awards. The timing of settlement of such awards
shall be governed by specific documents governing the compliance of such stock
units with Code Section 409A.

 

 

(g)

Other Provisions.

 

 

 

 

15

 

 

 

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(i)

Good Reason. The definition of "Good Reason" in Section 2(l) of the Policy has
been modified to constitute an "involuntary separation" within the meaning of
Treasury Regulation § 1.409A-1(n), and shall be so construed and interpreted.

 

 

(ii)

Deferrals and Waivers of Settlement. Certain provisions of the Policy and
Designations, specifically Policy Section 5(a)(ii) and Designations Section
II(d)(vi) and Section II(f)(iv), refer to deferrals and waivers of settlement of
awards. Any such deferral or waiver relating to an award that is a deferral of
compensation subject to Section 409A (i.e., is not a "grandfathered" award or
excluded from Section 409A) will be permitted only in accordance with the
provisions specified in Section 5(b) of the Company's Deferred Compensation
Plan, as amended and restated October 8, 2007, subject to any additional
limitations as may be necessary for compliance with Code Section 409A.

 

 

(iii)

Continued Benefits. Medical, dental and group life and disability benefits shall
be continued as specified in Designation Sections II(a)(vi) and II(d)(ix),
subject to any applicable requirements under Treasury Regulation § 1.409A-1. If
any of these benefits are not excluded from being deferrals of compensation
under Code Section 409A, in addition to any other requirement regarding the
timing of payment, the benefits or any payments in lieu of the benefits shall be
made no later than the end of Employee's taxable year next following Employee's
taxable year in which the benefit or expense was due to be paid.

 

 

(iv)

Excess Benefit Plan. The Company shall have no authority to elect to pay the
present value of accrued obligations to the Employee under the Excess Benefit
Plan as a lump sum except for "grandfathered" accrued obligations and except as
permitted in compliance with Code Section 409A (including transition rules and
as permitted under permitted under Treasury Regulation § 1.409A-3(j)(4)). In
addition, the terms of any "rabbi trust" required or permitted to be established
under the Policy in connection with the Excess Benefit Plan or otherwise shall
be limited as required by Code Section 409A.

 

 

(v)

Other Separate Payments. In addition to the provisions of Section 10(b)(i), each
other payment or benefit payable under this Policy shall be deemed a separate
payment for all purposes, including for purposes of Section 409A.

 

 

(vi)

Non-transferability. No right of an Employee to any payment or benefit under
this Policy shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Employee or of any beneficiary of the Employee.

 

 

(vii)

No Acceleration. The timing of payments and benefits under the Policy may not be
accelerated to occur before the time specified for payment hereunder, except to
the extent permitted under Treasury Regulation § 1.409A-3(j)(4) or as otherwise
permitted under Code Section 409A without the Employee incurring a tax penalty.

 

(h)         General Compliance. In addition to the foregoing provisions, the
terms of this Policy, including any authority of the Company and rights of the
Employee which constitute a deferral of compensation subject to 409A (and which
is not grandfathered or excluded from being deemed such a deferral), shall be
limited to those terms permitted under 409A without resulting in a tax penalty
to Employee, and any terms not so permitted under 409A shall be modified and
limited to the extent necessary to conform with Section 409A but only to the
extent that such modification or limitation is permitted under Section 409A and
the regulations and guidance issued thereunder. The Company and

 

 

 

16

 

 

 

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its employees and agents make no representation and are providing no advice
regarding the taxation of the payments and benefits under this Policy, including
with respect to taxes, interest and penalties under Section 409A and similar
liabilities under state and local tax laws. No indemnification or gross up is
payable under this Policy with respect to any such tax, interest, or penalty
under Section 409A or similar liability under state or local tax laws applicable
to any employee, except that this provision does not limit the gross up payable
under Section 6 or affect the methodology for determining the gross up payable
under Section 6.

 

 

11.

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, unappealable
order setting forth a determination that the position taken by the Employee was
frivolous or advanced in bad faith. The timing of payments under this Section
11(c) shall be subject to Section 10(a)(iv).

 

(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 two 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
relating to a termination during the two years after a Change in Control under
Section 4 and any Annex implementing Section 4, Section 5 or Section 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 provisions hall 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

 

 

 

17

 

 

 

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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 became effective as of April 13, 2000.
This amendment and restatement of the Policy is effective as of December 11,
2007 and shall apply to executives hired after October 22, 2007.

 

 

 

18

 

 

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Annex I

 

 

 

Executive Separation Policy

 

 

TIER I

 

 

Designation of Participants and Terms

 

 

This documents sets forth the participants designated in the Tier I
participation level under the International Flavors & Fragrances Inc. Executive
Separation Policy (the "Policy"). All of the terms of the Policy are
incorporated into this Annex, and capitalized terms defined in the Policy have
the same meaning in this Annex.

 

I.

Designation of Participants in Tier I.

 

The Committee and/or the Board shall designate the Tier I participants under the
Policy.

 

II.

Terms of Participation in Tier I

 

Subject to all of the terms and conditions of the Policy, including Section 10
(modifying certain terms hereof to comply with Code Section 409A), the terms and
conditions set forth below apply to Employees designated as Tier I participants.
This Annex shall have no application to Employees designated as participants at
a level other than Tier I, unless the Committee shall adopt such terms and
conditions and so specify in a separate Annex to the Policy.

 

(a)        Termination by the Company Not for Cause Prior to or More than Two
Years After a Change in Control. An Employee who is eligible for Tier I
severance payments and benefits under the Policy pursuant to Part I of this
Annex 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 two 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, 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 18 months (24 months for

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

executives hired prior to October 22, 2007and having continuous service)
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)       Unless otherwise determined by the Committee, the Employee's options,
both those vested and not vested at the time of the Employee's termination of
employment, shall be governed by the terms of the option agreements in respect
of such options.

 

(v)        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 18 months (24 months for
executives hired prior to October 22, 2007 and having continuous service)
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 Part II(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.

 

 

 

2

--------------------------------------------------------------------------------

 

(b)        Termination by the Company for Cause or Voluntary Termination by the
Employee Prior to or More than Two Years After a Change in Control. An Employee
who is eligible for Tier I severance payments and benefits under the Policy
pursuant to Part I of this Annex 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 two 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:

 

(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)       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)       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 Two Years After a Change in Control. An Employee who is eligible for Tier I
severance payments and benefits under the Policy pursuant to Part I of this
Annex 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 two 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

 

 

 

3

 

 

 

--------------------------------------------------------------------------------

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 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)       Unless otherwise determined by the Committee, the Employee's
options, both those vested and not vested at the time of the Employee's
termination of employment, shall be governed by the terms of the option
agreements in respect of such options.

 

(iv)       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 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 (subject to Sections 10(f) and
10(g)(v)).

 

(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 on-going 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 (divided by
the total number of days in the performance cycle). 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 Two Years After a Change in Control. An Employee who is eligible
for Tier I severance payments and benefits under the Policy pursuant to Part I
of this Annex shall be entitled to receive the payments and benefits from the
Company upon termination of employment within two 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 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

 

 

 

4

 

 

 

--------------------------------------------------------------------------------

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 target annual incentive for the year
of termination, with the award so determined then prorated based on the number
of days during the year of termination which preceded the Employee's
termination. This amount will be payable as a lump sum.

 

(iii)       A lump-sum cash severance payment equal to the product of the
Employee's Annual Compensation, multiplied by 3.

 

(iv)       A cash payment of a prorated portion of each of the Employee's LTIP
awards for each performance cycle on-going at the time of termination,
determined as the target LTIP award for that performance cycle, with each LTIP
award prorated based on the number of days during the performance cycle
preceding the Employee's termination (divided by the total number of days in the
performance cycle) This amount will be payable as a lump sum.

 

(v)        Except for Designated Awards, 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)       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, stock
unit awards shall be settled as promptly as practicable following termination
(subject to Sections 10(f) and 10(g)(ii)).

 

(vii)      The Employee's Designated Awards, if any, will be subject to the
terms of the Plan and/or stock option agreement under which they were granted,
except that, in the case of options which are Designated Awards, and
irrespective of such Plan and/or stock option agreement, Employee will be
entitled to a payment equal to the following: 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 Part II(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.

 

 

 

5

 

 

 

--------------------------------------------------------------------------------

(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 at a rate of compensation
equal to his or her Annual Compensation, 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 to the third anniversary of his termination at an annual
rate of compensation equal to his or her Annual Compensation; provided further,
that, subject to Section 10(g)(ii), 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, subject to Section 10(g)(ii), 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 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 Part II(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. Notwithstanding anything to the contrary
contained herein, in the event the Employee becomes eligible for benefits under
a new employer's welfare benefit plan during the 36 month period following the
date of termination, the benefits required to be provided to the employee
pursuant to this Part II(d)(iv) shall be reduced by the amount of substantially
similar benefits

 

 

 

6

 

 

 

--------------------------------------------------------------------------------

provided to the Employee at no additional cost by such new employer.

 

(e)        Termination by the Company for Cause or Voluntary Termination by the
Employee Within Two Years After a Change in Control. An Employee who is eligible
for Tier I severance payments and benefits under the Policy pursuant to Part I
of this Annex shall be entitled to receive the payments and benefits from the
Company upon termination of employment at any time within two 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.

 

(iii)       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)       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 Two Years
After a Change in Control. An Employee who is eligible for Tier I severance
payments and benefits under the Policy pursuant to Part I of this Annex shall be
entitled to receive the payments and benefits from the Company upon termination
of employment at any time within two 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

 

 

 

7

 

 

 

--------------------------------------------------------------------------------

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 target annual incentive for the year
of termination, with the award so determined then prorated based on the number
of days during the year of termination which preceded the Employee's
termination, subject to Section 10(e) in applicable cases. This amount will be
payable as a lump sum.

 

(iii)       Except for Designated Awards, 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, or (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)       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 (subject to Sections
10(f) and 10(g)(ii)).

 

(v)        The Employee's Designated Awards, if any, will be subject to the
terms of the Plan and/or stock option agreement under which they were granted,
except that, in the case of options which are Designated Awards, and
irrespective of such Plan or stock option agreement, Employee will be entitled
to a payment equal to the following: 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 Part II(f), 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.)

 

(vi)       A cash payment of a prorated portion of each of the Employee's LTIP
awards that would have become payable for each performance cycle on-going at the
time of termination, determined as the target LTIP award for that performance
cycle, with each LTIP award prorated based on the number of days during the
performance cycle preceding the Employee's termination (divided by the total
number of days in the performance cycle), subject to Section 10(e) in applicable
cases. This amount will be

 

 

 

8

 

 

 

--------------------------------------------------------------------------------

payable as a lump sum.

 

(vii)      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.

 

(g)        Entitlement to Gross-Up. Tier I level participants shall be entitled
to the Gross-Up Payment in accordance with Section 6 of the Policy.

 

 

 

9

 

 

 

--------------------------------------------------------------------------------

 

Annex II

 

 

 

Executive Separation Policy

 

 

TIER II

 

 

Designation of Participants and Terms

 

 

This documents sets forth the participants designated in the Tier II
participation level under the International Flavors & Fragrances Inc. Executive
Separation Policy (the "Policy"). All of the terms of the Policy are
incorporated into this Annex, and capitalized terms defined in the Policy have
the same meaning in this Annex.

 

I.

Designation of Participants in Tier II.

 

The Committee and/or the Board shall designate the Tier II participants under
the Policy.

 

II.

Terms of Participation in Tier II

 

Subject to all of the terms and conditions of the Policy, including Section 10
(modifying certain terms hereof to comply with Code Section 409A), the terms and
conditions set forth below apply to Employees designated as Tier II level
participants. This Annex shall have no application to Employees designated as
participants at a level other than Tier II, unless the Committee shall adopt
such terms and conditions and so specify in a separate Annex to the Policy.

 

(a)        Termination by the Company Not for Cause Prior to or More than Two
Years After a Change in Control. An Employee who is eligible for Tier II
severance payments and benefits under the Policy pursuant to Part I of this
Annex 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 two 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, 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 12 months (18 months for
executives hired prior to October 22, 2007 and having continuous service)
following the

 

 

 

1

 

 

 

--------------------------------------------------------------------------------

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)       Unless otherwise determined by the Committee, the Employee's options,
both those vested and not vested at the time of the Employee's termination of
employment, shall be governed by the terms of the option agreements in respect
of such options.

 

(v)        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 12 months (18 months for
executives hired prior to October 22, 2007and having continuous service)
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 Part II(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 Two Years After a Change in Control. An Employee
who is eligible for Tier II severance payments and benefits under the Policy
pursuant to Part I of this

 

 

 

2

 

 

 

--------------------------------------------------------------------------------

Annex 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 two 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:

 

(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)       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)       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 Two Years After a Change in Control. An Employee who is eligible for Tier
II severance payments and benefits under the Policy pursuant to Part I of this
Annex 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 two 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.

 

(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

 

 

3

 

 

 

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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)       Unless otherwise determined by the Committee, the Employee's
options, both those vested and not vested at the time of the Employee's
termination of employment, shall be governed by the terms of the option
agreements in respect of such options.

 

(iv)       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 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 (subject to Sections 10(f) and
10(g)(ii)).

 

(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 on-going 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 Two Years After a Change in Control. An Employee who is eligible
for Tier II severance payments and benefits under the Policy pursuant to Part I
of this Annex shall be entitled to receive the payments and benefits from the
Company upon termination of employment within two 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 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 target annual incentive for the year
of termination, with the award so determined then prorated based on the number
of days during the year of termination which preceded the Employee's
termination. This amount will be payable as a lump sum.

 

 

4

 

 

 

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(iii)       A lump-sum cash severance payment equal to the product of the
Employee's Annual Compensation, multiplied by 2.

 

(iv)       A cash payment of a prorated portion of each of the Employee's LTIP
awards for each performance cycle on-going at the time of termination,
determined as the target LTIP award for that performance cycle, with each LTIP
award prorated based on the number of days during the performance cycle
preceding the Employee's termination (divided by the total number of days in the
performance cycle). This amount will be payable as a lump sum.

 

(v)        Except for Designated Awards, 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)       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, stock
unit awards shall be settled as promptly as practicable following termination
(subject to Sections 10(f) and 10(g)(ii)).

 

(vii)      The Employee's Designated Awards, if any, will be subject to the
terms of the Plan and/or stock option agreement under which they were granted,
except that, in the case of options which are Designated Awards, and
irrespective of such plan and/or stock option agreement, Employee will be
entitled to a payment equal to the following: 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 Part II(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 24 months after termination at a rate of compensation
equal to his or her Annual Compensation, 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 to the third anniversary of his termination at an annual
rate of compensation equal to his or her Annual Compensation; provided further,
that, subject to Section 10(g)(iv), 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

 

 

5

 

 

 

--------------------------------------------------------------------------------

upon insolvency or bankruptcy of the Company, until all obligations to the
Employee and his beneficiaries have been satisfied; and provided further, that,
subject to Section 10(g)(iv), 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 24 months following the
date of termination of employment or the commencement of eligibility for
benefits 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 Part II(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. Notwithstanding anything to the contrary
contained herein, in the event the Employee becomes eligible for benefits under
a new employer's welfare benefit plan during the 24-month period following the
date of termination, the benefits required to be provided to the employee
pursuant to this Part II(d)(iv) shall be reduced by the amount of substantially
similar benefits provided to the Employee at no additional cost by such new
employer.

 

(e)        Termination by the Company for Cause or Voluntary Termination by the
Employee Within Two Years After a Change in Control. An Employee who is eligible
for Tier II severance payments and benefits under the Policy pursuant to Part I
of this Annex shall be entitled to receive the payments and benefits from the
Company upon termination of employment at any time within two 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

 

 

6

 

 

 

--------------------------------------------------------------------------------

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)       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)       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.

 

 

7

 

 

 

--------------------------------------------------------------------------------

(f)        Termination Due to Death, Disability or Retirement Within Two Years
After a Change in Control. An Employee who is eligible for Tier II severance
payments and benefits under the Policy pursuant to Part I of this Annex shall be
entitled to receive the payments and benefits from the Company upon termination
of employment at any time within two 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 target annual incentive for the year
of termination, with the award so determined then prorated based on the number
of days during the year of termination which preceded the Employee's
termination, subject to Section 10(e) in applicable cases. This amount will be
payable as a lump sum.

 

(iii)       Except for Designated Awards, 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, (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)       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 (subject to Sections
10(f) and 10(g)(ii)).

 

(v)       The Employee's Designated Awards, if any, will be subject to the terms
of the Plan and/or stock option agreement under which they were granted, except
that, in the case of options which are Designated Awards, and irrespective of
such Plan and/or stock option agreement, Employee will be entitled to a payment
equal to the following: 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 Part II(f), 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

 

 

1

 

 

 

--------------------------------------------------------------------------------

Exchange on the date of the Change in Control, and, upon such payment, such
option shall be deemed canceled and annulled.

 

(vi)       A cash payment of a prorated portion of each of the Employee's LTIP
awards that would have become payable for each performance cycle on-going at the
time of termination, determined as the target LTIP award for that performance
cycle, with each LTIP award prorated based on the number of days during the
performance cycle preceding the Employee's termination (divided by the total
number of days in the performance cycle), subject to Section 10(e) in applicable
cases. This amount will be payable as a lump sum.

 

(vii)      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.

 

(g)        Entitlement to Gross-Up. Tier II level participants shall be entitled
to the Gross-Up Payment in accordance with Section 6 of the Policy.

 

(h)         Period During Which Restrictions Under Section 7(a)(i) and (ii)
Apply. Tier II level participants shall be subject to the Non-competition Period
under Section 7(a)(i) of this Policy for 18 months following termination of
employment rather than two years, and shall be subject to the restrictions under
Section 7(a)(ii) of this Policy for 18 months following termination of
employment rather than two years. Except for this limitation, Sections 7(a)(i)
and 7(a)(ii) apply to each such participant in accordance with their terms.

 

2

 

 

 

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Annex III

 

 

 

Executive Separation Policy

 

 

TIER III

 

 

Designation of Participants and Terms

 

 

This documents sets forth the participants designated in the Tier III
participation level under the International Flavors & Fragrances Inc. Executive
Separation Policy (the "Policy"). All of the terms of the Policy are
incorporated into this Annex, and capitalized terms defined in the Policy have
the same meaning in this Annex.

 

I.

Designation of Participants in Tier III.

 

The Committee and/or the Board shall designate the Tier III participants under
the Policy.

 

II.

Terms of Participation in Tier III

 

Subject to all of the terms and conditions of the Policy, including Section 10
(modifying certain terms hereof to comply with Code Section 409A), the terms and
conditions set forth below apply to Employees designated as Tier III level
participants. This Annex shall have no application to Employees designated as
participants at a level other than Tier III, unless the Committee shall adopt
such terms and conditions and so specify in a separate Annex to the Policy.

 

(a)        Termination by the Company Not for Cause Prior to or More than Two
Years After a Change in Control. An Employee who is eligible for Tier III
severance payments and benefits under the Policy pursuant to Part I of this
Annex 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 two 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, 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 12 months following the
date of termination of employment or the Employee's attaining age 65, severance
payments, paid

 

 

3

 

 

 

--------------------------------------------------------------------------------

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)       Unless otherwise determined by the Committee, the Employee's options,
both those vested and not vested at the time of the Employee's termination of
employment, shall be governed by the terms of the option agreements in respect
of such options.

 

(v)        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 12 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 Part II(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 Two Years After a Change in Control. An Employee
who is eligible for Tier III severance payments and benefits under the Policy
pursuant to Part I of this Annex 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 two years following a

 

 

4

 

 

 

--------------------------------------------------------------------------------

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:

 

(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)       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)       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 Two Years After a Change in Control. An Employee who is eligible for Tier
III severance payments and benefits under the Policy pursuant to Part I of this
Annex 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 two 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.

 

(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

 

 

5

 

 

 

--------------------------------------------------------------------------------

amount will be payable at such time as annual incentives for performance in the
year of termination otherwise become payable.

 

(iii)       Unless otherwise determined by the Committee, the Employee's
options, both those vested and not vested at the time of the Employee's
termination of employment, shall be governed by the terms of the option
agreements in respect of such options.

 

(iv)       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 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 (subject to Sections 10(f) and
10(g)(ii)).

 

(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 on-going 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 Two Years After a Change in Control. An Employee who is eligible
for Tier III severance payments and benefits under the Policy pursuant to Part I
of this Annex shall be entitled to receive the payments and benefits from the
Company upon termination of employment within two 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 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 target annual incentive for the year
of termination, with the award so determined then prorated based on the number
of days during the year of termination which preceded the Employee's
termination. This amount will be payable as a lump sum.

 

 

(iii)

A lump-sum cash severance payment equal to the product of the

 

 

6

 

 

 

--------------------------------------------------------------------------------

Employee's Annual Compensation, multiplied by 1.5.

 

(iv)       A cash payment of a prorated portion of each of the Employee's LTIP
awards for each performance cycle on-going at the time of termination,
determined as the target LTIP award for that performance cycle, with each LTIP
award prorated based on the number of days during the performance cycle
preceding the Employee's termination (divided by the total number of days in the
performance cycle). This amount will be payable as a lump sum.

 

(v)        Except for Designated Awards, 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)       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, stock
unit awards shall be settled as promptly as practicable following termination
(subject to Sections 10(f) and 10(g)(ii)).

 

(vii)      The Employee's Designated Awards, if any, will be subject to the
terms of the Plan and/or stock option agreement under which they were granted,
except that, in the case of options which are Designated Awards, and
irrespective of such plan and/or stock option agreement, Employee will be
entitled to a payment equal to the following: 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 Part II(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 18 months after termination at a rate of compensation
equal to his or her Annual Compensation, 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 to the third anniversary of his termination at an annual
rate of compensation equal to his or her Annual Compensation; provided further,
that, subject to Section 10(g)(iv), 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, subject to Section

 

 

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10(g)(iv), 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 18 months following the
date of termination of employment or the commencement of eligibility for
benefits 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 Part II(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. Notwithstanding anything to the contrary
contained herein, in the event the Employee becomes eligible for benefits under
a new employer's welfare benefit plan during the 18-month period following the
date of termination, the benefits required to be provided to the employee
pursuant to this Part II(d)(iv) shall be reduced by the amount of substantially
similar benefits provided to the Employee at no additional cost by such new
employer.

 

(e)        Termination by the Company for Cause or Voluntary Termination by the
Employee Within Two Years After a Change in Control. An Employee who is eligible
for Tier III severance payments and benefits under the Policy pursuant to Part I
of this Annex shall be entitled to receive the payments and benefits from the
Company upon termination of employment at any time within two 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.

 

 

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(ii)        No portion of the Employee's annual incentive under any AIP for the
year of termination shall be or become payable.

 

(iii)       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)       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 Two Years
After a Change in Control. An Employee who is eligible for Tier III severance
payments and benefits under the Policy pursuant to Part I of this Annex shall be
entitled to receive the payments and benefits from the Company upon termination
of employment at any time within two 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 target annual incentive for the year
of termination, with the award so determined then prorated based on the number
of days during the year of termination which preceded the Employee's
termination, subject to Section 10(e) in applicable cases. This amount will be
payable as a lump sum.

 

(iii)       Except for Designated Awards, 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, (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.

 

 

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(iv)       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 (subject to Sections
10(f) and 10(g)(ii)).

 

(v)        The Employee's Designated Awards, if any, will be subject to the
terms of the Plan and/or stock option agreement under which they were granted,
except that, in the case of options which are Designated Awards, and
irrespective of such Plan and/or stock option agreement, Employee will be
entitled to a payment equal to the following: 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 Part II(f),
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.

 

(vi)       A cash payment of a prorated portion of each of the Employee's LTIP
awards that would have become payable for each performance cycle on-going at the
time of termination, determined as the target LTIP award for that performance
cycle, with each LTIP award prorated based on the number of days during the
performance cycle preceding the Employee's termination (divided by the total
number of days in the performance cycle), subject to Section 10(e) in applicable
cases. This amount will be payable as a lump sum.

 

(vii)      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.

 

(g)        Entitlement to Gross-Up. Tier III level participants shall be
entitled to the Gross-Up Payment in accordance with Section 6 of the Policy.

 

(h)         Period During Which Restrictions Under Section 7(a)(i) and (ii)
Apply. Tier III level participants shall be subject to the Non-competition
Period under Section 7(a)(i) of this Policy for 12 months following termination
of employment rather than two years, and shall be subject to the restrictions
under Section 7(a)(ii) of this Policy for 12 months following termination of
employment rather than two years. Except for this limitation, Sections 7(a)(i)
and 7(a)(ii) apply to each such participant in accordance with their terms.

 

 

 

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