Exhibit (10)(c)
Execution Copy
EMPLOYMENT AGREEMENT
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THIS IS AN EMPLOYMENT AGREEMENT (the "Agreement"), dated as of April 30,
2002, between West Pharmaceutical Services, Inc., a Pennsylvania corporation,
(the "Company") and Xxxxxx X. Xxxxx, Xx. (the "Employee").
Background
The Employee is employed by the Company as its Chief Operating Officer and
serves as a director of the Company. He and the Company are parties to a Second
Amended and Restated Change in Control Agreement dated as of March 25, 2000 and
an Amended and Restated Confidentiality and Non-Competition Agreement dated as
of October 26, 1999 (the "1999 Confidentiality Agreement") (together, the "Prior
Agreements"), which provide for compensation and benefits and restrict certain
activities following employment termination.
The Board of Directors and the Compensation Committee of the Board have
determined to promote the Employee to the position of Chief Executive Officer
and to offer an employment agreement containing compensation, benefits and other
terms and conditions contained herein. The parties also wish to express all
arrangements concerning the Employee's employment in a single agreement and
therefore agree to merge and integrate the Prior Agreements into this Agreement.
Terms
Intending to be legally bound, the parties agree as follows:
1. Definitions. Terms defined in this Section 1 and parenthetically elsewhere
in this Agreement will throughout this Agreement have the meanings here or
there provided.
1.1 An "Affiliate" of any Person means any Person directly or indirectly
controlling, controlled by or under common control with such Person.
1.2. "Cause" means: (i) the Employee's conviction of a felony; or (ii) the
Employee's willful failure to perform his duties under this Agreement
(other than due to physical or mental illness) and the failure by the
Employee to correct that failure within 30 days after written notice
from the Company, provided that the Company shall have delivered a
written notice to the Employee within 60 days of the Board of
Directors having actual knowledge of the occurrence of any such
failure; or (iii) the Employee's gross negligence or willful
misconduct in the performance of his duties; or (iv) the Employee's
willful misconduct that is materially injurious to the Company or any
of its Affiliates or any of their business reputations; or (v) the
Employee's breach of his undertakings under Sections 9 or 10. No act,
or failure to act, by the Employee shall be considered "willful"
unless committed without good faith and without a reasonable belief
that the act or omission was in the best interest of the Company.
1.3 "Change in Control" means a change in control of a nature that 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:
(a) Any Person, other than:
(i) the Company,
(ii) any Person who on the date of this Agreement is a director
or officer of the Company, or
(iii) a trustee or fiduciary holding securities under an employee
benefit plan of the Company,
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
(b) 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
(c) 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,
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.
1.4 "Code" means the Internal Revenue Code of 1986, as amended.
1.5 "Commencement Date" means April 30, 2002.
1.6 "Company's Business" means the business of the Company or any
Affiliate of the Company: (i) 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; (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 and other business
carried on by the Company's Pharmaceutical Systems Division; and (iii)
any other business conducted by the Company or any Affiliate of the
Company during the Restrictive Period in which the Employee has been
actively involved while an employee of the Company or any such
Affiliate.
1.7 "Constructive Termination" means the termination of the Employee's
employment with the Company at his initiative within one year
following the occurrence of one or more of the following events:
(i) The Company requires the Employee to assume any duties
inconsistent with, or the Company makes a significant diminution
or reduction in the nature or scope of the Employee's authority
or duties from, those assigned to or held by the Employee on the
Commencement Date;
(ii) A reduction in the overall level of the Employee's compensation
or benefits as provided in Section 5 hereof (except for a
reduction attributable to changes in written plans or programs
that apply generally to employees participating in such plans or
programs);
(iii) Any reduction or diminution in the Employee's title or position,
an adverse change in the Employee's reporting relationship or any
material diminution in the Employee's authority, duties or
responsibilities with the Company;
(iv) A relocation of the Employee's site of employment to a location
more than 50 miles from the Employee's site of employment on the
Commencement Date;
(v) The Company fails to provide the Employee with a reasonable
number of paid vacation days at least equal to the number of paid
vacation days to which the Employee was entitled in the last full
calendar year prior to the execution of this Agreement;
(vi) The Company fails to provide the Employee with substantially the
same fringe benefits that were provided to the Employee
immediately prior to the Commencement Date, 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 Commencement
Date, is substantially at least as beneficial to the Employee in
all material respects as such prior fringe benefits taken as a
whole;
(vii) A successor of the Company does not assume the Company's
obligations under this Agreement, expressly or as a matter of
law; or
(viii) Any other material breach of this Agreement by the Company.
Notwithstanding the foregoing, no Constructive Termination will be deemed
to have occurred under any of the following circumstances:
(1) The Employee will have consented in writing or given a
written waiver to the occurrence of any of the events
enumerated in clauses (i) through (viii) above;
(2) The Employee will have failed to give the Company written
notice stating the Employee's intention to claim
Constructive Termination and the basis for that claim at
least 10 days in advance of the effective date of the
Employee's resignation; or
(3) The event constituting a Constructive Termination has been
cured or reversed by the Company prior to the effective date
of the Employee's resignation.
1.8 "Disability" means any physical or mental ailment as determined by a
physician, which prevents, or is substantially certain to prevent, the
Employee from performing the duties incident to the Employee's
employment with the Company and which (i) has continued for a period
of 45 consecutive days, or for a period of 90 days whether or not
consecutive, during any 360-day period; or (ii) is determined by a
physician as highly likely to persist for 90 consecutive days or to be
of permanent duration. Any question as to the existence, extent,
duration or potentiality of the Employee's Disability shall be made by
a qualified, independent physician mutually agreed to by the Employee
and the Company, whose determination shall be final and conclusive for
all purposes of this Agreement.
1.8 "Payment" means
(i) any amount due or paid to the Employee under this Agreement,
(ii) any amount that is due or paid to the Employee 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 Employee
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 Employee, 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
Employee or (3) any contingent severance or other amounts that
are payable to the Employee.
1.9 "Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
1.10 "Regulations" means the proposed, temporary and final regulations
under section 280G of the Code or any successor provision thereto.
1.11 "Restrictive Period" means the period of time that commences on the
Commencement Date and ends on the second anniversary of the
Termination Date.
1.12 "Retirement Plan" means the West Pharmaceutical Services, Inc.
Employees' Retirement Plan and any successor plan thereto.
1.13 "Savings/Deferred Comp Plan" means The Company's Salaried Employees'
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.
1.14 "Termination Date" means the date on which the Employee ceases to be
employed by the Company or any of its subsidiaries or Affiliates for
any reason.
2. Position.
The Company engages the Employee as its Chief Executive Officer. The
Employee shall report solely and directly to the Company's Board of
Directors. The Employee will perform such duties and carry out such
responsibilities as may be determined from time to time by the Board of
Directors, which shall be consistent with the duties and responsibilities
customarily performed by persons in a similar executive capacity. The
Employee will diligently devote his entire time, effort and attention to
the affairs of the Company and to the successful development of its
business. During the term of this Agreement, the Board of Directors will
nominate the Employee for re-election as a director by the shareholders of
the Company.
3. Exclusive Services.
Without the Company's prior written consent, the Employee will not render
business services to any other Person or engage in any other activity that
would materially interfere with the performance of his duties under this
Agreement. Nevertheless, as long as the following activities do not
interfere with the Employee's obligations to the Company, the Employee may:
(a) serve as a director, officer or trustee of any trade association or of
any civic, educational or charitable organization; (b) acquire solely as an
investment securities of any entity so long as (i) he remains a passive
investor in that entity and (ii) he beneficially owns no more than 5% of
the outstanding voting securities in that entity; and (c) with the prior
consent of the Company's Board of Directors, serve as director of any
corporation which does not, directly or indirectly, engage in competition
with the Company's Business.
4. Term of Employment. -
Unless sooner terminated as provided in Sections 6 or 7, the Employee's
employment term as Chief Executive Officer shall begin on the Commencement
Date and shall end on the sooner of the Employee's normal retirement date
or the second anniversary of the Company's giving notice of termination,
which notice may be given at any time on or after (but not before) the
first anniversary of the Commencement Date.
5. Compensation and Benefits.
5.1. Compensation.
(a) Base Salary. The Employee will be paid a base salary from the
Commencement Date through the regular salary review date in 2003 at a
rate of $450,000 per annum. Thereafter, the Employee's annual base
salary will be determined in accordance with the Company's regular
executive compensation review arrangements. The Employee shall not be
required to defer any part of his base salary under any Company plan
or program.
(b) Bonus. In addition to his base salary, the Employee will be entitled
to participate in the Company's Annual Executive Incentive Bonus Plan
with a target bonus at the 75% of base salary level.
(c) Long-Term Incentives. The Employee will be entitled to participate in,
and receive awards and grants under, the 1998 Key Employee Incentive
Compensation Plan and any other stock option or otherlong-term
incentive programs made available to the Company's executive
management from time to time. The Employee will be granted, as of the
Commencement Date, a stock option to purchase a total of 160,000
shares of the Company's common stock, on the terms and subject to the
conditions contained in the Non-Qualified Stock Option Agreement
attached as Exhibit "A" hereto.
5.2. Employee Benefits.
(a) The Employee will be entitled to participate in the Company's
employee benefit plans that are generally available to the
Company's executive management. These include any group life,
hospitalization, surgical, major medical and accidental death and
dismemberment insurance plans, the Non-Qualified Deferred
Compensation Plan for Designated Executive Officers, the
Company's Supplemental Executives' Retirement Plan and the
Retirement Plan. The Company shall purchase and maintain
additional term life insurance for the benefit of the Employee of
not less than $1.75 million.
(b) The Employee will receive four weeks (20 days) of annual
vacation.
5.3. Reimbursement of Expenses. The Company will reimburse the Employee in
accordance with the Company's expense reimbursement policy as in
effect from time to time, for expenses reasonably and properly
incurred by him in performing his duties. The Employee shall furnish
the Company with evidence of his disbursements in sufficient detail to
qualify them as deductions under the Code.
5.4. Automobile. The Company will provide the Employee with the use of an
automobile and will pay or reimburse the Employee for maintenance and
operation expenses of that automobile in accordance with the Company's
executive automobile policy.
6. Termination.
6.1. Termination for Cause. The Company may terminate the Employee's
employment and the Company's obligations under this Agreement, at any
time for Cause by giving notice to the Employee. In the event the
Employee's employment is terminated for Cause, he shall be entitled
to: (i) any amounts earned, accrued or owing the Employee under
Section 5.1; and (ii) other or additional amounts or benefits in
accordance with applicable written plans or programs of the Company.
The Employee shall not be entitled to any other compensation or
benefits under this Agreement upon termination for Cause and all
rights of the Employee not specified in this Section 6.1 shall
terminate on the effective date of such termination.
6.2. Termination Due to Disability. If, due to the Employee's Disability,
he resigns or is terminated by the Company, the Employee shall be
entitled to: (i) any amounts earned, accrued or owing the Employee
under Section 5.1; and (ii) other or additional amounts or benefits in
accordance with applicable written plans or programs of the Company.
The Employee shall not be entitled to any other compensation or
benefits under this Agreement upon resignation or termination due to
Disability and all rights of the Employee not specified in this
Section 6.1 shall terminate on the effective date of such resignation
or termination.
6.3. Termination Other Than For Cause. The Company may terminate the
Employee's employment at any time other than for Cause, Disability or
by giving the two years' notice specified in Section 4, but if it does
so, and the Employee is not then in breach of this Agreement, the
Employee shall be entitled to:
(a) either: (i) an amount equal to the Employee's annual base salary
then in effect, plus an amount equal to his annual base salary
that would be in effect for the next following year if such
amount can be determined from this Agreement or has been set by
the Compensation Committee of the Board of Directors; or (ii) if
the subsequent year's annual base salary has not been so
determined or set, an amount equal to two times the Employee's
then-current annual base salary; and
(b) other or additional compensation or benefits in accordance with
the applicable written plans and programs of the Company.
The amount specified in clause (a) above will be payable as a lump sum
within 30 days following the Termination Date and the payment of such
amount and any compensation or benefits under clause (b) above will be
in full satisfaction of all claims the Employee may have against the
Company and conditioned upon execution of an agreement and release
substantially in the form attached as Exhibit "B" hereto. If the
circumstances of the termination are such that the Employee is also
entitled to severance compensation and benefits under Section 7, the
Employee will be entitled to receive the larger of the two amounts
under this Section 6.3 or Section 7, but not both. The provisions of
Section 8.2 will apply to all payments made under this Section 6.3.
6.4. Death. In the event that the Employee dies while employed under this
Agreement, the Employee's estate shall be entitled to: (i) any amounts
earned, accrued or owing the Employee under Section 5.1; and (ii)
other or additional amounts or benefits in accordance with applicable
written plans or programs of the Company. Neither the Employee nor his
estate shall be entitled to any other compensation or benefits under
this Agreement upon employment termination due to death and all rights
of the Employee not specified in this Section 6.4 shall terminate on
the date of his death.
7. Termination Following a Change in Control.
7.1. The Employee will be entitled to the compensation and benefits
specified in Section 8 if at any time within two years after a Change
in Control has occurred, the Employee's employment by the Company is
terminated:
(1) by the Company, other than by reason of death, disability, Cause
or retirement at the Employee's normal retirement date under the
Retirement Plan, or
(2) as a result of the Employee's resignation at any time following
the Employee's Constructive Termination; or
(3) the Employee resigns for any reason within 30 days following the
first anniversary of a Change in Control.
Except as otherwise set forth in Section 7.2, the Employee will not be
entitled to the benefits specified in Section 8 if the Employee's
employment terminates for any other reason or if, at any time
thereafter, the Employee is in breach of any of the Employee's
obligations under this Agreement.
7.2 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, Cause
or retirement at the Employee's normal retirement date under the
Retirement Plan, or
(ii) as a result of the Employee's resignation at any time following
the Employee'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 Employee will be entitled to
the severance compensation and benefits specified in Section 8.
8. Severance Compensation and Benefits Following a Change in Control.
8.1 Determination of Severance Compensation. Upon termination of
employment as set forth in Section 7, the Employee will be entitled to
the following benefits:
(a) Severance Compensation. The Employee will be entitled to
severance compensation in an amount equal to three times the sum
of
(i) the Employee's highest annual base salary rate in effect
during the year of the termination of the Employee's
employment, plus
(ii) the aggregate amount of the annual bonuses paid or payable
to the Employee for the three fiscal years immediately
preceding a Change in Control divided by the number of
fiscal years as to which such bonuses were paid or payable;
provided, however, that if at any time before the third
anniversary of the Termination Date, the Employee either (x)
elects retirement under the Retirement Plan, or (y) could
have been compelled to retire under the Retirement Plan if
the Employee had remained employed by the Company, the
Employee's severance compensation under this Section 8.1
will be reduced by an amount equal to the pension benefit
payable to the Employee under the Retirement Plan,
determined after any applicable actuarial reduction for
early commencement. The amount of pension benefit taken into
account for this purpose shall be limited to those benefits
payable before the third anniversary of the Termination
Date. The severance compensation paid hereunder will not be
reduced to the extent of any other compensation for the
Employee's services that the Employee receives or is
entitled to receive from any other employment consistent
with the terms of this Agreement.
(b) Equivalent of Vested Savings/Deferred Comp Plan Benefit. The
Company will pay to the Employee the difference, if any, between
(i) the benefit the Employee 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 the Employee's employment,
and
(ii) the benefit the Employee is entitled to receive under the
terms of the Savings/Deferred Comp Plan upon termination of
the Employee's employment.
Any such benefit will be payable at such time and in such manner
as benefits are payable to the Employee under the
Savings/Deferred Comp Plan.
(c) Unvested Equity Awards. All stock options, other equity-based
awards and shares of the Company's stock granted or awarded to
the Employee under any Company compensation or benefit plan or
arrangement, but which are unvested, will vest immediately upon
termination of the Employee's employment. The provisions of this
Section 8.1(c) will supersede the terms of any such grant or
award made to the Employee under any such plan or arrangement to
the extent there is an inconsistency between the two.
(d) Employee and Executive Benefits. The Employee will be entitled to
a continuation of all hospital, major medical, medical, dental,
life and other insurance benefits not otherwise addressed in this
Agreement in the same manner and amount to which the Employee was
entitled on the date of a Change in Control or on the date of
Constructive Termination of the Employee's employment (whichever
benefits are more favorable to the Employee) until the earlier of
(i) a period of 36 months after the Termination Date, (ii) the
Employee's retirement under the Retirement Plan, or (iii) the
Employee's eligibility for similar benefits with a new employer.
Assistance in finding new employment will be made available to
the Employee by the Company if the Employee so requests. Upon
termination of the Employee's employment, Company cars must be
returned to the Company.
8.2 Additional Payments.
(a) Gross-Up Payment. Notwithstanding anything herein to the
contrary, if 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 Employee shall
be entitled to an additional payment (a "Gross-Up Payment") in an
amount that will place the Employee in the same after-tax
economic position that the Employee would have enjoyed if the
Excise Tax had not applied to the Payment.
(b) Determination of Gross-Up Payment. Subject to the provisions of
Section 8.2(c), all determinations required under this Section 8,
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
Employee) (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Employee and the Company
within fifteen days of the Change in Control, the Termination
Date or any other date reasonably requested by the Employee or
the Company on which a determination under this Section 8.2 is
necessary or advisable. The Company shall pay to the Employee the
initial Gross-Up Payment within 5 days of the receipt by the
Employee and the Company of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable
by the Employee, the Company shall cause the Accounting Firm to
provide the Employee with an opinion that the Accounting Firm has
substantial authority under the Code and Regulations not to
report an Excise Tax on the Employee's federal income tax return.
Any determination by the Accounting Firm shall be binding upon
the Employee 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 Employee with respect to
any Payment (hereinafter, an "Underpayment"), the Company, after
exhausting its remedies under Section 8.3, shall promptly pay to
the Employee an additional Gross-Up Payment in respect of the
Underpayment.
(c) Procedures. The Employee shall notify the Company in writing of
any 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
Employee 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 Employee agrees not to pay the claim until the
expiration of the 30-day period following the date on which the
Employee 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 Employee in writing
prior to the expiration of the Notice Period that it desires to
contest the claim, the Employee 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 Employee; (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
Employee 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 Employee agrees
either to pay the tax claimed and xxx 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 Employee to pay such claim and pursue a refund, the
Company shall advance the amount of such payment to the Employee
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
Employee 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
Employee in writing prior to the end of the Notice Period of its
desire to contest the claim, the Company shall pay to the
Employee an additional Gross-Up Payment in respect of the excess
parachute payments that are the subject of the claim, and the
Employee 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 Employee of an Advance, the
Employee becomes entitled to a refund with respect to the claim
to which such Advance relates, the Employee 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 Employee of an Advance, a determination is made
that the Employee shall not be entitled to any refund with
respect to the claim and the Company does not promptly notify the
Employee of its intent to contest the denial of refund, then the
amount of the Advance shall not be required to be repaid by the
Employee and the amount thereof shall offset the amount of the
additional Gross-Up Payment then owing to the Employee.
(e) Further Assurances. The Company shall indemnify the Employee and
hold the Employee harmless, on an after-tax basis, from any
costs, expenses, penalties, fines, interest or other liabilities
(collectively, "Losses") incurred by the Employee with respect to
the exercise by the Company of any of its rights under this
Section 8.2, including, without limitation, any Losses related to
the Company's decision to contest a claim or any imputed income
to the Employee resulting from any Advance or action taken on the
Employee'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 8.2 and shall promptly reimburse the
Employee, or cause the Trust to reimburse the Employee, for the
reasonable expenses incurred by the Employee in connection with
any actions taken by the Company or required to be taken by the
Employee 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 8.2(b).
8.3 Payment of Severance Compensation.
(a) The severance compensation set forth in Section 8.1(a) will be
payable in 36 equal monthly installments commencing on the first
day of the month following the month in which Employee's
employment terminates. However, Employee may elect in writing, in
accordance with the provisions of this Section, to receive
Employee's severance compensation in a lump sum at a later time
or in installments in amounts and at times elected by Employee,
but Employee's election will not entitle Employee to receive
severance compensation sooner than permitted by the preceding
sentence.
(b) Employee must elect to receive amounts in installments or to
defer payments by filing a written election with the Company,
which specifies the time at which payments are to be made and the
amounts of such payments. Employee's election to receive
installment payments or to defer payments will not be valid
unless it is made prior to the time Employee is entitled to
receive any payments under this Agreement. The last such election
in effect on the day before the Termination Date will be
controlling. No election may be made on or after termination of
employment.
(c) The payment of deferred amounts must commence no earlier than the
first business day of the calendar year following the termination
of Employee's employment and no later than the third calendar
year following the attainment of normal retirement age under the
Retirement Plan.
8.4 Payments Final. In the event of a termination of the Employee's
employment under the circumstances described in Section 7, the
arrangements provided for by this Section 8, and any other agreement
between the Company and the Employee in effect at that time and by any
other applicable plan or program of the Company in which the Employee
then participates, will constitute the entire obligation of the
Company to the Employee, and performance of that obligation will
constitute full settlement of any claim that the Employee might
otherwise assert against the Company on account of such termination.
The Company's obligation to pay the Employee under this Section 8 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 the Employee or
anyone else as long as the Employee is not in beach of the Employee's
obligations under this Agreement.
9. Confidential Information and Intellectual Property Matters.
9.1 Confidential Information. The Employee acknowledges that his
employment by the Company will, throughout the duration of this
Agreement, bring him into close contact with many confidential affairs
of the Company. These include (but are not limited to) information
about markets, key personnel, client lists and client information,
operational methods, proprietary intellectual property, plans for
future developments relating thereto, and other information not
readily available to the public. The Employee also further
acknowledges that the services to be performed under this Agreement
are of a special, unique, unusual, extraordinary and intellectual
character. In recognition of these factors, the Employee covenants and
agrees that, both during and after the term of this Agreement, he will
keep secret all material confidential matters of the Company known to
him which are not otherwise in the public domain and will not
intentionally disclose them to anyone outside of the Company, wherever
located, except with the Company's prior written consent.
9.2 Papers. All correspondence, memoranda, notes, records, reports,
drawings, lists, photographs, plans and other papers and items
received or made by the Employee in connection with his employment by
the Company shall be the property of the Company. The Employee will
deliver all copies of such materials to the Company upon request of
the Company and, even if it does not request, when his employment by
the Company ends.
9.3 Inventions Company Property.
(a) As used herein, the term "Inventions" includes inventions, ideas,
techniques, methods, developments, improvements and all other
forms of intellectual property. All rights in Inventions that the
Employee conceives, makes or obtains either alone or with others
during his employment by the Company (both before and after the
date of this Agreement) and within six months after the
Termination Date, are and shall be the property of the Company,
except for Inventions which the Company determines in its sole
discretion to be unrelated to any matter of actual or potential
interest to the Company unless they are conceived, made or
obtained in the course of his employment or with the use of the
time, material or facilities of the Company. This Section also
does not apply to Inventions conceived, made or obtained by the
Employee before his employment by the Company, a complete listing
of which was appended to the 1999 Confidentiality Agreement and
which is attached hereto as Exhibit "C" as a matter of record.
(b) The Employee will make full and prompt disclosure to the Company
of all Inventions that are defined by this Section 9 to be the
Company's property. At the Company's request and expense (but
without additional compensation to the Employee), the Employee
will at any time take such actions as the Company reasonably
considers necessary to obtain or preserve the Company's rights in
such Inventions. These actions may include, but are not
necessarily limited to, signing and delivering applications,
assignments and other papers and testifying in legal proceedings.
10. Non-Competition and Non-Solicitation. During the Restrictive Period,
Employee will not, and will not permit any of his Affiliates, directly or
indirectly, to:
10.1.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);
10.2.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 anywhere in the
world;
10.3.solicit, employ, interfere with or attempt to entice away from the
Company or any Affiliate of the Company any employee who has been
employed by the Company or any such Affiliate 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;
00.0.xx an individual proprietor, partner, stockholder, officer, employee,
director, joint venture, investor, lender, or in any other capacity
whatsoever (other than as the holder of not more than five percent of
the total outstanding stock of a publicly held company), engage in the
business of developing, producing, marketing or selling products or
services of the kind or type developed or being developed, produced,
marketed or sold by the Company while the Employee was employed by the
Company within any market or territory in which the Company is then
actively engaged;
10.5.recruit any employee of the Company or solicit or induce, or attempt
to solicit or induce, any employee of the Company to terminate his or
her employment with, or otherwise cease his or her relationship with,
the Company; or
10.6.solicit, divert or take away, or attempt to divert or to take away,
the business or patronage of any of the clients, customers or
accounts, or prospective clients, customers or accounts, of the
Company which were contacted, solicited or served by the Employee
while employed by the Company.
11. Legal Fees; Insurance.
11.1.The Company will pay all legal fees and expenses which the Employee
may incur as a result of the Company's contesting the validity or
enforceability of this Agreement to the extent that the Employee
prevails or substantially prevails in any action relating to same.
11.2.The Employee shall be insured under the Company's Directors' and
Officers' Liability Insurance Policy as in effect from time to time.
12. 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 Employee 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 12 will supersede the terms of any such grant or award made to
the Employee under any such plan or arrangement to the extent there is an
inconsistency between the two.
13. Specific Remedy. The restrictions contained in Sections 9 and 10 are
necessary for the protection of the business and goodwill of the Company
and are considered by the Employee to be reasonable for that purpose. The
Employee agrees that any breach of those Sections will cause the Company
substantial and irrevocable harm for which money damages will be inadequate
and therefore, in the event of any such breach or threatened breach, in
addition to such other remedies as may be available, the Company shall have
the right to seek specific performance and injunctive relief. All of the
rights and remedies enumerated in Sections 9 and 10 are in addition to and
not in lieu of any other rights and remedies available to the Company under
law or in equity and shall survive termination of this Agreement.
14. Independence, Severability and Non-Exclusivity. If any of the provisions of
this Agreement (including Sections 9 and 10) are determined to be invalid
or unenforceable, that will not affect the remainder of this Agreement,
which will be given full effect without regard to the invalid portions. If
any part of Section 10 is held to be unenforceable by a competent tribunal
because of its duration or the area covered thereby, the parties agree that
the court making that determination will have the power to reduce the
duration or area (and those provisions will be deemed to be amended by the
parties) to the extent necessary to make those provisions enforceable
15. Assignment of the Employee Benefits. Absent the prior written consent of
the Company, and subject to will and the laws of descent and distribution,
the Employee will have no right to exchange, convert, encumber or dispose
of the rights of the Employee to receive benefits and payments under this
Agreement, which payments and benefits are non-assignable and
non-transferable.
16. Miscellaneous.
16.1.Survival. The following rights and/or obligations of the parties shall
survive termination or expiration of this Agreement to the degree
necessary to permit their complete fulfillment or discharge: (i) the
rights and obligations of the parties under Sections 8, 9 and 10, (ii)
the Company's obligation to make payments under Section 6 and (iii)
subject to the execution of the agreement and release referred to in
Section 6.3, any cause of action or claim of either party, accrued or
to accrue, because of any breach or default by the other party. 16.2.
Notices. All notices under this Agreement shall be given in writing by
personal delivery or by certified mail addressed to the Company at its
principal place of business and to the Employee at his residence
address as then listed in the Company's records.
16.3.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.
16.4.Entire Agreement. This Agreement, together with the attachment and
exhibits hereto, constitutes the entire agreement and understanding of
the parties relating to the subject matter hereof, and supersedes all
prior agreements, including the Prior Agreements referred to in the
Background section of this Agreement, which shall deemed to be
terminated upon the Commencement Date, arrangements and
understandings, written or oral, between the parties.
00.0.Xx Other Representations. No representation, promise or inducement
has been made by any party hereto that is not embodied in this
Agreement, and no party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
16.6.Successors and Assigns. This Agreement shall inure to the benefit of
and shall be binding upon the Company and the Employee and, subject to
the provisions of Section 15, their respective heirs, executors,
personal representatives, successors and assigns.
16.7.Amendments; Waivers. This Agreement may not be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants
hereof may 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. 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. 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.
16.8.Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same instrument.
16.9.Interpretation; Captions.
(a) Section and clause headings and captions used in this Agreement
are for convenience only and shall not affect its construction or
interpretation.
(b) References to the singular shall be deemed to include the plural
and vice versa.
(c) References to sections, clauses, attachments, exhibits and
parties are to the sections and clauses of and the exhibits,
attachments and the parties to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Employment Agreement as of the date first set forth above.
WEST PHARMACEUTICAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------ --------------------------
Xxxxxxx X. Xxxxx, Vice President, Xxxxxx X. Xxxxx, Xx.
Human Resources
EXHIBIT "A"
WEST PHARMACEUTICAL SERVICES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
--------------------------------------------------------------------------------
As of April 30, 2002, West Pharmaceutical Services, Inc. (referred to as
the "Company") and Xxxxxx X. Xxxxx, Xx. (referred to as "you" and "your"),
agree:
1. Definitions. As used herein:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means those members of the Board who have been designated
pursuant to the Plan to act in that capacity.
(d) "Date of Exercise" means the date on which you deliver the notice
required by Paragraph 5 hereof in accordance with the Plan document.
(e) "Date of Grant" means April 30, 2002, the date on which the Committee
awarded the Option.
(f) "Employer" means the Company or the Subsidiary for which you are
performing services on the Date of Exercise, or for which you were
performing services at the time of your death, disability or other
termination of employment.
(g) "Expiration Date" means the earliest of the following:
(i) If you cease to be employed by the Employer for any reason other
than death, disability or retirement (as determined by the
Committee), the date three months after the termination of
employment;
(ii) If you cease to be employed by the Employer because of death or
disability (as determined by the Committee), the date twelve
months after the date you terminate employment;
(iii) The 10th anniversary of the Date of Grant; or
(iv) The occurrence of any of the activities specified in Paragraph 6
hereof.
(h) "Fair Market Value" means the Fair Market Value of a share of Company
common stock as determined pursuant to the Plan.
(i) "Option" means the option hereby granted.
(j) "Option Price" means $27.985 per Share, as calculated under the Plan.
(k) "Person" means an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
(l) "Plan" means the West Pharmaceutical Services, Inc. 1998 Key Employee
Incentive Compensation Plan, the terms of which are incorporated
herein by reference.
(m) "Share Price" means the closing price of the Company's common stock
quoted in the New York Stock Exchange Composite Transactions as
published in the New York edition of The Wall Street Journal.
(n) "Shares" means the 160,000 shares of the Company's common stock, par
value $.25 per share, which are the subject of the Option hereby
granted.
(o) "Subsidiary" means any corporation that, at the time in question, is a
subsidiary corporation of the Company within the meaning of Section
425(f) of the Code.
2. Grant of Option. The Company grants to you, as of the Date of Grant, the
Option to purchase any or all of the Shares, on the terms and conditions
set forth herein and in the Plan. The Option hereby granted is a
non-qualified stock option.
3. Time of Exercise.
(a) The Option shall become exercisable in four equal installments of
40,000 Shares on the first through fourth anniversaries of the Date of
Grant as follows:
Date on Which Shares
No. of Shares First Become Exercisable
40,000 April 30, 2003
40,000 April 30, 2004
40,000 April 30, 2005
40,000 April 30, 2006
provided, however, the Option shall become immediately exercisable in
full as and to the extent provided in that certain Employment
Agreement dated as of April 30, 2002 between the Company and you.
(b) After each installment becomes exercisable, it shall remain
exercisable until the Expiration Date, when the right to exercise
shall terminate absolutely.
4. Payment for Shares. Full payment for Shares purchased upon the exercise of
the Option shall be made in cash, common stock of the Company valued at its
Fair Market Value on the Date of Exercise, or in a combination thereof, as
the Committee may determine. Such determination may include a restriction
on the use of any Shares unless they have been held by you for at least six
months before delivery, and have not been used for another exercise during
such period.
5. Forfeiture of Option and Option Gain Upon Certain Events. Notwithstanding
any provision of this Agreement to the contrary, if at any time within (i)
the term of this Option or (ii) within three months following termination
of employment or (iii) within three months after you exercise any portion
of this Option, whichever is the latest, you directly or indirectly engage
in any activity in competition with any activity of the Company, or
inimical, contrary or harmful to the interests of the Company, including
without limitation:
(a) conduct related to your employment for which either criminal or civil
penalties against you may be sought;
(b) acquisition of a direct or indirect interest or an option to acquire
such an interest in any Person engaged in competition with, the
Company's business (other than an interest of not more than 5 percent
of the outstanding stock of any publicly traded company);
(c) accepting employment with or serving as a director, officer, employee
or consultant of, or furnishing information to, or otherwise
facilitating the efforts of, any Person engaged in competition with
the Company's business;
(d) soliciting, employing, interfering with or attempting to entice away
from the Company any employee who has been employed by the Company in
an executive or supervisory capacity within one year prior to such
solicitation, employment, interference or enticement;
(e) violation of Company policies, including the Company's insider-trading
policy; or
(f) using for yourself or others, or disclosing to others, any
confidential or proprietary information of the Company in
contravention of any Company policy or agreement, then
any and all rights to exercise this Option shall terminate and you
shall pay any option gain realized by you from exercising all or any
portion of this Option by you to the Company.
6. Right of Set-Off. By accepting this agreement, you consent to a deduction
from any amounts the Company owes you, including amounts owed as wages or
other compensation, fringe benefits, or vacation paid, to the extent of the
amount owed under Paragraph 5 hereof. Whether or not the Company elects to
make any set-off in whole or in part, if the Company does not recover by
means of set-off the full amount you owe, calculated as set forth above,
you agree to pay immediately the unpaid balance to the Company.
7. Committee Discretion. The Committee may release you from your obligations
under Paragraph 5 if the Committee (or its duly appointed agent) determines
in its sole discretion that such action is in the best interests of the
Company.
8. Securities Laws. The Committee may from time to time impose any conditions
on the exercise of the Option as it deems necessary or advisable to ensure
that all rights granted under the Plan satisfy the requirements of the
Securities and Exchange Commission Rule 16b-3 or any successor rule. Such
conditions may include, without limitation, the partial or complete
suspension of the right to exercise the Option.
9. Issuance of Certificates. Subject to the provisions of Paragraph 9 hereof,
a certificate for the Shares issuable on the exercise of the Option shall
be delivered to you or to your personal representative, heir or legatee as
promptly as possible after the Date of Exercise, provided that no
certificates for Shares will be so delivered until (a) appropriate
arrangements have been made with Employer for the withholding of any taxes
which may be due with respect to such Shares and (b) the Option Price has
been paid in full. The Company may condition delivery of certificates for
Shares upon the prior receipt from you of any undertakings which it may
determine are required to assure that the certificates are being issued in
compliance with federal and state securities laws.
10. Rights Prior to Exercise. Neither you nor your personal representative,
heir or legatee shall have any of the rights of a shareholder with respect
to any Shares until the date of the issuance to you of a certificate for
such Shares as provided in Paragraph 9 hereof.
11. Status of Option; Interpretation. The Option is intended to be a
non-qualified stock option. The Committee shall have sole power to resolve
any dispute or disagreement arising out of this Agreement. The
interpretation and construction of any provision of this Option or the Plan
made by the Committee shall be final and conclusive and, insofar as
possible, shall be consistent with the requirements of a non-qualified
stock option.
12. Entire Agreement. The parties intend this Agreement to be the final
expression of their agreement and to be a complete and exclusive statement
of their agreement and understanding in respect of the subject matter
contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement in two
counterparts as of the date stated above.
WEST PHARMACEUTICAL SERVICES, INC.
By:-------------------------------------
Xxxxxxx X. Xxxxx, Vice President,
Human Resources
------------------------------------- ----------------------------
XXXXXX X. XXXXX, XX. (Witness Signature)
(Employee's Signature)
EXHIBIT "B"
AGREEMENT AND GENERAL RELEASE
--------------------------------------------------------------------------------
NOTICE: This is a very important legal document, and you should thoroughly
review and understand the terms and effect of this document before signing it.
By signing this Agreement and General Release, you will be completely releasing
West Pharmaceutical Services, Inc. from all liability to you. Therefore, you
should consult with an attorney before signing this Agreement and General
Release. You have 21 days from the date of distribution of these materials to
consider this document. If you have not returned a signed copy of this Agreement
and General Release by that time, we will assume that you have elected not to
sign the Agreement and General Release. If you choose to sign the Agreement and
General Release, you will have an additional seven (7) days following the date
of your signature to revoke the Agreement and General Release, and the Agreement
and General Release shall not become effective or enforceable until the
revocation period has expired.
--------------------------------------------------------------------------------
Intending to be legally bound by the provisions of this Agreement and in
consideration of the negotiated payments and benefits specified in the
accompanying agreement which shall be incorporated as if fully set forth within,
dated ------------------, between West Pharmaceutical Services, Inc. and me,
providing valuable consideration to which I would otherwise not be entitled, I,
-------------------- hereby release and discharge West Pharmaceutical Services,
Inc. and its affiliates, parents, subsidiaries, successors, and predecessors and
all of their employees, agents, attorneys, officers, and directors (individually
and collectively referred to as the "Company") from any and all claims and/or
causes of action, known or unknown, which I may have or could claim to have
against the Company in connection with my employment with the Company up to and
including the date of my signing of this General Release.
This General Release includes, but is not limited to, all claims arising
from or during my employment or as a result of the termination of my employment
and all claims arising under federal, state, or local laws prohibiting
employment discrimination based upon age, race, sex, religion, handicap,
national origin, or any other protected characteristic, including, but not
limited to, any and all claims arising under the Age Discrimination in
Employment Act, Title VII of the Civil Rights Act of 1964 and 1991, the
Americans with Disabilities Act, the Family and Medical Leave Act, the Equal Pay
Act, the Pennsylvania Wage Payment and Collection Law, the Pennsylvania Human
Relations Act, any other federal, state or local labor or employment law, and
claims under the common law and/or growing out of any legal restrictions,
express or implied, in contract or on any other grounds, or the Company's right
to control or terminate the employment fits employees.
By signing below, I acknowledge that I have carefully read and fully
understand the provisions of this Agreement and General Release. I further
acknowledge that I am signing this Agreement and General Release knowingly and
voluntarily and without duress, coercion or undue influence. I further agree
that should I file a claim with any agency or any lawsuit in court which is
found to be barred in whole or in part by this General Release, I will pay the
legal fees and costs incurred by the Company in defending those claims found to
be barred and shall also be obligated to tender back upon filing of such
complaint in state or federal court or before any administrative agency any
consideration that I have received pursuant to the severance arrangements
provided within the accompanying Letter Agreement.
This Agreement and General Release constitutes the total and complete
understanding between me and the Company relating to the subject matter covered
by this Agreement and General Release and all other prior or contemporaneous
written oral agreements or representations, except the accompanying Letter
Agreement setting forth the terms of my severance arrangement, if any, otherwise
relating to the subject matter of this Agreement and General Release are null
and void. It is also expressly understood and agreed that the terms of this
Agreement and General Release may not be altered except in writing signed by
both the Company and me. I further understand and agree that the terms and
conditions of this Agreement and General Release shall not be communicated to
any persons other than those referred to herein and to my spouse or legal
counsel, if applicable.
INTENDING TO BE LEGALLY BOUND, I hereby set my hand and seal below:
Witnessed by: [EMPLOYEE NAME]
--------------------------------- ----------------------------------
Dated: Dated:
--------------------------- ------------------------------
EXHIBIT "C"
ATTACHMENT
INTELLECTUAL PROPERTY DISCLOSURE
I currently am listed on two patent applications pertaining to materials
for satellite structures. The first is a design for a precision deployable
reflector which is used to concentrate solar energy into a heat engine,
consisting of thin layers of metal protected by a transparent oxide overcoat.
The second is a multi-layer insulation concept for protecting spacecraft in low
earth orbit.
ADVANCED MATERIALS CONSULTING
Prior to joining The West Company, I formed a corporation in the state of
Maryland called The AMT (Advanced Materials Technology) Group, Inc. This company
was formed to provide technical services to various customers performing
aerospace and defense related research focused on composite materials testing,
spacecraft design, and materials processing in space. The contracts currently in
place cover the Army, NASA, Analex Corporation, and STR, Inc. There are also two
outstanding bids to the Navy and Air Force.
AMT is also involved with a small Virginia business, Artech Corp., and the
Medical College of Virginia, in a cooperative research program to study plasma
coated titanium implants for dental and orthopaedic applications. I anticipate a
series of patent applications to result from this work and will provide
additional information when available. A proposal was also sent to NIH which is
currently under review.
I intend to complete my obligations to current clients as soon as possible
and have stopped accepting new task orders. Because the technical focus of this
work is on structural composites and load bearing implant materials, I do not
believe it presents a potential conflict of interest with my duties at West.
However to preclude any potential for the appearance of COI I will cease my
direct involvement with these efforts in early 1993.
/s/ X. X. Xxxxx Jr.
11 November 1992
