e10vq

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GeVe2wPQY522SVVLy56oi2J23DM2oFRhUr8gQl9GQEA58V9gZ8bqj/QNUMrlGpF0 R9w0olDEsFXpgp7guM+Yyw== 0000950137-08-007121.txt : 20080509 0000950137-08-007121.hdr.sgml : 20080509 20080509101733 ACCESSION NUMBER: 0000950137-08-007121 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20080509 DATE AS OF CHANGE: 20080509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENSIENT TECHNOLOGIES CORP CENTRAL INDEX KEY: 0000310142 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 390561070 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07626 FILM NUMBER: 08816426 BUSINESS ADDRESS: STREET 1: 777 EAST WISCONSIN AVENUE CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4142716755 MAIL ADDRESS: STREET 1: PO BOX 737 CITY: MILWAUKEE STATE: WI ZIP: 53201 FORMER COMPANY: FORMER CONFORMED NAME: UNIVERSAL FOODS CORP DATE OF NAME CHANGE: 19920703 10-Q 1 c26509e10vq.htm FORM 10-Q e10vq

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2008


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-7626

SENSIENT TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)


Wisconsin		39-0561070

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202-5304
(Address of principal executive offices)

Registrant’s telephone number, including area code: (414) 271-6755

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.


Class		Outstanding at April 30, 2008

Common Stock, par value $0.10 per share		48,057,255

SENSIENT TECHNOLOGIES CORPORATION
INDEX


		Page No.
PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements:
Consolidated Condensed Statements of Earnings - - Three Months Ended March 31, 2008 and 2007.		1

Consolidated Condensed Balance Sheets - - March 31, 2008 and December 31, 2007.		2

Consolidated Condensed Statements of Cash Flows - - Three Months Ended March 31, 2008 and 2007.		3

Notes to Consolidated Condensed Financial Statements.		4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		9

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		11

Item 4. Controls and Procedures.		11

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings.		12

Item 1A. Risk Factors.		13

Item 4. Submission of Matters to a Vote of Security Holders		13

Item 6. Exhibits.		14

Signatures.		15

Exhibit Index.		16
2007 Restricted Stock Plan, as Amended
Form of Restricted Stock Unit Agreement Under 2007 Restricted Stock Plan
2002 Stock Option Plan, as Amended and Restated
Form of Restricted Stock Unit Agreement Under 2002 Stock Option Plan
Certifications Pursuant to Rule 13a-14(a)
Certifications Pursuant to Section 1350

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

(In thousands except per share amounts)
(Unaudited)


	Three Months
	Ended March 31,
	2008		2007
Revenue	$	307,419	$	285,268

Cost of products sold		211,777		199,120

Selling and administrative expenses		56,009		51,936


Operating income		39,633		34,212

Interest expense		8,578		9,252


Earnings before income taxes		31,055		24,960

Income taxes		10,378		7,614


Net earnings	$	20,677	$	17,346


Average number of common shares outstanding:
Basic		47,299		46,402


Diluted		47,806		46,909


Earnings per common share:
Basic	$	.44	$	.37


Diluted	$	.43	$	.37


Dividends per common share	$	.18	$	.16

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)


	March 31,
	2008			December 31,
	(Unaudited)			2007 *
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	12,808		$	10,522
Trade accounts receivable, net		216,825			196,458
Inventories		371,264			361,534
Prepaid expenses and other current assets		48,605			41,530


TOTAL CURRENT ASSETS		649,502			610,044


OTHER ASSETS		45,186			44,404

INTANGIBLE ASSETS, NET		15,266			14,789

GOODWILL		493,200			476,611

PROPERTY, PLANT AND EQUIPMENT:
Land		48,651			46,013
Buildings		266,873			259,830
Machinery and equipment		630,994			612,265
Construction in progress		35,597			30,335

		982,115			948,443
Less accumulated depreciation		(551,977	)		(530,109	)

		430,138			418,334


TOTAL ASSETS	$	1,633,292		$	1,564,182


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade accounts payable	$	85,118		$	88,812
Accrued salaries, wages and withholdings from employees		16,628			23,684
Other accrued expenses		63,595			56,948
Income taxes		5,790			2,342
Short-term borrowings		68,727			57,487


TOTAL CURRENT LIABILITIES		239,858			229,273

OTHER LIABILITIES		28,131			26,670

ACCRUED EMPLOYEE AND RETIREE BENEFITS		45,573			44,197

LONG-TERM DEBT		459,255			449,621

SHAREHOLDERS’ EQUITY:
Common stock		5,396			5,396
Additional paid-in capital		76,442			75,233
Earnings reinvested in the business		830,270			818,180
Treasury stock, at cost		(127,362	)		(132,358	)
Accumulated other comprehensive income		75,729			47,970


TOTAL SHAREHOLDERS’ EQUITY		860,475			814,421


TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,633,292		$	1,564,182


*		Condensed from audited financial statements.

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)


	Three Months
	Ended March 31,
	2008			2007
Net cash provided by operating activities	$	9,734		$	5,095


Cash flows from investing activities:
Acquisition of property, plant and equipment		(12,113	)		(6,827	)
Proceeds from sale of assets		23			1,418
Other investing activity		1,462			252


Net cash used in investing activities		(10,628	)		(5,157	)


Cash flows from financing activities:
Proceeds from additional borrowings		9,052			24,679
Debt payments		(3,071	)		(19,744	)
Dividends paid		(8,587	)		(7,481	)
Proceeds from options exercised and other equity transactions		5,478			2,514


Net cash provided by (used in) financing activities		2,872			(32	)


Effect of exchange rate changes on cash and cash equivalents		308			(14	)


Net increase (decrease) in cash and cash equivalents		2,286			(108	)
Cash and cash equivalents at beginning of period		10,522			5,035


Cash and cash equivalents at end of period	$	12,808		$	4,927

See accompanying notes to consolidated condensed financial statements.

SENSIENT TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1.		Accounting Policies

		In the opinion of Sensient Technologies Corporation (the “Company”), the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) which are necessary to present fairly the financial position of the Company as of March 31, 2008 and December 31, 2007, the results of operations for the three months ended March 31, 2008 and 2007, and cash flows for the three months ended March 31, 2008 and 2007. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

		The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

		Expenses are charged to operations in the year incurred. However, for interim reporting purposes, certain expenses are charged to operations based on a proportionate share of estimated annual amounts rather than as they are actually incurred.

		Refer to the notes in the Company’s annual consolidated financial statements for the year ended December 31, 2007, for additional details of the Company’s financial condition and a description of the Company’s accounting policies, which have been continued without change except for the item discussed in Note 3.

2.		Share-Based Compensation

		The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment, on January 1, 2006, using the modified prospective transition method. The Company recognized $0.2 million and $1.5 million of share-based compensation expense for the quarters ended March 31, 2008 and 2007, respectively.

		The Company estimated the fair value of stock options using the Black-Scholes option pricing model. For the three months ended March 31, 2008, the Company did not issue any stock options. The weighted-average fair value of stock options awarded during the three months ended March 31, 2007 was $5.73 per share. Significant assumptions used in estimating the fair value of the awards granted during the three months ended March 31, 2007 are as follows:


	2007
Dividend yield		2.7	%
Volatility		26.0	%
Risk-free interest rate		4.7	%
Expected term (years)		5.0

3.		Fair Value Measurements

		On January 1, 2008 the Company adopted Financial Accounting Standards Board (“FASB”) Statement No. 157, Fair Value Measurements. This Statement defines fair value for financial assets and liabilities, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. As of March 31, 2008, the Company’s only assets and liabilities subject to this statement are forward contracts (all currently accounted for as cash flow hedges) and mutual fund investments. Both of these financial instruments were previously being recorded by the Company at fair value that meets the requirements as defined by FASB Statement No. 157. Accordingly, there is no impact on the Company’s net earnings and financial position as a result of adopting this standard. The fair value of the forward contracts based on current pricing obtained for comparable derivative products (Level 2 inputs per Statement No. 157) at March 31, 2008 was an asset of $0.6 million. The fair value of the investments based on March 31, 2008 market quotes (Level 1 inputs per Statement No. 157) was an asset of $16.3 million.

		The Company reviewed FASB Statement No. 159, The Fair Value Option for Financial Assets and Liabilities, which permits companies to choose to measure many financial instruments and certain other items at fair value. The Company chose not to elect the fair

		value option for any assets and liabilities not currently valued at fair value and determined that this statement does not have an impact on its financial statements and disclosures.

4.		Segment Information

		Operating results by segment for the periods and at the dates presented are as follows:


	Flavors &				Corporate
(In thousands)	Fragrances		Color		& Other			Consolidated
Three months ended March 31, 2008:
Revenue from external customers	$	190,908	$	98,501	$	18,010		$	307,419
Intersegment revenue		4,295		4,270		581			9,146

Total revenue	$	195,203	$	102,771	$	18,591		$	316,565


Operating income (loss)	$	28,795	$	18,505	$	(7,667	)	$	39,633
Interest expense		—		—		8,578			8,578

Earnings (loss) before income taxes	$	28,795	$	18,505	$	(16,245	)	$	31,055


Three months ended March 31, 2007:
Revenue from external customers	$	176,622	$	93,143	$	15,503		$	285,268
Intersegment revenue		3,891		3,049		641			7,581

Total revenue	$	180,513	$	96,192	$	16,144		$	292,849


Operating income (loss)	$	25,437	$	17,113	$	(8,338	)	$	34,212
Interest expense		—		—		9,252			9,252

Earnings (loss) before income taxes	$	25,437	$	17,113	$	(17,590	)	$	24,960

		Beginning in the first quarter of 2008, the Company’s operations in China, previously reported in Flavors & Fragrances Group, are reported in the Corporate and Other segment. Results for 2007 have been restated to reflect this change.

5.		Inventories

		At March 31, 2008 and December 31, 2007, inventories included finished and in-process products totaling $269.8 million and $266.3 million, respectively, and raw materials and supplies of $101.5 million and $95.2 million, respectively.

6.		Retirement Plans

		The Company’s components of annual benefit cost for the defined benefit plans for the periods presented are as follows:


	Three Months Ended
	March 31,
(In thousands)	2008			2007
Service cost	$	331		$	262
Interest cost		747			597
Expected return on plan assets		(287	)		(159	)
Amortization of prior service cost		487			484
Amortization of actuarial loss		58			48


Defined benefit expense	$	1,336		$	1,232

During the three months ended March 31, 2008, the Company made contributions to its defined benefit pension plans of $1.4 million. Total contributions to Company defined benefit pension plans are expected to be $8.9 million in 2008.

7.		Comprehensive Income

		Comprehensive income is comprised of the following:


	Three Months Ended
	March 31,
(In thousands)	2008		2007
Net earnings	$	20,677	$	17,346
Currency translation adjustments		27,179		1,711
Net unrealized gain on cash flow hedges		580		90


Net comprehensive income	$	48,436	$	19,147

8.		Cash Flows from Operating Activities

		Cash flows from operating activities are detailed below:


	Three Months Ended
	March 31,
(In thousands)	2008			2007
Cash flows from operating activities:
Net earnings	$	20,677		$	17,346
Adjustments to arrive at net cash provided by operating activities:
Depreciation and amortization		11,483			11,201
Stock-based compensation		180			1,488
Loss (gain) on assets		191			(538	)
Deferred income taxes		1,041			1,190
Changes in operating assets and liabilities		(23,838	)		(25,592	)


Net cash provided by operating activities	$	9,734		$	5,095

9.		Commitments and Contingencies

		Environmental Matters

		The Company is involved in various significant environmental matters, which are described below. The Company is also involved in other site closure and related environmental remediation and compliance activities at manufacturing sites primarily related to a 2001 acquisition by the Company for which reserves for environmental matters were established as of the date of purchase. Actions that are legally required or necessary to prepare the sites for sale are substantially complete.

		Superfund Claim

		On July 6, 2004, the EPA notified the Company’s Sensient Colors Inc. subsidiary that it may be a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) for activities at the General Color Company Superfund Site in Camden, New Jersey (the “Site”). The EPA requested reimbursement of $10.9 million in clean-up costs, plus interest. Sensient Colors Inc. advised the EPA that the Site had been expressly excluded from the Company’s 1988 stock purchase of H. Kohnstamm & Company, Inc. (now Sensient Colors). The selling shareholders had retained ownership of and liability for the Site, and some became owners of General Color Company, which continued to operate there until the mid-1990s. In a letter to the EPA dated January 31, 2005, the Company outlined legal challenges to the recoverability of certain costs and urged the EPA to pursue General Color Company and related parties. The EPA subsequently informed Sensient Colors Inc. that it was unwilling to discuss these legal challenges without prior conditions. In 2006, the EPA issued a news release stating that a private developer, Westfield Acres Urban Renewal Association II, LP, pursuant to an agreement with the EPA, began redevelopment efforts at the site (construction of affordable housing) by demolishing buildings thereon. Thereafter, the EPA removed allegedly contaminated soil from the locations where the buildings once stood. Documents received

pursuant to a Freedom of Information Act request indicate that the EPA incurred additional alleged response costs of approximately $4 million.

On March 16, 2007, the United States filed a complaint in the U.S. District Court in New Jersey against Sensient Colors Inc. claiming “over $16 million” in response costs allegedly incurred and to be incurred by the EPA pursuant to CERCLA. On May 21, 2007, Sensient Colors Inc. filed a motion to dismiss the complaint. On October 30, 2007, the Court issued a memorandum opinion and order denying the motion. Sensient Colors Inc. filed a timely answer to the complaint and a third-party complaint against the current owner and former owner and operator of the site. More recently, the United States moved to dismiss Sensient Colors Inc.’s affirmative defenses. Sensient Colors Inc. has opposed the motion and awaits the Court’s determination. By order of the Court, all fact discovery is to be completed by October 31, 2008. A case management conference has been scheduled for June 12, 2008, at which time a deposition schedule is expected to be set. Sensient Colors Inc. intends to vigorously defend its interests in the litigation. It is evaluating, among other things, the pursuit of additional PRPs and additional challenges to the EPA’s right to recover its claimed response costs. The Company’s legal defense costs are being paid, in part, by an insurer with a reservation of coverage rights. Litigation to resolve coverage rights is pending.

Pleasant Gardens Realty Corp. v. H. Kohnstamm & Co., et al.

The owner of Pleasant Gardens (“Property”), an apartment complex adjacent to the General Color Superfund Site, filed a complaint in New Jersey state court in November 2003 against H. Kohnstamm & Co. (now Sensient Colors Inc.), the Company, General Color Company, and unknown defendants. Plaintiff seeks to hold defendants liable, in an unspecified amount, for damages related to the alleged contamination of the Property. Plaintiff voluntarily dismissed the Company without prejudice. Sensient Colors Inc. filed an answer denying liability and asserting affirmative defenses. Limited discovery has occurred. In November 2006, the Camden Redevelopment Agency (“Agency”) filed condemnation litigation against plaintiff (and other purported interested parties) to take the Property. Sensient Colors Inc. is not a party to the condemnation litigation. In advance of its filing, the Agency notified plaintiff that its appraiser had assessed the fair market value of the Property at $7.7 million and that its environmental consultant had estimated the costs for environmental cleanup, purportedly to meet requirements of the New Jersey Department of Environmental Protection (“DEP”), at $7.5 million. Sensient Colors Inc. and plaintiff have pursued a reduction in the scope and cost of the Agency’s proposed environmental cleanup in meetings with the DEP, the Agency and another party involved in the condemnation, the New Jersey Schools Construction Corporation (“NJSCC”). To the extent that there is a reduction in the condemnation value of the Property due to the Agency’s remediation of contamination for which Sensient Colors Inc. is allegedly responsible, such reduction may become a part of the damages claimed by plaintiff. On March 29, 2007, plaintiff filed an amended complaint naming the Agency, the NJSCC and the DEP as additional defendants in furtherance of this effort. On April 20, 2007, Sensient Colors Inc. filed its answer to the amended complaint, including cross claims against these newly added parties. The Agency, the DEP and the New Jersey Schools Development Authority (“NJSDA”) (which replaced the NJSCC as a state agency effective August 7, 2007) each filed answers, cross-claims and counter-claims; Sensient Colors Inc. has responded to all three cross-claims. Fact discovery is on-going and, by order of the Court, must be completed by June 1, 2008. The parties are to exchange expert reports in June and July, and expert depositions are to be completed by September 1, 2008. A case management conference has been scheduled for July 1, 2008.

As of March 31, 2008, the liabilities related to environmental matters are estimated to be between $0.8 million and $27.6 million. As of March 31, 2008, the Company has accrued $1.8 million, which is all related to the environmental reserves established in connection with the 2001 acquisition discussed above. This accrual represents management’s best estimate of these liabilities; however, the actual liabilities may be above the levels reserved or estimated, in which case the Company would need to take charges or establish reserves in later periods. Also, the Company has not been able to make a reasonable estimate of the liabilities, if any, related to some of the environmental matters discussed above. The Company has not recorded any potential insurance recoveries related to these liabilities, as receipts are not yet assured. There can be no assurance that additional environmental matters will not arise in the future.

Commercial Litigation

The following is a significant commercial case involving the Company.

Smead et al. v. Sensient Flavors Inc. et al.

On April 14, 2008, the Company’s subsidiary, Sensient Flavors Inc. (“Sensient Flavors”), certain other flavor manufacturers, a flavor industry trade association and its management company were sued in Milwaukee County Circuit Court in Milwaukee, Wisconsin, by a former employee of International Flavors & Fragrances, Inc. (“IFF”), Richard Smead, and his spouse, Kathy Smead. Mr. Smead claims that while working in various positions at IFF he was exposed to “butter flavors and/or their constituents” allegedly sold by Sensient Flavors and the other manufacturer defendants, which caused him to suffer “severe and permanent” injury to his respiratory system and other damages. Mrs. Smead’s claim is for loss of consortium. The allegations of this complaint are virtually identical to those contained in other complaints that have been filed against Sensient Flavors in other jurisdictions over the presence of diacetyl in butter flavoring for use in microwave popcorn production. The Company believes that plaintiffs’ claims are without merit and will vigorously defend this case. A preliminary analysis of Sensient Flavors’ sales records suggests that it never sold any butter flavoring to IFF. Because this case is in the very early stages, no trial date has been set.

The Company is involved in various other claims and litigation arising in the normal course of business. In the judgment of management, which relies in part on information from Company counsel, the ultimate resolution of these actions will not materially affect the consolidated financial statements of the Company except as described above.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Revenue for the first quarter of 2008 was $307.4 million, an increase of 7.8% from $285.3 million recorded in the prior year first quarter. Revenue for the Flavors & Fragrances segment increased 8.1% for the quarter ended March 31, 2008, from the comparable quarter last year. First quarter revenue for the Color segment increased 6.8% from the first quarter of 2007. Corporate and Other revenue increased 15.2% for the quarter ended March 31, 2008. Additional information on group results can be found in the Segment Information section.

The gross profit margin increased 90 basis points to 31.1% for the quarter ended March 31, 2008, from 30.2% for the same period in 2007. Higher selling prices were the primary driver for the increase in margin.

Selling and administrative expenses as a percent of revenue were 18.2% in both the first quarter of 2008 and in the first quarter of 2007. The Company continues to focus on controlling selling and administrative expenses.

Operating income for the quarter ended March 31, 2008, was $39.6 million, an increase of 15.8% from $34.2 million for the first quarter of 2007. The change in operating income for each period was due to the revenue, margin and expense changes discussed above.

Favorable foreign exchange rates increased revenue and operating income by 6.0% and 8.4%, respectively, for the quarter ended March 31, 2008, over the same quarter of 2007.

Interest expense for the first quarter of 2008, was $8.6 million, a decrease of 7.3% from the prior year’s quarter. The decrease in the quarter was the result of lower average debt balances and lower interest rates.

The effective income tax rates were 33.4% and 30.5% for the quarters ended March 31, 2008 and 2007, respectively. The effective tax rate for the first quarter of 2008 was increased by changes in estimates associated with the finalization of prior year income tax returns. The effective tax rate for the first quarter of 2007 was reduced by changes in estimates associated with the finalization of prior year income tax returns and the resolution of prior years’ tax matters. Management expects the effective tax rate for the remainder of 2008 to be 32.5%, excluding the income tax expense or benefit related to discrete items, which will be reported separately in the quarter in which they occur.

SEGMENT INFORMATION

Beginning in the first quarter of 2008, the Company’s operations in China, previously reported in Flavors & Fragrances Group, are reported in the Corporate and Other segment. Results for 2007 have been restated to reflect this change.

Flavors & Fragrances –

Revenue for the Flavors & Fragrances segment in the first quarter of 2008 increased 8.1% to $195.2 million from $180.5 million for the same period last year. The increase in revenue was primarily due to the favorable impact of foreign exchange rates ($10.5 million) and higher revenue in North America ($5.6 million). Revenue gains in these areas were offset by lower fragrance revenue and lower flavor sales in Europe and Asia. The increase in North America was primarily related to higher prices in dehydrated flavors and other flavors.

For the quarter ended March 31, 2008, operating income increased 13.2% to $28.8 million from $25.4 million last year. The increase was primarily attributable to higher profit in North America ($2.3 million) and Europe ($0.7 million) and the favorable impact of exchange rates ($1.1 million) partially offset by lower profit in Latin America ($0.4 million). The increase in North America was primarily due to improved pricing and higher volumes in dehydrated flavors and other flavors partially offset by higher manufacturing costs. The increase in Europe was primarily due to favorable product mix. The decrease in Latin America was primarily due to higher raw material and manufacturing costs. Operating income as a percent of revenue was 14.8%, an increase of 70 basis points from the comparable quarter last year, primarily due to the reasons provided above.

Color –

Revenue for the Color segment for the first quarter of 2008 was $102.8 million, an increase of 6.8% from $96.2 million reported in the prior year’s comparable period. The increase in revenue was primarily due to the favorable effect of foreign exchange rates ($5.7 million) and higher sales of food and beverage colors ($1.5 million), partially offset by lower sales of technical colors ($0.7 million). The increase in sales of food and beverage colors was related to both increased volume and higher selling prices. The decrease in sales of technical colors primarily related to lower demand for inkjet products and colors for industrial applications.

Operating income for the quarter ended March 31, 2008, was $18.5 million versus $17.1 million in the comparable period last year. The increase was primarily due to the favorable effect of foreign exchange rates ($1.5 million) and increased profit in technical colors ($0.5 million), partially offset by lower profit in cosmetic colors ($0.6 million). Higher profit in technical colors was primarily due to favorable product mix and lower manufacturing costs. Lower profit in cosmetic colors was primarily due to lower volumes and higher costs. Operating income as a percent of revenue increased 20 basis points from the prior year’s quarter to 18.0%.

LIQUIDITY AND FINANCIAL CONDITION

The Company’s ratio of debt to total capital improved to 38.0% as of March 31, 2008, from 38.4% as of December 31, 2007. The improvement resulted from an increase in equity primarily from current year earnings and the impact of currency translation, partially offset by an increase in total debt. The increase in total debt was primarily due to the impact of currency translation and capital spending.

Net cash provided by operating activities was $9.7 million for the quarter ended March 31, 2008, compared to $5.1 million for the comparable period last year. The increase in cash provided by operating activities was primarily due to higher net earnings.

Net cash used in investing activities was $10.6 million and $5.2 million for the three months ended March 31, 2008 and 2007, respectively. Capital expenditures were $12.1 million and $6.8 million for the quarter ended March 31, 2008 and 2007, respectively.

Net cash provided by financing activities was $2.9 million for the three months ended March 31, 2008, compared to net cash used in financing activities of $0.03 million in the prior year comparable quarter. Net proceeds from additional borrowings of debt were $6.0 million and $4.9 million for the first three months of 2008 and 2007, respectively. For purposes of the cash flow statement, net changes in debt exclude the impact of foreign exchange rates. Dividends of $8.6 million and $7.5 million were paid during the three months ended March 31, 2008 and 2007, respectively, reflecting the Company’s increase in the dividend to $0.18 per share in the first quarter of 2008 compared to $0.16 in the same period of 2007. Consistent with 2007, the Company utilized additional borrowings in the first quarter of 2008 to supplement cash provided from operations to fund capital expenditures and pay dividends.

The Company’s financial position remains strong. Its expected cash flows from operations and existing lines of credit can be used to meet future cash requirements for operations, capital expenditures and dividend payments to shareholders.

CONTRACTUAL OBLIGATIONS

There has been no material changes in the Company’s contractual obligations during the quarter ended March 31, 2008. For additional information about contractual obligations, refer to page 23 of the Company’s 2007 Annual Report, portions of which were filed as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

OFF-BALANCE SHEET ARRANGEMENTS

The Company had no off-balance sheet arrangements as of March 31, 2008.

CRITICAL ACCOUNTING POLICIES

There have been no material changes in the Company’s critical accounting policies during the quarter ended March 31, 2008. For additional information about critical accounting policies, refer to pages 21 and 22 of the Company’s 2007 Annual Report, portions of which were filed as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company’s exposure to market risk during the quarter ended March 31, 2008. For additional information about market risk, refer to pages 22 and 23 of the Company’s 2007 Annual Report, portions of which were filed as Exhibit 13.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures: The Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Chairman and Chief Executive Officer and its Vice President and Chief Financial Officer, of the effectiveness, as of the end of the period covered by this report, of the design and operation of the disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act of 1934. Based upon that evaluation, the Company’s Chairman and Chief Executive Officer and its Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.

Change in Internal Control Over Financial Reporting: There has been no change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the Company’s most recent quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements that reflect management’s current assumptions and estimates of future economic circumstances, industry conditions, Company performance and financial results. Forward-looking statements include statements in the future tense, statements referring to any period after March 31, 2008, and statements including the terms “expect,” “believe,” “anticipate” and other similar terms that express expectations as to future events or conditions. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that could cause actual events to differ materially from those expressed in those statements. A variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results. These factors and assumptions include the pace and nature of new product introductions by the Company and the Company’s customers; the Company’s ability to successfully implement its growth strategies; the outcome of the Company’s various productivity-improvement and cost-reduction efforts; changes in costs of raw materials, including energy; industry and economic factors related to the Company’s domestic and international business; competition from other suppliers of color and flavors and fragrances; growth or contraction in markets for products in which the Company competes; terminations and other changes in customer relationships; industry and customer acceptance of price increases; currency exchange rate fluctuations; results of litigation, environmental investigations or other proceedings; the matters discussed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007; and the matters discussed above under Item 2 including the critical accounting policies described therein. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Superfund Claim

On July 6, 2004, the EPA notified the Company’s Sensient Colors Inc. subsidiary that it may be a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) for activities at the General Color Company Superfund Site in Camden, New Jersey (the “Site”). The EPA requested reimbursement of $10.9 million in clean-up costs, plus interest. Sensient Colors Inc. advised the EPA that the Site had been expressly excluded from the Company’s 1988 stock purchase of H. Kohnstamm & Company, Inc. (now Sensient Colors). The selling shareholders had retained ownership of and liability for the Site, and some became owners of General Color Company, which continued to operate there until the mid-1990s. In a letter to the EPA dated January 31, 2005, the Company outlined legal challenges to the recoverability of certain costs and urged the EPA to pursue General Color Company and related parties. The EPA subsequently informed Sensient Colors Inc. that it was unwilling to discuss these legal challenges without prior conditions. In 2006, the EPA issued a news release stating that a private developer, Westfield Acres Urban Renewal Association II, LP, pursuant to an agreement with the EPA, began redevelopment efforts at the site (construction of affordable housing) by demolishing buildings thereon. Thereafter, the EPA removed allegedly contaminated soil from the locations where the buildings once stood. Documents received pursuant to a Freedom of Information Act request indicate that the EPA incurred additional alleged response costs of approximately $4 million.

Pleasant Gardens Realty Corp. v. H. Kohnstamm & Co., et al.

condemnation value of the Property due to the Agency’s remediation of contamination for which Sensient Colors Inc. is allegedly responsible, such reduction may become a part of the damages claimed by plaintiff. On March 29, 2007, plaintiff filed an amended complaint naming the Agency, the NJSCC and the DEP as additional defendants in furtherance of this effort. On April 20, 2007, Sensient Colors Inc. filed its answer to the amended complaint, including cross claims against these newly added parties. The Agency, the DEP and the New Jersey Schools Development Authority (“NJSDA”) (which replaced the NJSCC as a state agency effective August 7, 2007) each filed answers, cross-claims and counter-claims; Sensient Colors Inc. has responded to all three cross-claims. Fact discovery is on-going and, by order of the Court, must be completed by June 1, 2008. The parties are to exchange expert reports in June and July, and expert depositions are to be completed by September 1, 2008. A case management conference has been scheduled for July 1, 2008.

Smead et al. v. Sensient Flavors Inc. et al.

ITEM 1A. RISK FACTORS

See “Risk Factors” in Item 1A of the Company’s annual report on Form 10-K for the year ended December 31, 2007.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company’s 2008 Annual Meeting of Shareholders, held on April 24, 2008, the following actions were taken:

•

The following Directors were each elected for a one-year term of office:


	Votes For		Votes Withheld
Hank Brown		43,392,785		2,074,884
Dr. Fergus M. Clydesdale		43,554,265		1,913,404
James A.D. Croft		42,676,285		2,791,383
William V. Hickey		38,582,049		6,885,620
Kenneth P. Manning		43,377,127		2,090,542
Peter M. Salmon		43,690,080		1,777,588
Dr. Elaine R. Wedral		43,675,635		1,792,034
Essie Whitelaw		42,656,025		2,811,643

Pursuant to the terms of the Company’s Proxy Statement, proxies received were voted, unless authority was withheld, in favor of the nominees.

•

The shareholders approved a proposal by the Board of Directors to ratify the appointment of Ernst & Young LLP as the Company’s independent auditors to conduct the annual audit of the consolidated financial statements of the Company and its subsidiaries for the year ending December 31, 2008. The shareholders cast 44,452,469 votes in favor of this proposal, 851,471 votes against, and there were 163,728 votes to abstain.

ITEM 6. EXHIBITS

See Exhibit Index following this report.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SENSIENT TECHNOLOGIES CORPORATION
Date: May 9, 2008	By:	/s/ John L. Hammond
		John L. Hammond, Vice President,
		Secretary & General Counsel


Date: May 9, 2008	By:	/s/ Richard F. Hobbs
		Richard F. Hobbs, Vice President
		& Chief Financial Officer

SENSIENT TECHNOLOGIES CORPORATION

EXHIBIT INDEX

QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2008


Exhibit	Description	Incorporated by Reference From	Filed Herewith

10.1 (a)	Sensient Technologies Corporation 2007 Restricted Stock Plan, as amended April 24, 2008		X

10.1 (b)	Form of Restricted Stock Unit Agreement Under 2007 Restricted Stock Plan		X

10.2 (a)	Sensient Technologies Corporation 2002 Stock Option Plan, as amended and restated on April 24, 2008		X

10.2 (b)	Form of Restricted Stock Unit Agreement under 2002 Stock Option Plan		X

31	Certifications of the Company’s Chairman & Chief Executive Officer and Vice President & Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act		X

32	Certifications of the Company’s Chairman & Chief Executive Officer and Vice President & Chief Financial Officer pursuant to 18 United States Code § 1350		X

EX-10.1(A) 2 c26509exv10w1xay.htm 2007 RESTRICTED STOCK PLAN, AS AMENDED exv10w1xay

EXHIBIT 10.1 (a)

SENSIENT TECHNOLOGIES CORPORATION
2007 RESTRICTED STOCK PLAN
(as amended and restated on April 24, 2008)

Section 1 Establishment, Purpose and Amendment and Restatement of Plan.

1.1 Establishment. Sensient Technologies Corporation, a Wisconsin corporation (the “Company”), hereby establishes the “SENSIENT TECHNOLOGIES CORPORATION 2007 RESTRICTED STOCK PLAN” (the “Plan”) for officers and key employees. This Plan permits the grant of Restricted Stock and Restricted Stock Units, as described herein.

1.2 Purpose. The purpose of this Plan is to advance the interests of the Company by encouraging and providing for the acquisition of an equity interest in the Company by its officers and key employees, and by enabling the Company to attract and retain the services of officers and key employees upon whose judgment, interest and special effort the successful conduct of its operations is largely dependent.

1.3 Effective Date; Amendment and Restatement. This Plan became effective on April 26, 2007 (the “Effective Date”), the date on which the Plan was approved by the shareholders of the Company. On April 24, 2008, the Plan was amended and restated to permit the grant of restricted stock units, in addition to restricted stock.

Section 2 Definitions.

2.1 Definitions. Capitalized terms used herein without definition shall have the respective meanings set forth below:

	(a)		“Award” means any Restricted Stock or Restricted Stock Unit grant, or any other benefit conferred under the terms hereof.

	(b)		“Board” means the Board of Directors of the Company.

	(c)		“Code” means the Internal Revenue Code of 1986, as amended.

	(d)		“Committee” means the Compensation and Development Committee of the Board.

	(e)		“Exchange Act” means the Securities Exchange Act of 1934, as amended.

	(f)		“Fair Market Value” means, as of any date of determination, the closing price of a share of Stock on the New York Stock Exchange (or on such other recognized market or quotation system on which the trading prices of Stock are traded or quoted at the relevant time) as reported on the composite list used by The Wall Street Journal for reporting stock prices,

or if no such sale shall have been made on that day, on the last preceding day on which there was such a sale.

	(g)		“Participant” means any individual designated by the Committee to participate in this Plan.

	(h)		“Performance Goals” means one or more of the following criteria, as determined by the Committee: (i) earnings per share; (ii) return on equity; (iii) return on invested capital; (iv) return on assets; (v) revenue growth; (vi) earnings before interest, taxes, depreciation and amortization; (vii) earnings before interest, taxes and amortization; (viii) operating income; (ix) pre- or after-tax income; (x) cash flow; (xi) cash flow per share; (xii) net earnings; (xiii) economic value added (or an equivalent metric); (xiv) share price performance; (xv) total shareholder return; (xvi) improvement in or attainment of expense levels; (xvii) improvement in or attainment of working capital levels; (xviii) debt reduction; or (xix) strategic and leadership goals (provided, however, that strategic and leadership goals must be (a) able to be objectively determined for each participant such that an award based in whole or part on strategic and leadership goals would not fail to qualify as “qualified performance based compensation” under Treas. Reg. 1.162-27(e) promulgated under Section 162(m) of the Code, or (b) such goals are used solely by the Committee for the purposes of exercising its negative discretion).

	(i)		“Period of Restriction” means the period during which an Award is forfeitable pursuant to Section 7 or Section 8 hereof.

	(j)		“Restricted Stock” means Stock granted to a Participant pursuant to Section 7 hereof.

	(k)		“Restricted Stock Unit” means a restricted stock unit granted to a Participant pursuant to Section 8 hereof.

	(l)		“Stock” means the Common Stock of the Company, par value of $0.10.

2.2 Gender and Number. Except when otherwise indicated by the context, words in the masculine gender when used in this Plan shall include the feminine gender, the singular shall include the plural and the plural shall include the singular.

Section 3 Eligibility and Participation.

Participants in this Plan shall be selected by the Committee from among those officers and key employees of the Company and its subsidiaries, including subsidiaries which become such after adoption hereof, who are recommended for participation by the Company’s Chief Executive Officer and who, in the opinion of the Committee, are in a position to contribute materially to the Company’s continued growth and development and to its long-term financial success. The Committee’s designation of any person to receive an Award shall not require the Committee to designate such person to receive an Award at any subsequent time.

Section 4 Administration.

4.1 Administration. This Plan shall be administered by the Committee.

4.2 Powers and Authority of the Committee. The Committee, by majority action thereof, shall have complete and sole authority to:

	(a)		designate officers and key employees to receive Awards;

	(b)		determine the type of Awards to be granted to Participants;

	(c)		determine the number of shares of Stock to be covered by Awards granted to Participants;

	(d)		determine the terms and conditions of any Award granted to any Participant (which may, in the discretion of the Committee, differ from Participant to Participant), including, without limitation, provisions relating to the vesting of Awards over a period of time, upon the attainment of specified Performance Goals, or otherwise;

	(e)		interpret this Plan and apply its provisions, and prescribe, amend and rescind rules, regulations, procedures, and forms relating to this Plan;

	(f)		authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of this Plan;

	(g)		amend any outstanding agreement relating to any Award, subject to applicable legal restrictions and, to the extent such amendment may adversely affect the Participant who entered into such agreement, to the consent of such Participant;

	(h)		prescribe the consideration for the grant of each Award hereunder and determine the sufficiency of such consideration; and

	(i)		make all other determinations and take all other actions deemed necessary or advisable for the administration hereof and provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company and its affiliates in connection herewith; but only to the extent that any of the foregoing are not contrary to the express provisions hereof. Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions hereof shall be final, binding and conclusive for all purposes and upon all persons. The Committee’s decisions need not be uniform and may be made selectively among Participants, whether or not they are similarly situated.

4.3 Composition of the Committee. The Committee shall consist of not less than two directors. Each member of the Committee shall be a “nonemployee director” (within the meaning of Rule 16b-3 under the Exchange Act); provided, however, that in the event any Committee

member is not a “nonemployee director,” then the Committee shall, with respect to any Award to be made to any Participant who is subject to Section 16 of the Exchange Act (“Section 16 Participant”), delegate its functions with respect to such Award to a subcommittee (of not less than two directors) which consists exclusively of members who are “nonemployee directors.” Further, the Committee may delegate to one or more senior officers of the Company any or all of the authority and responsibility of the Committee with respect to this Plan, other than with respect to Section 16 Participants. A majority of the members of the Committee (or subcommittee, as the case may be) shall constitute a quorum and all determinations of the Committee shall be made by a majority of its members. Any determination of the Committee may be made without notice or meeting of the Committee by a writing signed by a majority of the Committee members.

Section 5 Stock Subject to Plan.

5.1 Number. The total number of shares of Stock reserved and available for issuance under this Plan shall initially be 1,500,000. The number of shares of Stock reserved and available for issuance hereunder shall be subject to adjustment upon occurrence of any of the events indicated in Subsection 5.3 hereof. No Participant may be granted Awards under this Plan with respect to more than 250,000 shares of Stock (subject to adjustment) during any calendar year. The shares to be issued under this Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock, not reserved for any other purpose.

5.2 Unused Stock. In the event any shares of Stock that are subject to an Award cease to be subject to such Award (whether due to expiration, cancellation, termination, forfeiture, or otherwise) with such Stock being forfeited back to the Company, then the shares of Stock subject to such Award shall again become available for future Awards hereunder.

5.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, spin-off, split-up, exchange of shares or other similar corporate change such that an adjustment is required to preserve, or to prevent enlargement of, the benefits or potential benefits made available under this Plan, then the aggregate number and type of equity authorized for issuance hereunder as well as the number and type of equity subject to each outstanding Award shall be appropriately adjusted by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. In such event, the Committee shall also make appropriate adjustments in the number of shares of Stock authorized for issuance hereunder and make such other adjustments as it deems necessary or appropriate so as to preserve, or to prevent enlargement of, the benefits or potential benefits made available under this Plan.

Section 6 Duration of Plan.

This Plan shall remain in effect, subject to the Board’s right to earlier terminate this Plan pursuant to Section 12 hereof, until all shares of Stock subject to it shall have been purchased or acquired pursuant to the provisions hereof. Notwithstanding the foregoing, no Award may be granted hereunder on or after the tenth (10th) anniversary of the Effective Date.

Section 7 Restricted Stock.

7.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and 6 hereof, the Committee, at any time and from time to time, may grant shares of Restricted Stock hereunder to such Participants and in such amounts as it shall determine. Each grant of Restricted Stock shall be evidenced by a written agreement (“Restricted Stock Agreement”).

7.2 Other Restrictions. The Committee shall, in the terms and conditions of the Restricted Stock Agreement, impose such restrictions on any shares of Restricted Stock granted pursuant to this Plan as it may deem advisable (including, without limitation, restrictions under applicable Federal or state securities laws), and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. The restrictions may be based upon the attainment of Performance Goals so that the Award qualifies as “performance-based compensation” within the meaning of Section 162(m) of the Code. The Committee may also base the restrictions upon such other conditions, restrictions and contingencies as the Committee may determine.

7.3 Registration. Any Restricted Stock granted hereunder to a Participant may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock granted hereunder to a Participant, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend (as determined by the Committee) referring to the terms, conditions and restrictions applicable to such Restricted Stock. In the event such Restricted Stock is issued in book-entry form, the depository and the Company’s transfer agent shall be provided with notice referring to the terms, conditions and restrictions applicable to such Restricted Stock, together with such stop-transfer instructions as the Committee deems appropriate.

7.4 Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participant due to death, disability, or for any other reason, during the applicable Period of Restriction, all shares of Restricted Stock still subject to restriction under the terms of the Restricted Stock Agreement shall be immediately and automatically forfeited to the Company.

7.5 Voting Rights. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares.

7.6 Dividends and Other Distributions. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid.

7.7 Nontransferability of Restricted Stock. No shares of Restricted Stock granted hereunder may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, until the termination of the

applicable Period of Restriction. All rights with respect to the Restricted Stock granted to a Participant hereunder shall be exercisable during his lifetime only by such Participant.

Section 8 Restricted Stock Units.

8.1 Grant of Restricted Stock Units. Subject to the provisions of Sections 5 and 6 hereof, the Committee, at any time and from time to time, may grant Restricted Stock Units to such Participants and in such amounts as it shall determine. An Award of Restricted Stock Units shall entitle the Participant to receive shares of Stock at such future time and upon such terms and conditions as specified by the Committee in the agreement evidencing such Award (the “Restricted Stock Unit Agreement”).

8.2 Other Restrictions. The Committee shall, in the terms and conditions of the Restricted Stock Unit Agreement, impose such restrictions on any Restricted Stock Units granted pursuant to this Plan as it may deem advisable (including, without limitation, restrictions under applicable Federal or state securities laws). The restrictions may be based upon the attainment of Performance Goals so that the Award qualifies as “performance-based compensation” within the meaning of Section 162(m) of the Code. The Committee may also base the restrictions upon such other conditions, restrictions and contingencies as the Committee may determine.

8.3 Voting, Dividend & Other Rights. Participants granted Restricted Stock Units shall not be entitled to vote or to receive dividends until they become owners of the shares of Stock pursuant to their Restricted Stock Unit Agreements.

8.4 Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participant due to death, disability, or for any other reason, during the applicable Period of Restriction, all Restricted Stock Units still subject to restriction under the terms of the Restricted Stock Unit Agreement shall be immediately and automatically forfeited to the Company.

8.5 Nontransferability of Restricted Stock Units. Except as otherwise provided in a Participant’s Restricted Stock Unit Agreement, no Restricted Stock Units granted hereunder may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, until the termination of the applicable Period of Restriction.

Section 9 Beneficiary Designation.

Each Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit hereunder is to be paid in case of his death before he receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to his estate.

Section 10 Rights of Employees.

Nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time nor confer upon any Participant any right to continue in the employment of the Company.

Section 11 Change of Control.

11.1 In the event of a “Change of Control” (as hereinafter defined):

	(a)		Restricted Stock that is not then vested shall vest upon the date of the Change of Control and each holder of such Restricted Stock shall have the right, exercisable by written notice to the Company within sixty (60) days after the Change of Control, to receive, in exchange for the surrender of such Restricted Stock, an amount of cash equal to the highest of (i) the Fair Market Value of such Restricted Stock on the date of surrender; (ii) the highest price per share of Stock paid in the transaction giving rise to the Change of Control multiplied by the number of shares of Restricted Stock surrendered; or (iii) the Fair Market Value of such Restricted Stock on the effective date of the Change of Control; and

	(b)		Restricted Stock Units that are not then vested shall vest upon the date of the Change of Control and each holder of such Restricted Stock Units shall have the right, exercisable by written notice to the Company within sixty (60) days after the Change of Control, to receive, in exchange for the surrender of the shares of Stock subject to the Restricted Stock Units, an amount of cash equal to the highest of (i) the Fair Market Value of the Stock covered by the Restricted Stock Units on the date of surrender; (ii) the highest price per share of Stock paid in the transaction giving rise to the Change of Control multiplied by the number of shares of Stock covered by the Restricted Stock Units surrendered; or (iii) the Fair Market Value of the Stock covered by the Restricted Stock Units on the effective date of the Change of Control.

11.2 A “Change of Control” of the Company means:

(a)

the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any

acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section; or

	(b)		individuals who, as of October 12, 2006, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to October 12, 2006, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

	(c)		consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the

initial agreement, or the action of the Board, providing for such Business Combination; or

(d)

approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

Section 12 Amendment, Modification and Termination of Plan.

12.1 Amendments and Termination. The Board may at any time amend, alter, suspend, discontinue or terminate this Plan; provided, however, that stockholder approval of any amendment of this Plan shall be obtained if otherwise required by (a) the Code or any rules promulgated thereunder, or (b) the listing requirements of the principal securities exchange or market on which the Stock is then traded (including in order to maintain the listing or quotation of the Stock thereon). An amendment or termination of this Plan shall not adversely affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards shall continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.

12.2 Waiver of Conditions. The Committee may, in whole or in part, waive any conditions or other restrictions with respect to any Award granted hereunder.

Section 13 Taxes.

The Company shall be entitled to withhold the amount of any tax attributable to any amount payable or shares of Stock deliverable under this Plan after giving the person entitled to receive such amount or shares of Stock notice as far in advance as practicable, and the Company may defer making any such payment or delivery if any such tax may be pending unless and until indemnified to its satisfaction. A Participant may by written election, elect to pay all or a portion of the federal, state and local withholding taxes arising in connection with the lapse of restrictions on an Award, by electing to (a) have the Company withhold shares of Stock received in connection with such benefit provided, however, that the amount to be withheld shall not exceed the Company’s minimum statutory federal, state and local tax withholding obligations for the Participant (“Minimum Obligations”) associated with the transaction, (b) have the Company withhold up to 50% of the shares of Stock received in connection with such benefit provided that the Participant can demonstrate that the Participant holds previously owned shares of Stock (“Previous Shares”) equal to the difference between the amount withheld and the Minimum Obligations and that the Previous Shares have been held for a minimum of six months and the Participant agrees to hold the Previous Shares for at least six months from the date of the election, (c) deliver up to 50% of other previously owned shares of Stock, having a Fair Market Value equal to the amount to be withheld provided that the shares have been held by the Participant for a minimum of six months, or (d) pay the withholding amount in cash. The written election must be made on or before the date as of which the amount of tax to be withheld is determined. The Fair Market Value of fractional shares of Stock remaining after payment of the withholding taxes shall be paid to the Participant in cash.

Section 14 Indemnification.

Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit or proceeding to which he may be a party or in which he may be involved by reason of any action taken or failure to act under this Plan and against and from any and all amounts paid by him in settlement thereof, with the Company’s approval, or paid by him in satisfaction of any judgment in any such action, suit or proceeding against him, provided he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

Section 15 Miscellaneous.

Any Award may also be subject to other provisions (whether or not applicable to any Award made to any other Participant) as the Committee determines appropriate, including, without limitation, provisions for:

	(a)		restrictions on resale or other disposition of financed shares; and

	(b)		compliance with federal or state securities laws and stock exchange or market requirements.

Section 16 Requirements of Law.

16.1 Requirements of Law. The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan, shall be subject to all applicable foreign, Federal and State laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required, and to any rules or regulations of any exchange on which the Stock is listed. The Company, in its discretion, may postpone the granting and exercising of Awards, the issuance or delivery of Stock under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Stock or other required action under any foreign, Federal or State law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Stock in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or to otherwise sell or issue Stock in violation of any such laws, rules, or regulations; and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards, and neither the Company nor its directors or officers shall have any obligation or liability to the Participant with respect to any Award (or Stock issuable thereunder) that shall lapse because of such postponement.

16.2 Governing Law. This Plan, and all agreements hereunder, shall be construed in accordance with and governed by the internal laws of the State of Wisconsin.

Section 17 No Limitation on Compensation; No Impact on Benefits.

Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its employees, in cash or property, in a manner that is not expressly authorized under the Plan. Except as may otherwise be specifically stated under any employee benefit plan, policy or program, no amount payable in respect of any Award shall be treated as compensation for purposes of calculating a Participant’s right under any such plan, policy or program. No person shall have a right to be selected as a Participant, or, having been so selected, to receive any future Awards.

Section 18 No Constraint on Corporate Action.

Nothing in this Plan shall be construed (a) to limit, impair or otherwise affect the Company’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets or (b) to limit the right or power of the Company, or any of its affiliates to take any action which such entity deems to be necessary or appropriate.

Section 19 Stockholder Rights.

A Participant shall have no rights as a stockholder with respect to any shares of Stock covered by an Award until he or she shall have become the holder of record of such share(s), and no adjustments shall be made for dividends in cash or other property or distribution or other rights in respect to any such shares, except as otherwise specifically provided for in this Plan.

Section 20 Blue-Pencil.

If any provision of this Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

Section 21 Unfunded Plan.

This Plan is an unfunded Plan and participants in the Plan shall have the status of unsecured creditors of the Company with respect to the Plan.

Section 22 Headings and Captions.

The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan

EX-10.1(B) 3 c26509exv10w1xby.htm FORM OF RESTRICTED STOCK UNIT AGREEMENT UNDER 2007 RESTRICTED STOCK PLAN exv10w1xby

EXHIBIT 10.1 (b)

SENSIENT TECHNOLOGIES CORPORATION
(a Wisconsin Corporation)
2007 Restricted Stock Plan

RESTRICTED STOCK UNIT AGREEMENT

Grantee:

Grantee’s Address:

Grant Date:

Number of Restricted Stock Units:

Period of Restriction:

Sensient Technologies Corporation, a Wisconsin corporation (the “Company”), and the above-named Grantee hereby agree as follows:

1. Grant of Restricted Stock Units. In consideration of the continued employment of the Grantee for the periods herein defined, and in consideration of the Grantee having entered into a Noncompetition, Nonsolicitation and Confidentiality Agreement (or an agreement of similar purpose and effect, however titled) prior to or contemporaneous with this Agreement, the Company grants to the Grantee the number of Restricted Stock Units stated above upon the terms and conditions set forth herein.

2. Plan; Defined Terms. This grant of Restricted Stock Units is made pursuant to the Company’s 2007 Restricted Stock Plan (the “Plan”) and is subject to each and all of the provisions of the Plan. A copy of the Plan is attached to this Agreement and is made a part hereof. All capitalized terms used in this Agreement, including the terms set forth in the table above, have the meanings assigned to them in this Agreement. Any capitalized terms that are not defined in this Agreement are defined in the Plan. Certain other terms used in this Agreement are also defined herein.

3. Period of Restriction. The Period of Restriction shall be as stated above.

4. Restrictions. The Restricted Stock Units may not be sold, transferred, pledged, assigned or otherwise alienated during the Period of Restriction except as provided in the Plan. The Restricted Stock Units shall become immediately vested upon the termination of the Period of Restriction and the Company shall issue Grantee one share of Stock for each Restricted Stock Unit which has become vested.

5. Termination of Employment.

(a) In the event that the Grantee terminates his or her employment with the Company because of normal retirement (under the terms of the Company’s Employee Stock Ownership Plan (“ESOP”) in effect on the date of such termination of employment (or on the date the ESOP is terminated if not then in effect)), the Period of Restriction with respect to any Restricted Stock Units held by the Grantee shall automatically terminate and the Company shall issue Grantee one share of Stock for each Restricted Stock Unit which has become vested.

(b) In the event that the Grantee terminates his or her employment with the Company because of “early retirement” (under the terms of the ESOP in effect on the date of such termination of employment (or on the date the ESOP is terminated if not then in effect)) the Committee may, in its sole discretion, waive the Period of Restriction and/or add such new restrictions to the Restricted Stock Units as it deems appropriate.

(c) In the event the Grantee terminates his or her employment with the Company because of death or Disability during the Period of Restriction, the Period of Restriction shall terminate automatically with respect to that number of Restricted Stock Units (rounded to the nearest whole number) equal to the total number of Restricted Stock Units granted multiplied by the number of full months which have elapsed since the Grant Date divided by the maximum number of full months of the Period of Restriction. All remaining Restricted Stock Units shall be forfeited; provided, however, that the Committee may, in its sole discretion, waive the restrictions remaining on all such remaining Restricted Stock Units. “Disability” means the permanent and total inability, by reason of physical or mental infirmity, or both, of the Grantee to perform the work customarily assigned to him or her by the Company. The determination of the existence or nonexistence of a Disability shall be made by the Committee based on satisfactory medical evidence.

(d) In the event the employment of the Grantee with the Company is terminated by any reason other than death, Disability, normal retirement, or early retirement prior to the expiration of the Period of Restriction, then the Restricted Stock Units shall be automatically forfeited by the Grantee.

6. Forfeiture of Restricted Stock Units and Repayment of Restricted Stock Unit Value.

(a) If, at any time after the Grant Date, the Grantee engages in any act in violation of any agreement between Grantee and the Company (whether executed prior to, simultaneous with, or after the date of this Agreement) having the effect or purpose of prohibiting or restricting all or any of (A) the disclosure by Grantee of confidential information obtained from the Company or any subsidiary; (B) activities by the Grantee in competition with the Company or any subsidiary; or (C) solicitation by the Grantee of customers of the Company or any subsidiary in competition with the Company or any subsidiary (including, without limitation, any agreement entitled “Noncompetition, Nonsolicitation and Confidentiality Agreement”), or any amendment thereto or extension thereof or successor or replacement agreement, then notwithstanding any other terms of this Grant:

(i) If the Period of Restriction has not then expired, the Restricted Stock Units shall automatically be forfeited by the Grantee; and

(ii) If the Period of Restriction expired prior to the termination date of the agreement referred to in the introductory portion of this subparagraph (a), the Grantee shall be obligated to pay to the Company the Restricted Stock Unit Value. “Restricted Stock Unit Value” shall mean the total market value of the shares of Stock as determined based upon the closing price of the Stock on the New York Stock Exchange on the expiration date of the Period of Restriction.

(b) Notwithstanding the foregoing, this Section 7 shall immediately become null and void and of no further force and effect upon the occurrence of a Change of Control.

7. Tax Withholding. The Grantee may by written election, elect to pay all or a portion of the federal, state and local withholding taxes arising in connection with the lapse of restrictions on Restricted Stock, by electing to (a) have the Company withhold shares of Stock to be issued in connection with such benefit provided, however, that the amount to be withheld shall not exceed the Company’s minimum statutory federal, state and local tax withholding obligations for the Grantee (“Minimum Obligations”) associated with the transaction, (b) have the Company withhold up to 50% of the shares of Stock to be issued in connection with such benefit provided that the Grantee can demonstrate that the Grantee holds previously owned shares of Stock (“Previous Shares”) equal to the difference between the amount withheld and the Minimum Obligations and that the Previous Shares have been held for a minimum of six months and the Grantee agrees to hold the Previous Shares for at least six months from the date of the lapse of restrictions, (c) deliver up to 50% of other previously owned shares of Stock, having a Fair Market Value equal to the amount to be withheld provided that the shares have been held by the Grantee for a minimum of six months, or (d) pay the withholding amount in cash. The written election must be made on or before the date as of which the amount of tax to be withheld is determined. The Fair Market Value of fractional shares of Stock remaining after payment of the withholding taxes shall be paid to the Grantee in cash.

8. Rights as Shareholder. Grantee shall not be entitled to vote or to receive dividends until the Restricted Stock Units have become vested and shares of Stock are issued to Grantee.

9. No Right to Continued Employment. This Grant shall not confer upon Grantee any right with respect to continuance of employment by the Company or any subsidiary, nor shall it interfere in any way with the right of the Company to terminate Grantee’s employment at any time.

10. Designation of Beneficiary. The person designated by the Grantee as his or her beneficiary or any successor designated by the Grantee in accordance herewith (the “Beneficiary”) shall be entitled to the Restricted Stock Units as to which the Period of Restriction has not expired, subject to Section 6(c) hereof, after the death of the Grantee. The Grantee may from time to time revoke or change his or her Beneficiary without the consent of any prior Beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or

change or revocation thereof, shall be effective unless received by the Committee prior to the Grantee’s death, and in no event shall any designation be effective as of a date prior to such receipt. If no such Beneficiary designation is in effect at the time of the Grantee’s death, or if no designated Beneficiary survives the Grantee, or if such designation conflicts with law, the Grantee’s estate acting through his or her legal representative, shall be entitled to the Restricted Stock Units as to which the Period of Restriction has not expired, subject to Section 6(c) hereof, after the death of the Grantee.

11. Powers of the Company Not Affected. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Company’s common stock or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business or any other corporate act or proceeding, whether of a similar character or otherwise.

12. No Tax Gross-Up. Grantee shall not be entitled to any tax gross-up as a result of the lapse of restrictions under this Agreement.

13. Interpretation by Committee. As a condition of the granting of the Restricted Stock Units, the Grantee agrees, for himself and his legal representatives or guardians, successors and assigns, that this Agreement shall be interpreted by the Committee and that any interpretation by the Committee of the terms of this Agreement and any determination made by the Committee pursuant to this Agreement shall be final, binding and conclusive.

14. Severability. Wherever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions hereof.

IN WITNESS WHEREOF, the parties have executed this Restricted Stock Agreement, in duplicate, as of the date of grant shown above.


		SENSIENT TECHNOLOGIES CORPORATION

		By:

		Vice President — Administration

Grantee

EX-10.2(A) 4 c26509exv10w2xay.htm 2002 STOCK OPTION PLAN, AS AMENDED AND RESTATED exv10w2xay

EXHIBIT 10.2 (a)

SENSIENT TECHNOLOGIES CORPORATION
2002 STOCK OPTION PLAN
(as amended and restated on April 24, 2008)

Section 1 Establishment, Purpose and Amendment and Restatement of Plan.

1.1 Establishment. Sensient Technologies Corporation, a Wisconsin corporation (the “Company”), hereby establishes the “SENSIENT TECHNOLOGIES CORPORATION 2002 STOCK OPTION PLAN” (the “Plan”) for officers and key employees. This Plan permits the grant of Options, Restricted Stock and Restricted Stock Units, each as described herein.

1.3 Effective Date; Amendment and Restatement. This Plan became effective on April 25, 2002 (the “Effective Date”), the date on which the Plan was approved by the shareholders of the Company. On April 24, 2008, the Plan was amended and restated to permit the grant of restricted stock units, in addition to options and restricted stock.

Section 2 Definitions.

2.1 Definitions. Capitalized terms used herein without definition shall have the respective meanings set forth below:

	(a)		“Award” means any Option, Restricted Stock or Restricted Stock Unit, or any other benefit conferred under the terms hereof.

	(b)		“Board” means the Board of Directors of the Company.

	(c)		“Code” means the Internal Revenue Code of 1986, as amended.

	(d)		“Committee” means the Compensation and Development Committee of the Board.

	(e)		“Exchange Act” means the Securities Exchange Act of 1934, as amended.

	(f)		“Exercise Price” means the price payable in respect of an Option.

	(g)		“Fair Market Value” means, as of any date of determination, the closing price of a share of Stock on the New York Stock Exchange (or on such other recognized market or quotation system on which the trading prices of Stock are traded or quoted at the relevant time) as reported on the

			composite list used by The Wall Street Journal for reporting stock prices, or if no such sale shall have been made on that day, on the last preceding day on which there was such a sale.

	(h)		“Option” means the right to purchase Stock at a stated price for a specified period of time. For purposes of this Plan an Option may be either: (i) an “incentive stock option” within the meaning of Section 422(b) of the Code; or (ii) an option which is not intended to qualify as an incentive stock option (a “nonstatutory stock option”).

	(i)		“Participant” means any individual designated by the Committee to participate in this Plan.

	(j)		“Period of Restriction” means the period during which an Award is forfeitable pursuant to Section 8 or Section 9 hereof.

	(k)		“Restricted Stock” means Stock granted to a Participant pursuant to Section 8 hereof.

	(l)		“Restricted Stock Unit” means a restricted stock unit granted to a Participant pursuant to Section 9 hereof.

	(m)		“Stock” means the Common Stock of the Company, par value of $0.10.

Section 3 Eligibility and Participation.

Section 4 Administration.

4.1 Administration. This Plan shall be administered by the Committee.

4.2 Powers and Authority of the Committee. The Committee, by majority action thereof, shall have complete and sole authority to:

	(a)		designate officers and key employees to receive Awards;

	(b)		determine the type of Awards to be granted to Participants;

	(c)		determine the number of shares of Stock to be covered by Awards granted to Participants;

	(d)		determine the terms and conditions of any Award granted to any Participant (which may, in the discretion of the Committee, differ from Participant to Participant), including, without limitation, provisions relating to the vesting of Awards over a period of time, upon the attainment of specified performance goals, or otherwise;

	(e)		interpret this Plan and apply its provisions, and prescribe, amend and rescind rules, regulations, procedures, and forms relating to this Plan;

	(f)		authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of this Plan;

	(g)		amend any outstanding agreement relating to any Award, subject to applicable legal restrictions and, to the extent such amendment may adversely affect the Participant who entered into such agreement, to the consent of such Participant;

	(h)		prescribe the consideration for the grant of each Award hereunder and determine the sufficiency of such consideration; and

	(i)		make all other determinations and take all other actions deemed necessary or advisable for the administration hereof and provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company and its affiliates in connection herewith; but only to the extent that any of the foregoing are not contrary to the express provisions hereof. No term of this Plan relating to incentive stock options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code. Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions hereof shall be final, binding and conclusive for all purposes and upon all persons. The Committee’s decisions need not be uniform and may be made selectively among Participants, whether or not they are similarly situated.

4.3 Composition of the Committee. The Committee shall consist of not less than two directors. Each member of the Committee shall be both a “nonemployee director” (within the meaning of Rule 16b-3 under the Exchange Act) and an “outside director” (within the meaning of Section 162(m)(4)(C) of the Code); provided, however, that in the event any Committee member does not satisfy both conditions of the first clause of this sentence, then the Committee shall, with respect to any Award to be made to any Participant who is subject to Section 16 of the Exchange Act (“Section 16 Participant”) or who is subject to the provisions of Section 162(m) of the Code, delegate its functions with respect to such Award to a subcommittee (of not less than two directors) which consists exclusively of members who meet both conditions of the first clause of this sentence. Further, the Committee may delegate to one or more senior officers of

the Company any or all of the authority and responsibility of the Committee with respect to this Plan, other than with respect to Section 16 Participants or Participants who are subject to Section 162(m) of the Code. A majority of the members of the Committee (or subcommittee, as the case may be) shall constitute a quorum and all determinations of the Committee shall be made by a majority of its members. Any determination of the Committee may be made without notice or meeting of the Committee by a writing signed by a majority of the Committee members.

Section 5 Stock Subject to Plan.

5.1 Number. The total number of shares of Stock reserved and available for issuance under this Plan shall initially be 2,400,000. The number of shares of Stock reserved and available for issuance hereunder shall be subject to adjustment upon occurrence of any of the events indicated in Subsection 5.3 hereof. Of this total number, not more than 600,000 shares of Stock may at any time be issued as Restricted Stock and not more than 1,800,000 shares of Stock may at any time be issued under incentive stock options. No Participant may be granted stock options under this Plan with respect to more than 750,000 shares of Stock (subject to adjustment) during the term of this Plan. The shares to be issued under this Plan may consist, in whole or in part, of authorized but unissued Stock or treasury Stock, not reserved for any other purpose.

5.2 Unused Stock. In the event any shares of Stock that are subject to an Award cease to be subject to such Award (whether due to expiration, cancellation, termination, forfeiture, or otherwise) without such shares of Stock being issued or cash being paid to the Participant or, in the case of Restricted Stock, such Stock being forfeited back to the Company, then the shares of Stock subject to such Award shall again become available for future Awards hereunder.

5.3 Adjustment in Capitalization. In the event of any change in the outstanding shares of Stock that occurs by reason of a Stock dividend or split, recapitalization, merger, consolidation, combination, spin-off, split-up, exchange of shares or other similar corporate change such that an adjustment is required to preserve, or to prevent enlargement of, the benefits or potential benefits made available under this Plan, then the aggregate number and type of equity authorized for issuance hereunder as well as the number and type of equity subject to each outstanding Award, and its stated Exercise Price or other reference price (as applicable) shall be appropriately adjusted by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. In such event, the Committee shall also have the discretion to make appropriate adjustments in the number of shares of Stock authorized for issuance hereunder and to make such other adjustments as it deems necessary or appropriate so as to preserve, or to prevent enlargement of, the benefits or potential benefits made available under this Plan.

Section 6 Duration of Plan.

This Plan shall remain in effect, subject to the Board’s right to earlier terminate this Plan pursuant to Section 13 hereof, until all shares of Stock subject to it shall have been purchased or acquired pursuant to the provisions hereof. Notwithstanding the foregoing, no Award may be granted hereunder on or after the tenth (10th) anniversary of the Effective Date.

Section 7 Stock Options.

7.1 Grant of Options. Subject to the provisions of Sections 5 and 6 hereof, Options may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of shares of Stock underlying Options granted to each Participant. The Committee also shall determine whether an Option is to be an incentive stock option within the meaning of Section 422(b) of the Code or a nonstatutory stock option. An Option shall be a nonstatutory option unless otherwise specified by the Committee at the time of grant. Nothing in this Plan to the contrary, the terms and conditions of incentive stock options shall be in compliance with Section 422 of the Code.

7.2 Incentive Stock Options. Incentive stock options shall be subject to the limitation that the Fair Market Value (determined on the date of grant) of all shares of Stock with respect to which incentive stock options are exercisable for the first time by a Participant during any calendar year shall not exceed $100,000. This limitation shall not apply to nonstatutory stock options.

7.3 Option Agreement. Each Option shall be evidenced by a written agreement (“Option Agreement”) that shall specify the type of Option granted, the Exercise Price, the duration of the Option, the number of shares of Stock to which the Option pertains, and such other provisions as the Committee shall determine. No Participant shall have any rights hereunder until an Option Agreement has been executed.

7.4 Exercise Price. No Option granted pursuant hereto shall have an Exercise Price per share of Stock underlying an Option that is less than the Fair Market Value of a share of Stock on the date the Option is granted.

7.5 Duration of Options. Each Option shall expire at such time as the Committee shall determine; provided, however, that no incentive stock option shall be exercisable later than the tenth (10th) anniversary date of its grant.

7.6 Exercise of Options. Options granted hereunder shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for all Participants.

7.7 Payment. The aggregate Exercise Price of any portion of an Option being exercised shall be payable to the Company in full upon exercise:

	(a)		in cash or its equivalent, including, in the discretion of the Committee, a full recourse promissory note issued to the Company by the Participant (which note shall (i) be secured by the Stock issued; (ii) be for a term of not more than ten (10) years; (iii) bear interest at the market rate in effect on the date such promissory note is issued; (iv) require at least annual payments of principal and interest; and (v) contain such other terms and conditions as the Committee determines);

	(b)		by tendering shares of Stock having a Fair Market Value at the time of exercise equal to the aggregate Exercise Price of the portion of the Option

			being exercised, so long as the shares tendered have been held more than six months; or

	(c)		by a combination of cash or its equivalent (as defined in clause (a) above) and shares of Stock. The proceeds from such a payment shall be added to the general funds of the Company and shall be used for general corporate purposes.

7.8 Restrictions on Stock Transferability. The Committee shall impose such restrictions on any shares of Stock acquired pursuant to the exercise of an Option as it may deem advisable, including, without limitation, restrictions under applicable Federal securities laws, under the requirements of any stock exchange upon which such shares of Stock are then listed, and under any blue sky or state securities laws applicable to such shares.

7.9 Transferability of Options. The Committee may, in its discretion, and only by expressly so providing in the Option Agreement covering any Options (which Option Agreement must be approved by the Committee), permit all or a portion of Options to be granted to a Participant to be transferable by the Participant: (a) to the Participant’s spouse, or natural or adoptive children or grandchildren (“Immediate Family Members”); (b) to a trust or trusts for the exclusive benefit of one or more Immediate Family Members; or (c) to a partnership in which all partners are Immediate Family Members; provided that there may be no consideration for any such transfer and the transferee shall be expressly prohibited from any further transfer of such Options other than by will or pursuant to the laws of descent and distribution. Following such transfer, any Options so transferred shall be subject to the same terms and conditions as were applicable immediately prior to such transfer, provided that for purposes of this Plan, the term “Participant” shall be deemed to include such transferee. The circumstances under which any transferred Option may be terminated, canceled, or forfeited (whether such circumstances are set forth in this Plan or in the Option Agreement covering such Options) shall be applied with respect to the transferor Participant to which the Option was originally granted. Unless expressly so provided in the Option Agreement covering an Option, no Option granted hereunder may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or pursuant to the laws of descent and distribution, and all Options granted to a Participant hereunder shall be exercisable during his lifetime only by such Participant.

7.10 Substitute Options. If the Company at any time should succeed to the business of another corporation through merger or consolidation, or through the acquisition of stock or assets of such corporation, Options may be granted under this Plan (“Substitute Options”) in substitution of options previously granted by such corporation and which are outstanding at the date of the succession (“Surrendered Options”). The Committee shall have discretion to determine the extent to which such Substitute Options shall be granted, the persons to receive such Substitute Options, the number of shares of Stock to be subject to such Substitute Options, and the terms and conditions of such Substitute Options. The Committee shall have the discretion to grant Substitute Options with terms and conditions that vary from the terms and conditions of the Plan (so long as such terms and conditions are equivalent to the terms and conditions of the Surrendered Options). The Exercise Price of the Substitute Option may be determined without regard to Section 7.4 hereof; provided however, that the Exercise Price of each Substitute Option shall be an amount such that, in the sole and absolute judgment of the

Committee (and if the Substitute Options are to be incentive stock options, in compliance with Section 424(a) of the Code), the economic benefit provided by such Substitute Option is not greater than the economic benefit represented by the Surrendered Option as of the date of the succession.

7.11 Forfeiture. Except as otherwise determined by the Committee and set forth in the Option Agreement, upon termination of employment of a Participant due to death, disability, or for any other reason, all Options not exercisable in accordance with the Option Agreement immediately prior to such termination shall be immediately and automatically forfeited to the Company.

Section 8 Restricted Stock.

8.1 Grant of Restricted Stock. Subject to the provisions of Sections 5 and 6 hereof, the Committee, at any time and from time to time, may grant shares of Restricted Stock hereunder to such Participants and in such amounts as it shall determine. Each grant of Restricted Stock shall be evidenced by a written agreement (“Restricted Stock Agreement”).

8.2 Other Restrictions. The Committee shall, in the terms and conditions of the Restricted Stock Agreement, impose such restrictions on any shares of Restricted Stock granted pursuant to this Plan as it may deem advisable (including, without limitation, restrictions under applicable Federal or state securities laws), and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions. Any Restricted Stock granted to a Section 16 Participant may not be sold for at least six (6) months after the date it is granted.

8.3 Registration. Any Restricted Stock granted hereunder to a Participant may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock granted hereunder to a Participant, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend (as determined by the Committee) referring to the terms, conditions and restrictions applicable to such Restricted Stock. In the event such Restricted Stock is issued in book-entry form, the depository and the Company’s transfer agent shall be provided with notice referring to the terms, conditions and restrictions applicable to such Restricted Stock, together with such stop-transfer instructions as the Committee deems appropriate.

8.4 Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participant due to death, disability, or for any other reason, during the applicable Period of Restriction, all shares of Restricted Stock still subject to restriction under the terms of the Restricted Stock Agreement shall be immediately and automatically forfeited to the Company.

8.5 Voting Rights. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares.

8.6 Dividends and Other Distributions. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such

dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid.

8.7 Nontransferability of Restricted Stock. Except as provided in Section 8.8 hereof, no shares of Restricted Stock granted hereunder may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, until the termination of the applicable Period of Restriction. All rights with respect to the Restricted Stock granted to a Participant hereunder shall be exercisable during his lifetime only by such Participant.

8.8 Election to Sell Shares to the Company. A Participant, or in the case of his death his beneficiary or estate, may elect to sell to the Company up to one-half of the shares of Restricted Stock issued to him pursuant to this Plan and upon which any restrictions set forth in the Restricted Stock Agreement have lapsed. To the extent permitted by law, the Company shall purchase all such shares of Restricted Stock. Each such sale must occur within sixty (60) days after the last day of the Period of Restriction for such shares of Restricted Stock and shall be for a price equal to the Fair Market Value determined as of the last business day of the Period of Restriction of the shares of Restricted Stock to be sold. Such price shall be payable in cash or by check in one lump sum payment, unless provisions relating to payment for such shares of Restricted Stock in installments are agreed to by the Committee and the Participant (or his beneficiary or estate).

Section 9 Restricted Stock Units.

9.1 Grant of Restricted Stock Units. Subject to the provisions of Sections 5 and 6 hereof, the Committee, at any time and from time to time, may grant Restricted Stock Units to such Participants and in such amounts as it shall determine. An Award of Restricted Stock Units shall entitle the Participant to receive shares of Stock at such future time and upon such terms and conditions as specified by the Committee in the agreement evidencing such Award (the “Restricted Stock Unit Agreement”).

9.2 Other Restrictions. The Committee shall, in the terms and conditions of the Restricted Stock Unit Agreement, impose such restrictions on any Restricted Stock Units granted pursuant to this Plan as it may deem advisable (including, without limitation, restrictions under applicable Federal or state securities laws).

9.3 Voting, Dividend & Other Rights. Participants granted Restricted Stock Units shall not be entitled to vote or to receive dividends until they become owners of the shares of Stock pursuant to their Restricted Stock Unit Agreements.

9.4 Forfeiture. Except as otherwise determined by the Committee, upon termination of employment of a Participant due to death, disability, or for any other reason, during the applicable Period of Restriction, all Restricted Stock Units still subject to restriction under the terms of the Restricted Stock Unit Agreement shall be immediately and automatically forfeited to the Company.

9.5 Nontransferability of Restricted Stock Units. Except as otherwise provided in a Participant’s Restricted Stock Unit Agreement, no Restricted Stock Units granted hereunder may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, until the termination of the applicable Period of Restriction.

Section 10 Beneficiary Designation.

Section 11 Rights of Employees.

Section 12 Change of Control.

12.1 In the event of a “Change of Control” (as hereinafter defined):

	(a)		each holder of an Option (i) shall have the right at any time thereafter to exercise the Option in full whether or not the Option was previously exercisable; and (ii) shall have the right, exercisable by written notice to the Company within sixty (60) days after the Change of Control, to receive, in exchange for the surrender of an Option or any portion thereof to the extent the Option is then exercisable in accordance with clause (i), the highest of (1) an amount of cash equal to the difference between the Fair Market Value of the Stock covered by the Option or portion thereof that is so surrendered on the date of the Change of Control and the Exercise Price; (2) an amount of cash equal to the difference between the highest price per share of Stock paid in the transaction giving rise to the Change of Control and the Exercise Price multiplied by the number of shares of Stock covered by the Option; or (3) an amount of cash equal to the difference between the Fair Market Value of the Stock covered by the Option or portion thereof that is so surrendered, calculated on the date of surrender, and the Exercise Price; provided that the right described in this clause (ii) shall be exercisable only if a positive amount would be payable to the holder pursuant to the formula specified in this clause (ii);

	(b)		Restricted Stock that is not then vested shall vest upon the date of the Change of Control and each holder of such Restricted Stock shall have the right, exercisable by written notice to the Company within sixty (60) days

after the Change of Control, to receive, in exchange for the surrender of such Restricted Stock, an amount of cash equal to the highest of (i) the Fair Market Value of such Restricted Stock on the date of surrender; (ii) the highest price per share of Stock paid in the transaction giving rise to the Change of Control multiplied by the number of shares of Restricted Stock surrendered; or (iii) the Fair Market Value of such Restricted Stock on the effective date of the Change of Control; and

(c)

Restricted Stock Units that are not then vested shall vest upon the date of the Change of Control and each holder of such Restricted Stock Units shall have the right, exercisable by written notice to the Company within sixty (60) days after the Change of Control, to receive, in exchange for the surrender of the shares of Stock subject to the Restricted Stock Units, an amount of cash equal to the highest of (i) the Fair Market Value of the Stock covered by the Restricted Stock Units on the date of surrender; (ii) the highest price per share of Stock paid in the transaction giving rise to the Change of Control multiplied by the number of shares of Stock covered by the Restricted Stock Units surrendered; or (iii) the Fair Market Value of the Stock covered by the Restricted Stock Units on the effective date of the Change of Control.

12.2 A “Change of Control” of the Company means:

	(a)		the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section; or

	(b)		individuals who, as of September 10, 1998, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to September 10, 1998 whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual

			whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

	(c)		consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such business combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or of such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or the action of the Board, providing for such Business Combination; or

	(d)		approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

Section 13 Amendment, Modification and Termination of Plan.

13.1 Amendments and Termination. The Board may at any time amend, alter, suspend, discontinue or terminate this Plan; provided, however, that stockholder approval of any amendment of this Plan shall be obtained if otherwise required by (a) the Code or any rules promulgated thereunder (including in order to allow for incentive stock options to be granted hereunder or to enable the Company to comply with the provisions of Section 162(m) of the Code so that the Company can deduct compensation in excess of the limitation set forth therein),

or (b) the listing requirements of the principal securities exchange or market on which the Stock is then traded (including in order to maintain the listing or quotation of the Stock thereon). An amendment or termination of this Plan shall not adversely affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards shall continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.

13.2 Waiver of Conditions. The Committee may, in whole or in part, waive any conditions or other restrictions with respect to any Award granted hereunder.

Section 14 Taxes.

The Company shall be entitled to withhold the amount of any tax attributable to any amount payable or shares of Stock deliverable under this Plan after giving the person entitled to receive such amount or shares of Stock notice as far in advance as practicable, and the Company may defer making any such payment or delivery if any such tax may be pending unless and until indemnified to its satisfaction. A Participant may by written election, elect to pay all or a portion of the federal, state and local withholding taxes arising in connection with (a) the exercise of a nonstatutory stock option; (b) a disqualifying disposition of Stock received upon the exercise of an incentive stock option; (c) the lapse of restrictions on an Award, by electing to (i) have the Company withhold shares of Stock, (ii) tender back shares of Stock received in connection with such benefit, or (iii) deliver other previously owned shares of Stock, having a Fair Market Value equal to the amount to be withheld; provided, however, that the amount to be withheld shall not exceed the Company’s minimum statutory federal, state and local tax withholding obligations associated with the transaction. The written election must be made on or before the date as of which the amount of tax to be withheld is determined. The Fair Market Value of fractional shares of Stock remaining after payment of the withholding taxes shall be paid to the Participant in cash.

Section 15 Indemnification.

Section 16 Miscellaneous.

	(a)		restrictions on resale or other disposition of financed shares; and

	(b)		compliance with federal or state securities laws and stock exchange or market requirements.

Section 17 Requirements of Law.

17.1 Requirements of Law. The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan, shall be subject to all applicable foreign, Federal and State laws, rules, and regulations, and to such approvals by any regulatory or governmental agency as may be required, and to any rules or regulations of any exchange on which the Stock is listed. The Company, in its discretion, may postpone the granting and exercising of Awards, the issuance or delivery of Stock under any Award or any other action permitted under the Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Stock or other required action under any foreign, Federal or State law, rule, or regulation and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Stock in compliance with applicable laws, rules, and regulations. The Company shall not be obligated by virtue of any provision of the Plan to recognize the exercise of any Award or to otherwise sell or issue Stock in violation of any such laws, rules, or regulations; and any postponement of the exercise or settlement of any Award under this provision shall not extend the term of such Awards, and neither the Company nor its directors or officers shall have any obligation or liability to the Participant with respect to any Award (or Stock issuable thereunder) that shall lapse because of such postponement.

17.2 Governing Law. This Plan, and all agreements hereunder, shall be construed in accordance with and governed by the internal laws of the State of Wisconsin.

Section 18 No Limitation on Compensation; No Impact on Benefits.

Section 19 No Constraint on Corporate Action.

Section 20 Stockholder Rights.

Section 21 Blue-Pencil.

Section 22 Unfunded Plan.

This Plan is an unfunded Plan and participants in the Plan shall have the status of unsecured creditors of the Company with respect to the Plan.

Section 23 Headings and Captions.

The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan.

EX-10.2(B) 5 c26509exv10w2xby.htm FORM OF RESTRICTED STOCK UNIT AGREEMENT UNDER 2002 STOCK OPTION PLAN exv10w2xby

EXHIBIT 10.2 (b)

SENSIENT TECHNOLOGIES CORPORATION

(a Wisconsin Corporation)
2002 Stock Option Plan

RESTRICTED STOCK UNIT AGREEMENT

Grantee:

Grantee’s Address:

Grant Date:

Number of Restricted Stock Units:

Period of Restriction:

Sensient Technologies Corporation, a Wisconsin corporation (the “Company”), and the above-named Grantee hereby agree as follows:

2. Plan; Defined Terms. This grant of Restricted Stock Units is made pursuant to the Company’s 2002 Stock Option Plan (the “Plan”) and is subject to each and all of the provisions of the Plan. A copy of the Plan is attached to this Agreement and is made a part hereof. All capitalized terms used in this Agreement, including the terms set forth in the table above, have the meanings assigned to them in this Agreement. Any capitalized terms that are not defined in this Agreement are defined in the Plan. Certain other terms used in this Agreement are also defined herein.

3. Period of Restriction. The Period of Restriction shall be as stated above.

5. No Tax Gross-Up. Grantee shall not be entitled to any tax gross-up as a result of the lapse of restrictions under this Agreement.

6. Termination of Employment.

7. Forfeiture of Restricted Stock Units and Repayment of Restricted Stock Unit Value.

Agreement”), or any amendment thereto or extension thereof or successor or replacement agreement, then notwithstanding any other terms of this Grant:

(i) If the Period of Restriction has not then expired, the Restricted Stock Units shall automatically be forfeited by the Grantee; and

(b) Notwithstanding the foregoing, this Section 7 shall immediately become null and void and of no further force and effect upon the occurrence of a Change of Control.

8. Tax Withholding. The Grantee may by written election, elect to pay all or a portion of the federal, state and local withholding taxes arising in connection with the lapse of restrictions on Restricted Stock, by electing to (a) have the Company withhold shares of Stock to be issued in connection with such benefit provided, however, that the amount to be withheld shall not exceed the Company’s minimum statutory federal, state and local tax withholding obligations for the Grantee (“Minimum Obligations”) associated with the transaction, (b) have the Company withhold up to 50% of the shares of Stock to be issued in connection with such benefit provided that the Grantee can demonstrate that the Grantee holds previously owned shares of Stock (“Previous Shares”) equal to the difference between the amount withheld and the Minimum Obligations and that the Previous Shares have been held for a minimum of six months and the Grantee agrees to hold the Previous Shares for at least six months from the date of the lapse of restrictions, (c) deliver up to 50% of other previously owned shares of Stock, having a Fair Market Value equal to the amount to be withheld provided that the shares have been held by the Grantee for a minimum of six months, or (d) pay the withholding amount in cash. The written election must be made on or before the date as of which the amount of tax to be withheld is determined. The Fair Market Value of fractional shares of Stock remaining after payment of the withholding taxes shall be paid to the Grantee in cash.

9. Rights as Shareholder. Grantee shall not be entitled to vote or to receive dividends until the Restricted Stock Units have become vested and shares of Stock are issued to Grantee.

10. No Right to Continued Employment. This Grant shall not confer upon Grantee any right with respect to continuance of employment by the Company or any subsidiary, nor shall it interfere in any way with the right of the Company to terminate Grantee’s employment at any time.

11. Designation of Beneficiary. The person designated by the Grantee as his or her beneficiary or any successor designated by the Grantee in accordance herewith (the “Beneficiary”) shall be entitled to the Restricted Stock Units as to which the Period of Restriction has not expired, subject to Section 6(c) hereof, after the death of the Grantee. The

Grantee may from time to time revoke or change his or her Beneficiary without the consent of any prior Beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Grantee’s death, and in no event shall any designation be effective as of a date prior to such receipt. If no such Beneficiary designation is in effect at the time of the Grantee’s death, or if no designated Beneficiary survives the Grantee, or if such designation conflicts with law, the Grantee’s estate acting through his or her legal representative, shall be entitled to the Restricted Stock Units as to which the Period of Restriction has not expired, subject to Section 6(c) hereof, after the death of the Grantee.

12. Powers of the Company Not Affected. The existence of the Restricted Stock Units shall not affect in any way the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Company’s common stock or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of the Company’s assets or business or any other corporate act or proceeding, whether of a similar character or otherwise.

15. Waiver of Rights Under February 7, 2008 Grant. The Company and Grantee agree that this Grant replaces the restricted stock grant to Grantee authorized by the Committee on February 7, 2008. Grantee expressly waives any right to the February 7, 2008 restricted stock grant.

IN WITNESS WHEREOF, the parties have executed this Restricted Stock Agreement, in duplicate, as of the date of grant shown above.


		SENSIENT TECHNOLOGIES CORPORATION

		By:

		Vice President — Administration

Grantee

EX-31 6 c26509exv31.htm CERTIFICATIONS PURSUANT TO RULE 13A-14(A) exv31

EXHIBIT 31

CERTIFICATION
Pursuant to Rule 13a-14(a) of the Exchange Act

I, Kenneth P. Manning, certify that:

I have reviewed this quarterly report on Form 10-Q of Sensient Technologies Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a)		all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2008


/s/ Kenneth P. Manning Kenneth P. Manning, Chairman &
Chief Executive Officer

EXHIBIT 31

CERTIFICATION
Pursuant to Rule 13a-14(a) of the Exchange Act

I, Richard F. Hobbs, certify that:

I have reviewed this quarterly report on Form 10-Q of Sensient Technologies Corporation;

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2008


/s/ Richard F. Hobbs Richard F. Hobbs, Vice President &
Chief Financial Officer

EX-32 7 c26509exv32.htm CERTIFICATIONS PURSUANT TO SECTION 1350 exv32

EXHIBIT 32

CERTIFICATION
Pursuant to 18 United States Code § 1350

The undersigned hereby certifies that the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008 of Sensient Technologies Corporation (the “Company”) filed with the Securities and Exchange Commission on or about the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.



	/s/ Kenneth P. Manning
	Name:	Kenneth P. Manning
	Title: Date:	Chairman & Chief Executive Officer May 9, 2008

A signed original of this written statement required by Section 906 has been provided to Sensient Technologies Corporation and will be retained by Sensient Technologies Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32

CERTIFICATION
Pursuant to 18 United States Code § 1350



	/s/ Richard F. Hobbs
	Name:	Richard F. Hobbs
	Title: Date:	Vice President & Chief Financial Officer May 9, 2008

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