[WEST PHARMACEUTICAL LOGO OMITTED]
Exhibit (10)(h)
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AMENDED AND RESTATED
CHANGE-IN-CONTROL AGREEMENT
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THIS IS AN AMENDED AND RESTATED CHANGE-IN-CONTROL AGREEMENT (the
"Agreement"), dated as of March 25, 2000 between West Pharmaceutical, Services,
Inc., a Pennsylvania corporation, (formerly named "The West Company,
Incorporated") (the "Company") and XXXXXXX X. XXXXXXXX ("Executive").
BACKGROUND
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The Executive and the Company are parties to a Change-In-Control Agreement
dated October 1998 (the "Change-in-Control Agreement"). The Company desires to
make an amendment and restatement of the Change-in-Control Agreement to make
certain changes as set forth herein.
AGREEMENT
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In consideration of the foregoing and Executive's continued employment with
the Company, and intending to be legally bound, the Company agrees with
Executive as follows:
1. DEFINITIONS. As used in this Agreement, the following terms will have the
meanings set forth below:
(a) An "Affiliate" of any Person means any Person directly or indirectly
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controlling, controlled by or under common control with such Person.
(b) "Change in Control" shall mean a change in control of a nature that
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would be required to be reported in response to Item 1 of the Current
Report on Form 8-K as in effect on the date of this Agreement pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, (the "Act"), provided, that, without limitation, a Change in
Control shall be deemed to have occurred if:
(i) Any Person, other than:
(1) the Company,
(2) any Person who on the date hereof is a director or officer
of the Company, or
(3) a trustee or fiduciary holding securities under an employee
benefit plan of the Company,
(ii) is or becomes the "beneficial owner," (as defined in Rule 13-d3
under the Act), directly or indirectly, of securities of the
Company representing more than 50% of the combined voting power
of the Company's then outstanding securities; or
(iii) During any period of two consecutive years during the term of
this Agreement, individuals who at the beginning of such period
constitute the Board of Directors of the Company cease for any
reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the
beginning of such period has been approved in advance by
directors representing at least two-thirds of the directors then
in office who were directors at the beginning of the period; or
(iv) The shareholders of the Company approve: (A) a plan of complete
liquidation of the Company; or (B) an agreement for the sale or
disposition of all or substantially all of the Company's assets;
or (C) a merger, consolidation, or reorganization of the Company
with or involving any other corporation, other than a merger,
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consolidation, or reorganization (collectively, a
"Transaction"), that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity), at least 50% of
the combined voting power of the voting securities of the
Company (or the surviving entity, or an entity which as a result
of the Transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
subsidiaries) outstanding immediately after the Transaction.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
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(d) The "Company's Business" means: (i) the contract-manufacturing and
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contract-filing business for the pharmaceutical and consumer-products
industries, being carried on by West Pharmaceutical Services Lakewood,
Inc. and its subsidiaries; (ii) the manufacture and sale of stoppers,
closures, containers, medical-device components and assemblies made
from elastomers, metal and plastic for the health-care and
consumer-products industries; (iii) the development of proprietary
drug-delivery technologies that provide optimized therapeutic effects
for challenging drug molecules, such as peptides and proteins,
carbohydrates, oligonucleotides, as well as systems for vaccines, gene
therapy and diagnostic applications; and (iv) any other business
conducted by the Company or any of its Subsidiaries or Affiliates
during the term of this Agreement and in which Executive has have been
actively involved.
(e) "Constructive Termination" means the occurrence of any of the
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following events:
(i) The Company requires Executive to assume any duties inconsistent
with, or the Company makes a significant diminution or reduction
in the nature or scope of Executive's authority or duties from,
those assigned to or held by Executive on the date of this
Agreement;
(ii) A material reduction in Executive's annual salary or incentive
compensation opportunities;
(iii) A relocation of Executive's site of employment to a location
more than 50 miles from Executive's site of employment on the
date of this Agreement;
(iv) The Company falls to provide Executive with a reasonable number
of paid vacation days at least equal to the number of paid
vacation days to which Executive was entitled in the last full
calendar year prior to the execution of this Agreement;
(v) The Company fails to provide Executive with substantially the
same fringe benefits that were provided to Executive immediately
prior to the date of this Agreement, or with a package of fringe
benefits that, although one or more of such benefits may vary
from those in effect immediately prior to the execution of this
Agreement, is substantially at least as beneficial to Executive
in all material respects is such prior fringe benefits taken as
a whole; or
(vi) A successor of the Company does not assume the Company's
obligations under this Agreement, expressly or as a matter of
law.
Notwithstanding the foregoing, no Constructive Termination will be
deemed to have occurred under any of the following circumstances:
(1) Executive will have consented in writing or given a written
waiver to the occurrence of any of the events enumerated in
clauses (i) through (vi) above;
(2) Executive will have failed to give the Company written
notice stating Executive's intention to claim Constructive
Termination and the basis for that claim at least 10 days in
advance of the effective date of Executive's resignation; or
(3) The event constituting a Constructive Termination has been
cured or reserved by the Company prior to the effective date
of Executive's resignation.
(f) "Payment" means
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(i) any amount due or paid to the Executive under this Agreement,
(ii) any amount that is due or paid to the Executive under any plan,
program or arrangement of the Company and any of its
subsidiaries, and
(iii) any amount or benefit that is due or payable to the Executive
under this Agreement or under any plan, program or arrangement
of the Company and any of its subsidiaries not otherwise covered
under clause (i) or (ii) hereof which must reasonably be taken
into account under section 280G of the Code and the Regulations
in determining the amount of the "parachute payments" received
by the Executive, including, without limitation, any amounts
which must be taken into account under the Code and Regulations
as a result of (1) the acceleration of the vesting of any
option, restricted stock or other equity award granted under any
equity plan of the Company or otherwise, (2) the acceleration of
the time at which any payment or benefit is receivable by the
Executive or (3) any contingent severance or other amounts that
are payable to the Executive.
(g) "Person" means an individual, a corporation, a partnership, an
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association, a trust or other entity or organization.
(h) "Regulations" means the proposed, temporary and final regulations
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under section 280G of Code or any successor provision thereto.
(i) "Restrictive Period" means the period of time that commences on the
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date hereof and ends on the first anniversary of the Termination Date.
(j) "Retirement Plan" means the West Pharmaceutical Services, Inc.
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Employees' Retirement Plan and any successor plan
thereto.
(k) "Savings/Deferred Comp Plan" means The Company's Salaried Employees'
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Savings Plan, The Company's Non-Qualified Deferred Compensation Plan
for Designated Executive Officers and any other similar plan
established from time to time that may allow executive officers to
defer taxation of compensation.
(l) "Subsidiary" has the meaning ascribed to the term by section 425(f) of
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the Code.
(m) "Termination Date" is the date on which Executive ceases to be
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employed by the Company or any of its Subsidiaries or Affiliates for
any reason.
2. TERMINATION FOLLOWING A CHANGE IN CONTROL.
(a) Executive will be entitled to the benefits specified in Section 3
(BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT) if,
(i) at any time within two years after a Change in Control has
occurred, Executive's employment by the Company is terminated:
(1) by the Company, other than by reason of death, disability,
continuous willful misconduct to the detriment of the
Company, or retirement at Executive's normal retirement date
under the Retirement Plan, or
(2) as a result of Executive's resignation at any time following
Executive's Constructive Termination; or
(3) the Executive resigns for any reason within 30 days
following the first anniversary of a Change in Control; or
(ii) the Executive resigns for any reason within 30 days following the
first anniversary of the Termination Date.
Except as otherwise set forth in Section 2(b), Executive will not be
entitled to the Severance Payment and other benefits specified in
Section 3 hereof if Executive's employment terminates for any other
reason or if, at any time thereafter, Executive is in breach of any of
Executive's obligations under this Agreement or the Employee
Confidentiality Agreement dated July 20, 1992 (the "Confidentiality
Agreement"), a copy of which is attached hereto and incorporated
herein by reference.
(b) If the Company executes an agreement, the consummation of which would
result in the occurrence of a Change in Control, then, with respect to
a termination
(i) by the Company, other than by reason of death, disability,
continuous willful misconduct to the detriment of the Company, or
retirement at Executive's normal retirement date under the
Retirement Plan, or
(ii) as a result of Executive's resignation at any time following
Executive's Constructive Termination occurring after the
execution of such agreement (and, if such agreement expires or is
terminated prior to consummation, prior to the expiration or
termination of such agreement),
a Change in Control shall be deemed to have occurred as of the date of
the execution of such agreement and the Executive will be entitled to
the Severance Payment.
The Severance Payment and other benefits paid hereunder will not be
reduced to the extent of any other compensation for Executive's
services, which Executive receives or is entitled to receive from any
other employment consistent with the terms of this Agreement.
3. BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT. Upon termination of
employment as set forth in Section 2 hereof, Executive will be entitled to
the following benefits:
(a) Severance Compensation. Executive will be entitled to severance
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compensation of $150,000 in cash (the "Severance Payment"), which
shall be payable within 10 days following the Termination Date.
(b) Equivalent of Vested Savings/Deferred Comp Plan Benefit. The Company
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will pay to Executive the difference, if any, between
(i) the benefit Executive would be entitled to receive under the
Savings/Deferred Comp Plan if the Company's contributions to the
Savings/Deferred Comp Plan were fully vested upon the termination
of Executive's employment, and
(ii) the benefit Executive is entitled to receive under the terms of
the Savings/Deferred Comp Plan upon termination of Executive's
employment.
Any such benefit will be payable at such time and in such manner as
benefits are payable to Executive under the Savings/Deferred Comp
Plan.
(c) Unvested Equity Awards. All stock options, other equity-based awards
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and shares of the Company's stock granted or awarded to Executive
pursuant to any Company compensation or benefit plan or arrangement,
but which are unvested, will vest immediately upon termination of
Executive's employment. The provisions of this Section 3(c) will
supersede the terms of any such grant or award made to Executive under
any such plan or arrangement to the extent there is an inconsistency
between the two.
4. ADDITIONAL PAYMENTS.
(a) Gross-Up Payment. Notwithstanding anything herein to the contrary, if
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it is determined that any Payment would be subject to the excise tax
imposed by section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any
interest or penalties thereon, is herein referred to as an "Excise
Tax"), then the Executive shall be entitled to an additional payment
(a "Gross-Up Payment") in an amount that will place the Executive in
the same after-tax economic position that the Executive would have
enjoyed if the Excise Tax had not applied to the Payment.
(b) Determination of Gross-Up Payment. Subject to the provisions of
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Section 4(c), all determinations required under this Section 4,
including whether a Gross-Up Payment is required, the amount of the
Payments constituting excess parachute payments, and the amount of the
Gross-Up Payment, shall be made by the accounting firm that was the
Company's independent auditors immediately prior to the Change in
Control (or, in default thereof, an accounting firm mutually agreed
upon by the Company and the Executive) (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Executive
and the Company within fifteen days of the Change in Control, the date
of termination of employment or any other date reasonably requested by
the Executive or the Company on which a determination under this
Section 4 is necessary or advisable. The Company shall pay to the
Executive the initial Gross-Up Payment within 5 days of the receipt by
the Executive and the Company of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, the Company shall cause the Accounting Firm to provide the
Executive with an opinion that the Accounting Firm has substantial
authority under the Code and Regulations not to report an Excise Tax
on the Executive's federal income tax return. Any determination by the
Accounting Firm shall be binding upon the Executive and the Company.
If the initial Gross-Up Payment is insufficient to cover the amount of
the Excise Tax that is ultimately determined to be owing by the
Executive with respect to any Payment (hereinafter an "Underpayment"),
the Company, after exhausting its remedies under Section 4(c) below,
shall promptly pay to the Executive an additional Gross-Up Payment in
respect of the Underpayment.
(c) Procedures. The Executive shall notify the Company in writing of any
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claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of a Gross-Up Payment. Such notice
shall be given as soon as practicable after the Executive knows of
such claim and shall apprise the Company of the nature of the claim
and the date on which the claim is requested to be paid. The Executive
agrees not to pay the claim until the expiration of the thirty-day
period following the date on which the Executive notifies the Company,
or such shorter period ending on the date the Taxes with respect to
such claim are due (the "Notice Period"). If the Company notifies the
Executive in writing prior to the expiration of the Notice Period that
it desires to contest the claim, the Executive shall: (i) give the
Company any information reasonably requested by the Company relating
to the claim; (ii) take such action in connection with the claim as
the Company may reasonably request, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company and reasonably acceptable
to the Executive; (iii) cooperate with the Company in good faith in
contesting the claim; and (iv) permit the Company to participate in
any proceedings relating to the claim. The Executive shall permit the
Company to control all proceedings related to the claim and, at its
option, permit the Company to pursue or forgo any and all
administrative appeals, proceedings, hearings, and conferences with
the taxing authority in respect of such claim. If requested by the
Company, the Executive agrees either to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner and to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts as the Company shall determine; provided, however,
that, if the Company directs the Executive to pay such claim and
pursue a refund, the Company shall advance the amount of such payment
to the Executive on an after-tax and interest-free basis (the
"Advance"). The Company's control of the contest related to the claim
shall be limited to the issues related to the Gross-Up Payment and the
Executive shall be entitled to settle or contest, as the case may be,
any other issues raised by the Internal Revenue Service or other
taxing authority. If the Company does not notify the Executive in
writing prior to the end of the Notice Period of its desire to contest
the claim, the Company shall pay to the Executive an additional
Gross-Up Payment in respect of the excess parachute payments that are
the subject of the claim, and the Executive agrees to pay the amount
of the Excise Tax that is the subject of the claim to the applicable
taxing authority in accordance with applicable law.
(d) Repayments. If, after receipt by the Executive of an Advance, the
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Executive becomes entitled to a refund with respect to the claim to
which such Advance relates, the Executive shall pay the Company the
amount of the refund (together with any interest paid or credited
thereon after Taxes applicable thereto). If, after receipt by the
Executive of an Advance, a determination is made that the Executive
shall not be entitled to any refund with respect to the claim and the
Company does not promptly notify the Executive of its intent to
contest the denial of refund, then the amount of the Advance shall not
be required to be repaid by the Executive and the amount thereof shall
offset the amount of the additional Gross-Up Payment then owing to the
Executive.
(e) Further Assurances. The Company shall indemnify the Executive and hold
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the Executive harmless, on an after-tax basis, from any costs,
expenses, penalties, fines, interest or other liabilities ("Losses")
incurred by the Executive with respect to the exercise by the Company
of any of its rights under this Section 4, including, without
limitation, any Losses related to the Company's decision to contest a
claim or any imputed income to the Executive resulting from any
Advance or action taken on the Executive's behalf by the Company
hereunder. The Company shall pay, or cause the Trust to pay, all legal
fees and expenses incurred under this Section 4 and shall promptly
reimburse the Executive, or cause the Trust to reimburse the
Executive, for the reasonable expenses incurred by the Executive in
connection with any actions taken by the Company or required to be
taken by the Executive hereunder. The Company shall also pay all of
the fees and expenses of the Accounting Firm, including, without
limitation, the fees and expenses related to the opinion referred to
in Section 4(b).
5. LEGAL FEES. The Company will pay all legal fees and expenses that Executive
may incur as a result of the Company's contesting the validity or
enforceability of this Agreement.
6. PAYMENTS FINAL. In the event of a termination of Executive's employment
under the circumstances described in this Agreement, the arrangements
provided for by this Agreement, and any other agreement between the Company
and Executive in effect at that time and by any other applicable plan of
the Company in which Executive then participates, will constitute the
entire obligation of the Company to Executive, and performance of that
obligation will constitute full settlement of any claim that Executive
might otherwise assert against the Company on account of such termination.
The Company's obligation to pay Executive under this Agreement will be
absolute and unconditional and will not be affected by any circumstance,
including without limitation, any set-off, counterclaim, defense or other
rights the Company may have against Executive or anyone else as long as
Executive is not in beach of Executive's obligations under this Agreement.
7. NON-COMPETITION.
(a) During the Restrictive Period, Executive will not, and will not permit
any of Executive's Affiliates, or any other Person, directly or
indirectly, to:
(b) engage in competition with, or acquire a direct or indirect interest
or an option to acquire such an interest in any Person engaged in
competition with, the Company's Business in the United States (other
than an interest of not more than 5 percent of the outstanding stock
of any publicly traded company);
(i) serve as a director, officer, employee or consultant of, or
furnish information to, or otherwise facilitate the efforts of,
any Person engaged in competition with the Company's Business in
the United States or Puerto Rico;
(ii) solicit, employ, interfere with or attempt to entice away from
the Company any employee who has been employed by the Company or
a Subsidiary in an executive or supervisory capacity in
connection with the conduct of the Company's Business within one
year prior to such solicitation, employment, interference or
enticement; or
(iii) approach, solicit or deal with in competition with the Company
or any Subsidiary any Person which at any time during the 12
months immediately preceding the Termination Date:
(1) was a customer, client, supplier, agent or distributor of
the Company or any Subsidiary;
(2) was a customer, client, supplier, agent or distributor of
the Company or any Subsidiary with whom employees reporting
to or under the direct control of Executive had personal
contact on behalf of the Company or any Subsidiary; or
(3) was a Person with whom Executive had regular, substantial
or a series of business dealings on behalf of the Company
or any Subsidiary (whether or not a customer, client,
supplier, agent or distributor of the Company or any
Subsidiary).
(c) For the avoidance of doubt, Executive agrees that the phrase "Person
engaged in competition with the Company's Business" as used in this
Section includes, without limitation, the companies listed on Exhibit
"A" to this Agreement, their Affiliates and subsidiaries.
8. VESTING IN THE EVENT OF A CHANGE IN CONTROL. In the event of a Change in
Control, all stock options, equity-based awards and shares of the Company's
stock granted or awarded to the Executive pursuant to any Company
compensation or benefit plan or arrangement, but which are unvested at that
time, will vest immediately upon such Change in Control. The provisions of
this Section 8 will supersede the terms of any such grant or award made to
Executive under any such plan or arrangement to the extent there is an
inconsistency between the two.
9. DURATION OF AGREEMENT. This Agreement shall commence on the date hereof and
shall continue until terminated as provided in this Section. This Agreement
may be terminated only under the following circumstances:
(i) At any time by the mutual written consent of Executive and the
Company; and
(ii) By the Company at the end of each successive two-year period
commencing on the date of this Agreement by giving Executive
written notice at least one year in advance of such termination,
except that such termination and written notice will not be
effective unless Executive will be employed by the Company on the
Termination Date.
10. MISCELLANEOUS.
(a) In consideration for the benefit of having the protection afforded by
this Agreement, Executive agrees that the provisions of Section 7
(NON-COMPETITION) and the Confidentiality Agreement apply to
Executive, and Executive will be bound by them, whether or not a
Change in Control occurs or Executive actually receives the Severance
Payment and other benefits specified herein.
(b) This Agreement will be binding upon and inure to the benefit of
Executive, Executive's personal representatives and heirs and the
Company and any successor of the Company, but neither this Agreement
nor any rights arising hereunder may be assigned or pledged by
Executive.
(c) Executive acknowledges that a breach of the covenants contained in
Section 7 (NON-COMPETITION) or in the Confidentiality Agreement will
cause the Company immediate and irreparable harm for which the
Company's remedies at law (such as money damages) will be inadequate.
The Company shall have the right, in addition to any other rights it
may have, to obtain an injunction to restrain any breach or threatened
breach of such Sections. The Company may contact any Person with or
for whom you work after your employment by the Company ends and may
send that Person a copy of this Agreement.
(d) Should any provision of this Agreement be adjudged to any extent
invalid by any competent tribunal, that provision will be deemed
modified to the extent necessary to make it enforceable.
(e) This Agreement will be governed and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
(f) This Agreement amends and restates the Change-in-Control Agreement,
which shall be null and void and of no further effect. This Agreement,
together with the Confidentiality Agreement, constitutes the entire
agreement and understanding between the Company and Executive with
respect to the subject matter hereof and merges and supersedes all
prior discussions, agreements and understandings between the Company
and Executive with respect to such matters.
(g) This Agreement may be executed in one or more counterparts, which
together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
WEST PHARMACEUTICAL SERVICES, INC.
/s/ M.A. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXXXX Xxxxxxx X. Xxxxxx, Chairman of the
Board and Chief Executive Officer
EXHIBIT "A"
LIST OF PERSONS ENGAGED IN COMPETITION WITH THE COMPANY'S BUSINESS
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Stelmi Trading International, including its subsidiary American Stelmi,
Inc.
Pharmaceutical packaging division of Swiss Group Xxxxxxxx, including its
subsidiary Helvoet Pharma, Inc.
Comar, Inc.
Alusuisse SA, including its subsidiary Xxxxxx Xxxxxx Xxxxxxx, Inc.
Sharp Xxxxx-Xxx Corporation
Accupac
Xxxxxxxx Packaging, Inc.
Packaging Coordinators, Inc. (PCI)
Pharmaceutical Packaging Specialties, Inc.
Nastech, Inc.
Emisphere Technologies Incorporated
Elan Corporation, PLC
TheraTech, Inc.
ALZA Corporation
