Exhibit (10)(b)
EXECUTION COPY
NON-COMPETITION AGREEMENT
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THIS IS A NON-COMPETITION AGREEMENT (the "Agreement"), dated as of April
30, 2002 (the "Effective Date"), between West Pharmaceutical Services, Inc., a
Pennsylvania corporation, (the "Company") and Xxxxxxx X. Xxxxxx (the
"Executive").
Background
The Executive is employed by the Company as its Chairman of the Board
pursuant to an Amended and Restated Employment Agreement dated as of March 25,
2000, as amended by an Amendment to Amended and Restated Employment Agreement
dated as of April 30, 2002, between the Executive and the Company (as so
amended, the "Employment Agreement").
The Employment Agreement contains restrictions on the ability of the
Executive to engage in certain activities in competition with the Company. The
Board and its Compensation Committee have determined that it is in the best
interests of the Company to provide certain additional benefits and compensation
to the Executive in exchange for the Executive agreeing to an expanded scope and
extended term of the non-competition covenants, all as set for in this
Agreement. The Executive has agreed to these arrangements.
Agreement
Intending to be legally bound, the parties agree as follows:
1. Definitions. As used in this Agreement, the terms defined in this Section
and elsewhere in this Agreement shall have the meanings here or there
provided.
1.1 An "Affiliate" of a Person means any Person directly or indirectly
controlling, controlled by or under common control with such Person.
1.2 "Company's Business" means the business of the Company or any
Affiliate of the Company:
(a) in 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 other business being carried on
by the Company's Drug Delivery Systems Division;
(b) the development, manufacture and sale of stoppers, closures,
containers, medical-device components and assemblies made from
elastomers, metal and plastic, and other business being carried
on by the Company's Pharmaceutical Services Division; and
(c) any other business conducted by the Company or any Affiliate of
the Company during the Restrictive Period in which the Executive
has been actively involved while an employee of the Company.
1.3 "Termination Date" means the date on which the Executive ceases to be
employed by the Company or any of its Affiliates.
1.4 "Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
1.5 "Restrictive Period" means the period commencing on the Effective Date
and continuing through October 18, 2007, the date of the Executive's
65th birthday.
1.6 "Retirement Plan" means the West Pharmaceutical Services, Inc.
Employees Retirement Plan, as amended and restated effective January
1, 2001, and any successor plan thereto.
1.7 "SERP" means the West Pharmaceutical Services, Inc. Supplemental
Executive Retirement Plan and any successor plan thereto.
2. Covenant-Not-to-Compete. During the Restrictive Period, the Executive will
not, and will not permit any of his Affiliates, directly or indirectly, to:
2.1 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 anywhere in the world (other
than an interest of not more than 5 percent of the outstanding stock
of any publicly traded company);
2.2 serve as a director, officer, executive or consultant of, or furnish
information to, or otherwise facilitate the efforts of, any Person
engaged in competition with the Company's Business anywhere in the
world;
2.3 solicit, employ, interfere with or attempt to entice away from the
Company or any Affiliate of the Company any individual who has been
employed by the Company or any such Affiliate in an executive,
scientific or technical capacity in connection with the conduct of the
Company's Business within one year prior to such solicitation,
employment, interference or enticement; or
2.4. approach, solicit or deal with in competition with the Company any
Person which at any time during the 12 months immediately preceding
the Termination Date:
(a) was a customer, client, supplier, agent or distributor of the
Company or any Affiliate of the Company;
(b) was a customer, client, supplier, agent or distributor of the
Company or any Affiliate of the Company with whom individuals
reporting to or under the Executive's direct control had personal
contact on behalf of the Company or any such Affiliate; or
(c) was a Person with whom the Executive had regular, substantial or
a series of business dealings on behalf of the Company or any
Affiliate of the Company (whether or not a customer, client,
supplier, agent or distributor of the Company or any Affiliate of
the Company).
2.5. The Restrictive Period shall be automatically extended for any period
of time during which the Executive has breached, or threatened to
breach, any provisions hereof.
2.6. For the avoidance of doubt, the 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.
3. Consideration.
3.1 In consideration of the covenants contained in Section 2, the
Executive will be entitled to the payments, compensation and
benefits specified in Sections 3.2 through 3.7, inclusive.
Notwithstanding the foregoing, if the Company terminates the
Executive's employment for Cause, as defined in the Employment
Agreement, or if the Executive breaches any of the covenants
contained in this Agreement, the Company shall not be obligated
to make such payments or provide such compensation and benefits.
The Executive's obligations under Section 2 hereof shall continue
notwithstanding termination of the Executive's employment for
Cause.
3.2 Enhanced Retirement Benefits.
(a) The Executive shall be entitled to retirement benefits under
the Retirement Plan and the SERP, which shall be calculated
and paid using the following assumptions: (i) the
Termination Date is his Normal Retirement Date (as defined
in Section 1.33 of the Retirement Plan); (ii) the Executive
shall be deemed to have attained age 65 for all purposes
under the Retirement Plan and SERP; provided, however, that
Executive's actual age (as of any conversion date) shall be
used to convert the benefits payable under the SERP from a
single life annuity for the life of the Executive with no
period certain to any other form of benefit; and (iii) the
Executive shall be credited with 32.25 Years of Service (as
defined in Section 1.58 of the Retirement Plan). Benefits
under Retirement Plan and SERP will begin to be paid to the
Executive as soon as administratively feasible but not later
than 30 days after the Termination Date.
(b) There shall be no reduction of benefits under the SERP and
Retirement Plan for any benefits the Executive is or would
have been entitled to receive under pension plans sponsored
by The Xxxxxxx Company and X. X. Xxxx, Inc. if he has or had
retained the right to retire under the plans sponsored by
those employers.
3.3 Continued Medical and Insurance Coverage. The Company will
continue the following medical and insurance coverage for the
periods indicated below:
(a) The standard medical and dental benefits and the Executive
Medical coverage currently available to the Executive and
his dependents shall be continued from the Termination Date
through September 30, 2007. To continue these benefits the
Executive must pay the applicable contribution that is
charged to similarly situated executives of the Company. The
Company will continue to pay the same portion of the cost of
the coverage as it did when the Executive was employed;
(b) The Company will continue to keep in force its current
individual whole-life insurance policy in the amount of
$500,000 for the policy years 2003 through 2007, provided
that the Executive pays the applicable contribution. The
Company will continue to pay the same portion of the cost of
the coverage as it did when the Executive was employed; and
(c) The Company will continue or procure additional life
insurance coverage for the Executive in the amount of
$600,000 for the period commencing on the Termination Date
and continuing through at least October 18, 2007.
The Executive's short-term and long-term disability
insurance coverage will cease as of the Termination Date.
3.4 Company Car. Upon notice to the Company on or before the
Termination Date, the Executive shall be entitled to purchase his
company car from the Company for the sum of $1.00 (one dollar).
3.5 Financial Planning Assistance. During the period commencing on
the Termination Date and continuing through October 18, 2007, the
Executive will continue to be reimbursed for financial planning
assistance in accordance with the current Company policy.
3.6 Office Space and Administrative Support. The Company shall pay
for an offsite office and shared administrative support from the
period commencing on the Termination Date until October 18, 2007.
3.7 Stock-Based Incentive Awards.
(a) For purposes of all grants and awards made to the Executive
under the Company's 1998 Key Employee Incentive Compensation
Plan (the "Keicp") or otherwise, including without
limitation awards of restricted shares, the Executive shall
be deemed to have retired from the Company on and as of the
Termination Date.
(b) Exhibit "B" attached hereto identifies each outstanding
option (each an "Option" and collectively the "Options")
held by Executive to acquire shares of common stock of the
Company under the KEICP. Notwithstanding any provision of
the KEICP or any option agreement issued pursuant the KEICP
to the contrary, (i) that portion of any Option that is
unvested and/or unexercisable as of the Termination Date
shall continue to vest and/or become exercisable during the
period commencing on the Termination Date and ending on
October 18, 2007 as if Executive had continued to be
employed by the Company until October 18, 2007; and (ii) all
Options (including without limitation those that become
vested pursuant to subparagraph (i) hereof or otherwise)
will remain exercisable by the Executive (or his heirs or
representatives) until the date identified in the column
entitled "Last Date to Exercise Vested Shares" on Exhibit
"B".
4. Enforcement. The Executive acknowledges that a breach of this Agreement by
him 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 this
Agreement. 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. The Company may contact any
person with or for whom the Executive works after his employment by the
Company ends and may send that person a copy of this Agreement.
5. General.
5.1 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the Commonwealth of
Pennsylvania, without giving effect to conflicts of laws principles
thereof which might refer such interpretations to the laws of a
different state or jurisdiction.
5.2 Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
5.3 Entire Agreement. This Agreement, including Exhibit "A" and Exhibit
"B" hereto, both of which are incorporated herein by reference, sets
forth the entire agreement and understanding of the parties relating
to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, between the parties.
5.4 Effect of Agreement. Except as otherwise set forth in this Agreement,
the Employment Agreement shall remain in full force and effect in
accordance with its terms.
5.5 No Other Representations. No representation, promise or inducement has
been made by either party hereto that is not set forth in this
Agreement, and no party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
5.6 Amendments; Waivers.
(a) This Agreement may not be amended, modified, superseded,
canceled, renewed or extended, and the terms or covenants hereof
may not be waived, except by a written instrument executed by the
parties to this Agreement or in the case of a waiver, by the
party waiving compliance.
(b) The failure of any party to require performance of any provision
of, or to exercise any right under, this Agreement shall not
affect the right of that party at a later time to enforce that
provision or exercise that right.
(c) No waiver of any term of this Agreement, whether by conduct or
otherwise, will be deemed to be, or construed as, a further or
continuing waiver of that or any other breach.
5.7 Binding Effect. The Executive's undertakings hereunder will bind him
and his heirs and legal representatives regardless of (a) the duration
of his employment by the Company, (b) any change in his duties or the
nature of his employment, (c) the reasons or manner of termination of
his employment, and (d) the amount of his compensation.
5.8 Counterparts. This Agreement may be executed in one or more
counterparts, which together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Non-Competition
Agreement as of the date first set forth above.
WEST PHARMACEUTICAL SERVICES, INC.
By: /s/ J.R. Xxxxxx
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Xxxx X. Xxxxxx III, Vice President
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Exhibit "A"
Helvoet
Stelmi
Sealine
Xxxxxx
Xxxxxx
Xxxxxx Xxxxxxxxx and Company
Merck
Pfizer
GlaxoSmithKline
Xxxxx
Xxxxx
Aventis
Novo
Amgen
Genentech
Ivax
Teva
IDDS
Solvay
Bespak
Xxxxxxxx
Xxxxxx
Elan
Nastech
Inhale
Alkermes
Skye Pharma
Exhibit "B"
Xxxxxxx X. Xxxxxx
Stock Options Outstanding as of April 30, 2002 with Vesting Schedule
and Expiration Dates
Total Number of No. of Shares Vesting Date(s) of Last Date
Grant Date Shares Covered Exercisable as of Currently Exercisable Option Price To Exercise
by Option Effective Date Shares Per Share Vested Shares
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09/08/1995 120,000 120,000 n/a $30.18750 09/07/2005
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08/05/1997 165,000 132,000 08/06/2002 - 33,000 shares $29.40630 08/04/2007
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03/25/2000 20,000 8,000 Dependent on milestones $26.03130 03/25/2010
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03/25/2000 165,000 66,000 03/25/2003 - 33,000 shares $26.03130 03/25/2010
03/25/2004 - 33,000 shares
03/25/2005 - 33,000 shares
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05/02/2001 75,000 75,000 n/a $26.7500 05/01/2005
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