-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S3n7elX24iOI/VRPLRmdnDec/SztlRAb7qNP9XOiTo6aekjz3g7iwHNRtztcnPZP S4ms8qk/oJ9xJajlpRGq5g== 0000105770-00-000021.txt : 20000516 0000105770-00-000021.hdr.sgml : 20000516 ACCESSION NUMBER: 0000105770-00-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEST PHARMACEUTICAL SERVICES INC CENTRAL INDEX KEY: 0000105770 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 231210010 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08036 FILM NUMBER: 632913 BUSINESS ADDRESS: STREET 1: 101 GORDON DR STREET 2: P O BOX 645 CITY: LIONVILLE STATE: PA ZIP: 19341-0645 BUSINESS PHONE: 6105942900 MAIL ADDRESS: STREET 1: 101 GORDON DRIVE STREET 2: PO BOX 645 CITY: LIONVILLE STATE: PA ZIP: 19341-0645 10-Q 1 FIRST QUARTER 10Q 2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended March 31, 2000 --------------- Commission File Number 1-8036 ------ WEST PHARMACEUTICAL SERVICES, INC. ----------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania ------------------------------------- (State or other jurisdiction of incorporation or organization) 101 Gordon Drive, PO Box 645, Lionville, PA ------------------------------------- (Address of principal executive offices) 23-1210010 ---------------------- (I.R.S. Employer Identification Number) 19341-0645 ---------------------- (Zip Code) Registrant's telephone number, including area code 610-594-2900 -------------- N/A ----------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months, and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . --- --- March 31, 2000 -- 14,497,080 ----------------------------------------------------------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Page 2 Index Form 10-Q for the Quarter Ended March 31, 2000 Part I - Financial Information Item 1. Financial Statements Consolidated Statements of Income for the Three Months ended March 31, 2000 and March 3 31, 1999 Condensed Consolidated Balance Sheets at March 31, 2000 and December 31, 1999 4 Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2000 and March 31, 1999 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosure about Market Risk 12 Part II - Other Information Item 1. Legal Proceedings 13 Item 6. Exhibits and reports on Form 8-K 13 SIGNATURES 14 Index to Exhibits F-1 Page 3 Part I - Financial Information Item 1. Financial Statements West Pharmaceutical Services, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share data)
Quarter Ended March 31, 2000 March 31, 1999 --------------- -------------- Net sales .................................. $107,700 100% $114,200 100% Cost of goods and services sold ............ 79,500 74 79,800 70 --------------------------------- Gross profit ...................... 28,200 26 34,400 30 Selling, general and administrative expenses 17,400 16 17,000 15 Other expense, net ......................... 400 -- -- -- --------------------------------- Operating profit .................. 10,400 10 17,400 15 Interest expense ........................... 3,000 3 2,000 2 --------------------------------- Income before income taxes and minority interests ......... 7,400 7 15,400 13 Provision for income taxes ................. 2,700 3 5,900 5 Minority interests ......................... 100 -- 100 -- --------------------------------- Income from consolidated operations 4,600 4% 9,400 8% Equity in net income of affiliated companies 500 100 --------------------------------- Net income ........................ $ 5,100 $ 9,500 --------------------------------- Net income per share: Basic ............................. $ .35 $ .63 Assuming dilution ................. $ .35 $ .63 Average common shares outstanding .......... 14,546 15,082 Average shares assuming dilution ........... 14,562 15,133
See accompanying notes to consolidated financial statements. Page 4 West Pharmaceutical Services, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands)
March 31, December 31, 2000 1999 ---------- ----------- ASSETS ................................... Current assets: Cash, including equivalents ..... $ 55,000 $ 45,300 Accounts receivable ............. 69,300 74,600 Inventories ..................... 43,100 42,100 Deferred income tax benefits .... 7,200 7,300 Other current assets ............ 18,800 15,400 --------------------- Total current assets ..................... 193,400 184,700 --------------------- Net property, plant and equipment ........ 228,700 227,600 Investments in affiliated companies ...... 20,600 20,200 Goodwill ................................. 64,400 66,500 Deferred charges and other assets ........ 55,700 52,800 --------------------- Total Assets ............................. $562,800 $551,800 --------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 11,500 $ 2,200 Notes payable ................... 52,800 27,400 Accounts payable ................ 22,400 25,500 Salaries, wages, benefits ....... 11,600 15,600 Income taxes payable ............ 6,400 5,500 Other current liabilities ....... 28,800 27,800 ---------------------- Total current liabilities ................ 133,500 104,000 ---------------------- Long-term debt, excluding current portion 130,700 141,500 Deferred income taxes .................... 47,500 48,000 Other long-term liabilities .............. 25,600 26,300 Minority interests ....................... 800 800 Shareholders' equity ..................... 224,700 231,200 ---------------------- Total Liabilities and Shareholders' Equity $562,800 $551,800 ----------------------
See accompanying notes to consolidated financial statements. Page 5 West Pharmaceutical Services, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Quarter Ended March 31, March 31, 2000 1999 -------- -------- Cash flows from operating activities: Net income, plus net non-cash items ......... $ 10,400 $ 16,600 Changes in assets and liabilities ........... 100 (3,200) ----------------------- Net cash provided by operating activities ............ 10,500 13,400 ----------------------- Cash flows from investing activities: Property, plant and equipment acquired ...... (14,200) (7,700) Payment for acquisition (1,000) -- Customer advances, net of repayments ........ (1,400) 100 ----------------------- Net cash used in investing activities ................ (16,600) (7,600) ----------------------- Cash flows from financing activities: Repayment of long-term debt ................. (300) (800) Notes payable, net .......................... 25,200 2,400 Dividend payments ........................... (2,500) (2,400) Sale of common stock, net ................... 600 1,400 Purchase of common stock .................... (6,000) (2,900) ----------------------- Net cash provided by (used in) financing activities .. 17,000 (2,300) ----------------------- Effect of exchange rates on cash ..................... (1,200) (1,800) ----------------------- Net increase in cash, including equivalents .......... $ 9,700 $ 1,700 -----------------------
See accompanying notes to consolidated financial statements Page 6 West Pharmaceutical Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) The interim consolidated financial statements for the quarter ended March 31, 2000 should be read in conjunction with the consolidated financial statements and notes thereto of West Pharmaceutical Services, Inc., appearing in the Company's 1999 Annual Report on Form 10-K. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Interim results are based on the Company's accounts without audit. 1. Interim Period Accounting Policy --------------------------------- In the opinion of management, the unaudited Condensed Consolidated Balance Sheet as of March 31, 2000 and the related unaudited Consolidated Statement of Income and the unaudited Condensed Consolidated Statement of Cash Flows for the three month period then ended and for the comparative period in 1999 contain all adjustments, consisting only of normal recurring accruals, necessary to present fairly the financial position as of March 31, 2000 and the results of operations and cash flows for the respective periods. The results of operations for any interim period are not necessarily indicative of results for the full year. Operating Expenses ------------------ To better relate costs to benefits received or activity in an interim period, certain operating expenses have been annualized for interim reporting purposes. Such expenses include certain employee benefit costs, annual quantity discounts and advertising. Income Taxes ------------- The tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on the current estimate of full year results, except that taxes applicable to operating results in Brazil and prior year adjustments, if any, are recorded as identified. Page 7 West Pharmaceutical Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) (continued) 2. Inventories at March 31, 2000 and December 31, 1999 are summarized as follows:
(in thousands) 2000 1999 ------- ------- Finished goods....$14,200 $14,000 Work in process... 14,800 12,800 Raw materials..... 14,100 15,300 ------- ------- $43,100 $42,100 ------- ------- ------- -------
3. The carrying value of property, plant and equipment at March 31, 2000 and December 31, 1999 is determined as follows:
(in thousands) 2000 1999 -------- -------- Property, plant and equipment............... $491,800 $489,200 Less accumulated depreciation and amortization ......................... 263,100 261,600 -------- -------- Net property, plant and equipment .......... $228,700 $227,600 -------- -------- -------- -------- Page 8
West Pharmaceutical Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) (Continued) 4. For the three months ended March 31, 2000 and 1999, the Company's comprehensive income is as follows:
March 31, 2000 March 31, 1999 -------------- --------------- Net income .............. $ 5,100 $ 9,500 Foreign currency translation adjustments (3,700) (8,600) ------- ------- Comprehensive income .... $ 1,400 $ 900 ------- ------- ------- -------
5. Net sales to external customers and operating profit by operating segment for the three months ended March 31, 2000 and March 31, 1999 are as follows:
Net Sales Operating Profit 2000 1999 2000 1999 ------- -------- --------- -------- Device product development $ 92,100 $ 93,400 $ 19,800 $ 21,500 Contract services ........ 15,300 20,600 (3,600) 2,200 Drug delivery research & development ............ 400 200 (2,300) (1,400) Corporate and unallocated items .................. (100) -- (3,500) (4,900) --------- -------- -------- -------- Consolidated total ....... $ 107,700 $114,200 $ 10,400 $ 17,400 --------- -------- -------- -------- --------- -------- -------- --------
Compared with December 31, 1999, there were no material changes in the amount of assets as of March 31, 2000 for any operating segment. 6. Common stock issued at March 31, 2000 was 14,497,080 shares, of which 2,668,061 shares were held in treasury. Dividends of $.17 per common share were paid in the first quarter of 2000 and a dividend of $.17 per share payable to holders of record on April 19, 2000 was declared on March 27, 2000. Page 9 West Pharmaceutical Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) (Continued) 7. The Company has accrued the estimated cost of environmental compliance expenses related to soil or ground water contamination at current and former manufacturing facilities. The ultimate cost to be incurred by the Company and the timing of such payments cannot be fully determined. However, based on consultants' estimates of the costs of remediation in accordance with applicable regulatory requirements, the Company believes the accrued liability of $1.4 million at March 31, 2000 is sufficient to cover the future costs of these remedial actions, which will be carried out over the next several years. The Company has not anticipated any possible recovery from insurance or other sources. 8. In January 2000, the Company paid $1 million to acquire additional ownership in a firm involved in developing genotyping technology. As of March 31, 2000 the Company's cumulative investment in this firm is $2.3 million, representing a 12.8% ownership interest. Upon the satisfaction of certain future milestones, the Company is conditionally committed to investing up to an additional $1.3 million, which would result in a cumulative ownership percentage of up to 19.95%. Page 10 Item 2. Management's Discussion and Analysis of Financial Condition and - ---------------------------------------------------------------- Results of Operations for the Quarter Ended March 31, 2000 versus - ---------------------------------------------------------------- March 31, 1999. - -------------- Net Sales - ---------- Net Sales for the first quarter of 2000 were $107.7 million; a 5.6% decrease compared with net sales of $114.2 million for the same quarter in 1999. The U.S. dollar's continued strength accounted for $4 million, or 60%, of the drop in sales with the remainder due to low volume in the contract services segment that more than offset sales growth (at constant exchange rates) in the device product development segment. First quarter 2000 sales of the device product development segment were $92.1 million, an increase of 3% at constant exchange rates. Sales to domestic markets increased by 2%; while sales to international markets grew at 4% (at constant exchange rates) despite the low plastic medical device sales of a United Kingdom (UK) operation. The product mix for this segment had a higher ratio of lower margin medical device components compared with 1999, as some customers continued to work-down year end inventories of higher margin pharmaceutical packaging components. The contract services segment's results were, as previously noted, significantly below last year's first quarter. Both of the major business units - contract manufacturing and packaging and clinical services - suffered from low volumes. In total, sales for the contract services segment were $15.3 million; $5.3 million, or 26%, below first quarter 1999 levels. Both of these business units have been experiencing low volumes since late in the second half of 1999 due to customers' delays, cancellations or reduced orders for specific products or projects. In response to these difficulties in the contract services segment, management has increased the sales force, strengthened the management team and is upgrading the equipment in the contract packaging area. Management now projects an operating loss for this segment to extend through the second quarter, with sales showing improvement compared with first quarter. Although management anticipates operating profit for this segment in the later half of the year, the slow recovery in the backlog for this segment has reduced full year earnings expectations. Gross Profit - ------------ The consolidated gross margin was 26.2%, compared with 30.2% in 1999. The low volumes in the contract manufacturing and packaging business unit were unable to absorb plant overhead costs resulting in a negative gross margin for the contract services segment. In addition, the lower value product mix experienced mainly in domestic markets within the device product development segment coupled with low utilization of a UK plastics medical device plant resulted in a lower margin for this business segment. Page 11 Results of Operations for the Quarter Ended March 31, 2000 versus - ----------------------------------------------------------------- March 31, 1999, continued - -------------------------- Selling, General and Administrative Expenses - -------------------------------------------- Selling, general and administrative expenses were 2% higher compared with the prior year. The added costs of the clinical services group acquired in April 1999, and the higher expenses incurred for drug delivery systems development were essentially offset by increased income from pension plan assets and the impact of favorable foreign exchange rates on non-U.S. dollar expenses. Drug delivery systems costs were higher as the Company initiated clinical trials for nasal delivery of morphine using the Company's proprietary chitosan-based delivery system at its Evansville, Indiana clinical facility. The Company is in active negotiations with several parties interested in licensing agreements covering products utilizing the Company's chitosan-based nasal delivery system. Other expense - ---------------------- The line item "other expense, net" mainly reflects a foreign currency transaction loss and a loss related to a one-time environmental action by Brazilian customs that resulted in the destruction of raw material and finished products that were imported into that country. Interest Expense and Equity in Affiliates - ----------------------------------------- Interest expense increased by $1.0 million in the first quarter comparison, largely because of debt associated with the Company's stock buyback program. The Company has purchased 727,500 shares at an average cost of $33.18 per share under the one million share buyback program announced in March of 1999. In 2000's first quarter, 196,700 shares were purchased at an average cost of $30.67 per share. Higher interest rates and debt associated with acquisitions also contributed to the increase in interest expense. Equity in net income of affiliates increased by $0.4 million compared with first quarter 1999. This increase reflects the improved operating results of Daikyo Seiko, Ltd., a Japanese company in which the Company has a 25% ownership interest. Daikyo's improved results were generated from increased sales and a significant improvement in its gross margin. Taxes - ----- The estimated tax rate in the quarter was 37% compared with 38.5% in the same period of 1999. The decrease in the effective tax rate is due to the European tax reorganization completed in the fourth quarter of 1999. However, the current expected geographic mix of earnings and the potential elimination of the U.S. tax benefit of foreign sales corporations is raising the rate above management's earlier expectation. The estimated 2000 tax rate of 37% is lower by half a percentage point compared with 1999's full year rate on operations of 37.5%. Page 12 Results of Operations for the Quarter Ended March 31, 2000 versus - ----------------------------------------------------------------- March 31, 1999, continued - -------------------------- Net Income - ---------- Net income for the first quarter 2000 was $5.1 million, or $.35 per share, compared with net income of $9.5 million, or $.63 per share, in the same period of 1999. Average common shares outstanding in the first quarter were 14.5 million compared with 15.1 million in the first quarter 1999. The reduction in average common shares outstanding is due to the Company's stock buyback program noted above. Financial Position - ------------------ Working capital at March 31, 2000 was $59.9 million compared with $80.7 million at December 31, 1999. The working capital ratio at March 31, 2000 was 1.4 to 1. The primary reason for the decrease in working capital is due to the increase in current debt outstanding. The increase reflects maturities of long-term debt and borrowings related to share repurchases and capital spending. The Company's current revolving credit facility expires in August 2000. The Company is currently negotiating a replacement long-term credit facility. Debt as a percentage of total invested capital at March 31, 2000 was 46.4% compared with 42.5% at December 31, 1999. Cash totaled $55 million at March 31, 2000. The net increase in cash for the first quarter of 2000 of $9.7 million is expected to reverse in the second quarter as certain loans resulting from the European tax reorganization are repaid. In the quarter, cash flows from operations of $10.5 million and $25.2 million of short-term borrowings were used to fund $14.2 million of capital spending primarily related to maintenance and efficiency upgrades on device product development segment assets, a $1 million additional investment in a genotyping technology company, and $1.4 million of advances for customer projects. In addition, the Company paid cash dividends of $.17 per share and purchased 196,700 of its common shares at an average cost of $30.67 per share. The Company believes its financial condition and current capitalization indicate an ability to finance substantial future growth. Page 13 Results of Operations for the Quarter Ended March 31, 2000 versus - ----------------------------------------------------------------- March 31, 1999, continued - -------------------------- Recently Issued Accounting Pronouncements - ------------------------------------------ In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB 101). Among other things, SAB 101 provides guidance for recording revenue related to non-refundable, up-front fees received in connection with conveying licensing or other intangible rights or for delivery of products or services. In general, SAB 101 requires the recognition of revenue from up-front payments over any continuing service period. While the Company's historical revenue recognition practices are in compliance with SAB 101, revenue recognition from up-front licensing and other fees that may result from agreements currently being negotiated for the Company's drug delivery technologies may be deferred depending on final terms of such agreements. Market Risk - --------------- The Company is exposed to various market risk factors such as fluctuating interest rates and foreign currency rate fluctuations. These risk factors can impact results of operations, cash flows and financial position. These risks are managed periodically with the use of derivative financial instruments such as interest rate swaps and forward exchange contracts. In accordance with Company policy, derivative financial instruments are not used for speculation or trading purposes. At March 31, 2000 and December 31, 1999 the Company had three interest rate swap agreements in effect, with an estimated fair value less than $0.1 million. There were no forward exchange contracts in effect at March 31, 2000. Statements concerning forecasted results, financial or otherwise, which are contained in the above material, constitute "forward looking statements" that involve risks and uncertainties. The Company's actual results may differ materially from those expressed in any forward looking statement and are dependent on a number of factors including but not limited to, sales demand, timing of customers' projects, competitive pressures, the strength or weakness of the U.S. dollar, inflation, the cost of raw materials, successful continuance of cost-improvement programs and statutory tax rates. Item 3. Quantitative and Qualitative Disclosure about Market Risk --------------------------------------------------------- The information called for by this item is incorporated by reference to the text appearing in Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations-Market Risk". Page 14 Part II - Other Information Item 1. Legal Proceedings ----------------- None. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) See Index to Exhibits on pages F-1 and F-2 of this Report. (b) No reports on Form 8-K have been filed for the quarter ended March 31, 2000. Page 15 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WEST PHARMACEUTICAL SERVICES, INC. ----------------------------------- (Registrant) May 15, 2000 /s/ Steven A. Ellers - ------------ ----------------------------------- Date (Signature) Steven A. Ellers Senior Vice President and Chief Financial Officer INDEX TO EXHIBITS Exhibit Number (3) (a) Amended and Restated Articles of Incorporation of the Company through January 4, 1999, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8036). (3) (b) ByLaws of the Company, as amended through October 27, 1998, incorporated by reference to Exhibit (3)(b) to the Company's Form 10-Q for the quarter ended September 30, 1998 (File No. 1-8036). (4) (a) Form of stock certificate for common stock, incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8036). (10)(a) Amended and Restated Employment Agreement dated as of March 25, 2000 between the Company and William G. Little. (10)(b) Form of second amended and restated agreement between the Company and certain of its executive officers, dated as of March 25, 2000. (10)(c) Schedule of Agreements with Executive Officers. (11) Not Applicable. (12) Not Applicable. (15) None. (16) Not Applicable. (18) None. (19) None. (22) None. F - 1 Exhibit Number (23) None. (24) None. (27) Financial Data Schedule (99) None. F - 2 EX-10.(A) 2 AGREEMENT AND RESTATED EMPLOYMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS IS AN AMENDED AND RESTATED EMPLOYMENT 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 William G. Little (the "Employee"). Background The Company and Employee are parties to an Employment Agreement, dated as of May 20, 1991 (the "1992 Employment Agreement") and an amendment to the 1992 Employment Agreement, dated April 28, 1998 (as so amended, the "Amended Employment Agreement"). The Company desires to amend and restate the Amended Employment Agreement to incorporate the previous amendment as well as to make certain other changes as set forth herein. Agreement Intending to be legally bound, the parties agree as follows: 1. Position. The Company engages the Employee as its Chief Executive Officer. The Employee will perform such services as may be assigned to him by the Company's Bylaws and Board of Directors. The Company will also cause the Employee to become a director of the Company. 2. Exclusive Services. 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. Without the Company's advance written consent, the Employee will not render business services to others 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) that entity does not, directly or indirectly, compete with the Company; 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, compete with the Company. 3. Term of Employment. Unless sooner terminated as provided in Sections 6 or 7 of this Agreement, the Employee's employment term shall begin on the date of the 1992 Employment Agreement (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) May 20, 1992. 4. Compensation and Benefits. 4.1 Compensation. (a) Base Salary. The Employee's annual base salary will be determined in accordance with the Company's regular executive compensation review arrangements. (b) Bonuses. In addition to his base salary, the Employee will be entitled to participate in the executive compensation arrangements described in Section 5. 4.2 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 and the Company's Supplemental Executives' Retirement Plan and the Company's Salaried Employees' Retirement Plan. (b) In determining the Employee's benefits under the Company's Supplemental Executive Retirement Plan (i) his years of service under that Plan will include the years of service taken into account in determining his benefits under qualified pension plans sponsored by The Kendall Company and C. R. Bard, Inc. and (ii) on the date of the 1992 Employment Agreement, the Employee will be deemed to be vested under that Plan by virtue of such prior service. (c) In determining the Employee's benefits and vesting rights under the Company's Salaried Employee's Retirement Plan, the Employee will be treated as though he joined the Company on the date of the 1992 Employment Agreement without credit for prior service with previous employers. However, on Employee's retirement under that plan, he will be entitled to receive a supplemental retirement benefit which, when added to the payments he receives under all of the Company's pension plans in which he participates, will equal the amount he would have received had his service under those plans included his service taken into account in determining his benefits under qualified pension plans sponsored by The Kendall Company and C. R. Bard, Inc. (d) However, notwithstanding Sections 4.2 (b) and (c), amounts paid to the Employee by the Company and by its pension plans will be reduced by the benefits the Employee is or would have been entitled to receive under pension plans sponsored by The Kendall Company and C. R. Bard, Inc. if he has or had retained the right to retire under the plans sponsored by those employers. In computing that reduced amount, the Company may rely on information furnished to it by those other employers, and on appropriate actuarial adjustments (if practical, or otherwise adjusted as the parties may reasonably agree) to reflect the value of any benefits that are or would have been payable under those other plans in a manner or at a time different from the manner or time that benefits are payable under the Company's plans. (e) For purposes of determining vacation leave under the Company's vacation policy, the Employee will receive credit for periods of prior service with The Kendall Company and C. R. Bard, Inc. 4.3 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 Internal Revenue Code of 1986, as amended (the "Code"). The Company will also reimburse the Employee for reasonable personal financial and tax planning expenses incurred in connection with the Employee's initial employment in an aggregate amount not to exceed $3,500. 4.4 Relocation. The Company will assist the Employee with relocation expenses and other activities associated with Employee's relocation to a new residence in the area of the Company's executive offices in accordance with the Company's relocation policy applicable to salaried employees in the form attached. 4.5 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. 5. Establishment of Executive Compensation Arrangements. The Board of Directors has revised its executive incentive compensation arrangements under the Shareholder-approved Long Term Incentive Plan to provide for substantial incentive compensation opportunities for all of the Company's key executives. That plan shall be in effect for 1992 and each subsequent year of the Employee's employment. That plan will provide for bonuses of up to 100% of annual base salary based on the participant's rank and the achievement of fundamental and substantial increases in shareholder value. The latter will be determined by performance criteria established by the Compensation Committee in consultation with the Company's senior executives. 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. Such termination will be effective as of the date of such notice and all rights of the Employee under this Agreement shall terminate on such date. In this Agreement, "Cause" means: (i) the Employee's conviction of a felony; or (ii) the Employee's bankruptcy or insolvency; or (iii) the Employee's 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; or (iv) the Employee's gross negligence or willful misconduct in the performance of his duties; or (v) Employee's conduct which causes substantial damage to the Company or any of its affiliated companies or any of their business reputations, or which brings them into disrepute; or (vi) the Employee's breach of his undertakings under Sections 9 ("Confidential Information") or 10 ("Non-Competition"). 6.2 Employee's Disability. If, due to the Employee's Disability, he resigns or is terminated by the Company, the Employee shall be entitled to receive all base salary earned and accrued to the date of termination or resignation, as well as any other benefits payable under the Company's then current disability policy, but all other rights of the Employee hereunder shall terminate as of the date of Employee's termination or resignation. In this Agreement, "Disability" means any physical or mental ailment which prevents 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 selected by the Company, whose determination shall be final and conclusive for all purposes of this Agreement. 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 3, but if it does so, and the Employee is not then in breach of this Agreement, the Company shall pay the Employee 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 to 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. Such amount will be payable as a lump sum within 30 days following the date of termination and the payment will be in full satisfaction of all claims Employee may have against the Company. If the circumstances of the termination are such that the Employee is also entitled to severance compensation under Section-7 ("Termination Following a Change in Control"), the Employee will be entitled to receive the larger of the two amounts under Sections 6.3 or 7, but not both. The provisions of Section 8.2 ("Additional Payment") will apply to all 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 receive: (i) all base salary earned and accrued to the date of death; and (ii) any other benefits payable under any then current life insurance policy provided to the Employee pursuant to Section 4.2, hereof, but all other rights of the Employee hereunder shall terminate. 7. Termination Following a Change in Control. 7.1 Termination Following the Consummation of a Change in Control. The Employee will be entitled to the severance compensation specified in Section 8 if, (a) at any time within two years after a Change in Control has occurred, the Employee's employment is terminated: (i) by the Company other than for Cause, death or Disability or retirement at the Employee's normal retirement date under the Company's Salaried Employees' Retirement Plan; or (ii) as a result of Employee's resignation at any time following his Constructive Termination or (b) 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 his employment terminates for any other reason or if, at any time thereafter, the Employee is in breach of his undertakings under this Agreement.n breach of his undertakings under this Agreement. 7.2 Termination Following a Contemplated Change in Control. 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 for Cause, death or Disability or retirement at the Employee's normal retirement date under the Company's Salaried Employees' Retirement Plan; or (ii) as a result of the Employee's resignation following his 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 specified in Section 8. As used in this Section 7, the following terms shall have the meanings described below: (a) "Change in Control" means a change in control of a nature that would be required to be reported in response to Item I of the Current Report on Form 8-K as in effect on April 28, 1998 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" (as such term is used in Sections 13(d) and 14(d) of the Act), other than: A. the Company, B. any Person who on the date hereof is an employee or officer of the Company, or C. 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, 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." (b) "Constructive Termination" means the occurrence of any of the following events during the Employment Term: (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 material reduction in the Employee's base salary or incentive compensation opportunities; (iii)a relocation of the Employee's site of employment to a location more than 51) miles from the Employee's site of employment with the Company on the Commencement Date; (iv) 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 immediately preceding full calendar year; (v) the Company fails to provide the Employee with substantially the same fringe benefits that were provided to the Employee on the Commencement Date or with a package of fringe benefits that, though one or more such benefits may vary from those in effect on 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; 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 shall be deemed to have occurred if: (x) the Employee shall have consented in writing or given a written waiver to the occurrence of any to the events enumerated in clauses (i) through (vi) above; or (y) the Employee shall have failed to give the Company written notice stating his intention to claim Constructive Termination and the basis for that claim at least 10 days in advance of the effective date of the resignation; or (z) the event constituting a constructive dismissal has been cured or reversed by the Company prior to the effective date of his resignation. 8. Severance Compensation Following a Change in Control. 8.1 Determination of Severance Compensation. Upon termination of employment as set forth in Section 7, the Employee shall be entitled to: (a) 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 employment, and (ii) an amount equal to the annual bonus paid or payable for the fiscal year immediately preceding a Change in Control or the termination of employment (whichever amount is greater); provided, however, that if at any time before the third anniversary of the termination of the Employee's employment, the Employee either elects retirement under the Company's Salaried Employees' Retirement Plan, or could have been compelled to retire under that Plan if the Employee had remained employed by the Company, the severance compensation under this Section shall be reduced by an amount equal to the pension benefit payable to the Employee under that Plan, determined after any applicable actuarial reductions 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 of employment. The severance compensation paid hereunder shall not be reduced to the extent of any other compensation for the Employee's services which the Employee receives or is entitled to receive from any other employment as long as that employment is consistent with the terms of this Agreement; (b) the difference, if any, between (i) the benefit the Employee would be entitled to receive under the Company's Salaried Employees' Savings Plan (the "Savings Plan") if the Company's contributions to the Savings 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 Plan upon termination of employment. Any benefit payable hereunder shall be payable at such time and in such manner as benefits are payable under the Savings Plan; and (c) 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 termination of employment (whichever benefits are more favorable to the Employee) until the earlier of: (i) a period of 36 months after termination of employment; (ii) the Employee's retirement under the Company's Salaried Employees' Retirement Plan; or (iii) the Employee's eligibility for similar benefits with a new employer. Assistance in finding new employment will be made available by the Company if the Employee so requests. (d) the immediate vesting, upon the termination of the Employee's employment, of all stock options, other equity-based awards and shares of the Company's stock awarded to the Employee pursuant to this Agreement, the executive incentive plan referred to in Section 5, or any other Company compensation or benefit plan or arrangement generally, which are unvested at that time. The provisions of this Section 8.1 (d) shall supersede the terms of any stock-option, equity or other grant or award made to the Employee under any such other plan or arrangement to the extent that there is an inconsistency between the two. 8.2. Additional Payment. (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 8.2, 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 date of termination of employment 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 8.2(c) below, 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 thirty-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 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 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 ("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). As used in this Section 8.2, the following terms shall have the meanings described below: "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 (A) the acceleration of the vesting of any option, restricted stock or other equity award granted under any equity plan of the Company or otherwise, (B) the acceleration of the time at which any payment or benefit is receivable by the Employee or (C) any contingent severance or other amounts that are payable to the Employee. "Regulations" means the proposed, temporary and final regulations under Section 280G of Code or any successor provision thereto. 8.3 Payment of Severance Compensation. (a) The severance compensation set forth in Sections 8.1(a) and 8.1(b) will be payable in 36 equal monthly installments commencing on the first day of the month following the month in which employment terminates. However, the Employee may elect in writing, in accordance with the provisions of this Section, to receive his severance compensation in a lump sum at a later time or in installments in amounts and at times elected by the Employee, but that election will not entitle the Employee to receive severance compensation sooner than permitted by the preceding sentence. (b) The Employee must elect to receive amounts in installments or to defer payments by filing a written election with the Company. Such election must specify the time at which payments are to be made and the amounts of such payments. The election to receive installment payments or to defer payments will not be valid unless it is made prior to the time the Employee is entitled to receive any payments under this Agreement. The last such election in effect on the day before a termination of employment shall 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 employment and no later than the third calendar year following the attainment of normal retirement age under the Company's Salaried Employees' Retirement Plan. 8.4 Termination of Rights to Severance Compensation. The Employee's rights to severance compensation under Sections 7 and 8 may be terminated only: (a) at any time by the mutual written consent of the Employee and the Company; and (b) the Company may also terminate these rights at the end of each successive two-year period commencing on the date of this Agreement. The Company may terminate this Agreement under clause (b) of this Section 8.4 by giving written notice at least one year in advance of such termination, except that such termination and written notice shall not be effective unless the Employee is employed by the Company on the termination date. 9. Confidential Information. 9.1 Covenant. 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: (i) 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; and (ii) he will deliver promptly to the Company on termination of his employment by the Company, or at any other time the Company may so request, all memoranda, notes, records, reports and other documents (and all copies thereof) relating to the business of the Company which he obtained while employed by, or otherwise serving or acting on behalf of, the Company and which he may then possess or have under his control. 9.2 Specific Remedy. If the Employee commits a material breach of any of the provisions of Section 9.1, the Company shall have the right and remedy to have such provisions specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company. 10. Non-Competition. 10.1 Covenant. During the term of this Agreement and for a period of one year after the termination of Employee's employment hereunder, the Employee will not directly or indirectly: (i) as an individual proprietor, partner, stockholder, officer, employee, director, joint venturer, 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 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; or (ii) 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 (iii)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. 10.2 Specific Remedy. The restrictions contained in this Section 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 this Section 10 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. 11. Independence, Severability and Non-Exclusivity. All of the rights and remedies enumerated in Sections 9.2 and 10.2 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. 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 12. Vesting In the Event of a Change in Control. In the event of a Change in Control, all stock options, other equity-based awards and shares of the Company's stock awarded to the Employee pursuant to this Agreement, the executive incentive plan referred to in Section 5, or any other Company compensation or benefit plan or arrangement generally, which are unvested at that time, will immediately become fully vested. The provisions of this Section 12 shall supersede the terms of any equity award made to the Employee under any such other plan or arrangement to the extent that there is an inconsistency between them. 13. 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. 14. Notices. All notices under this Agreement shall be given in writing by personal delivery or by registered or 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. 15. Return of Company Property. On the termination of Employee's employment hereunder at any time, he will promptly return to the Company all of its property then in his possession. 16. General. 16.1 Survival. Notwithstanding anything to the contrary in this Agreement, (i) the rights and obligations of the parties under Sections 8, 9 and 10 hereof, (ii) the Company's obligation to make payments under Section 6 hereof, and (iii) any cause of action or claim of either party, accrued or to accrue, because of any breach or default by the other party, shall survive any termination of this Agreement to the degree necessary to permit their complete fulfillment or discharge. 16.2 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. 16.3 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. 16.4 Entire Agreement. This Agreement 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. 16.5 No 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 11, 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. 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/ George R. Bennyhoff George R. Bennyhoff, Senior Vice President, Human Resources /s/ William G. Little William G. Little EX-10.(B) 3 CONTROL AGREEMENT SECOND AMENDED AND RESTATED CHANGE-IN-CONTROL AGREEMENT THIS IS A SECOND 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 [NAME] ("Executive"). Background The Executive and the Company are parties to a certain letter agreement dated [DATE] (the "Change-in-Control Agreement"). The Company and the Executive amended and restated the Change-in-Control Agreement on April 28, 1998 (the "Amended and Restated Change-in-Control Agreement"). The Company desires to make a second amendment and restatement of the Change-in-Control Agreement to make certain changes as set forth herein. Agreement 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 controlling, controlled by or under common control with such Person. (b) "Change in Control" shall mean 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: (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, 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. (d) The "Company's Business" means: (i) the contract- manufacturing and 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 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 (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 association, a trust or other entity or organization. (h) "Regulations" means the proposed, temporary and final regulations under section 280G of Code or any successor provision thereto. (i) "Restrictive Period" means the period of time that commences on the date hereof and ends on the first anniversary of the Termination Date. (j) "Retirement Plan" means the West Pharmaceutical Services, Inc. Employees' Retirement Plan and any successor plan thereto. (k) "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. (l) "Subsidiary" has the meaning ascribed to the term by section 425(f) of the Code. (m) "Termination Date" is the date on which Executive ceases to be 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 (II) the Executive resigns for any reason within 30 days following the first anniversary of a Change in Control. Except as otherwise set forth in Section 2(b), Executive will not be entitled to the 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. (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 compensation specified in Section 3 hereof. 3. Benefits Payable Upon Termination of Employment. Upon termination of employment as set forth in Section 2 (Termination Following a Change in Control), Executive will be entitled to the following benefits: (a) Severance Compensation. Executive will be entitled to severance compensation in an amount equal to three times the sum of (i) Executive's highest annual base salary rate in effect during the year of the termination of Executive's employment, plus (ii) the annual bonus paid or payable for the fiscal year immediately preceding a Change in Control or upon the termination of Executive's employment (whichever amount is greater); provided, however, that if at any time before the third anniversary of the Termination Date, Executive either (x) elects retirement under the Retirement Plan, or (y) could have been compelled to retire under the Retirement Plan if Executive had remained employed by the Company, Executive's severance compensation under this Section 3(a) will be reduced by an amount equal to the product obtained by multiplying such severance compensation by a fraction the numerator of which is the number of days elapsed from the Termination Date until the date on which either of the events described in clauses (x) or (y) first occurs, and the denominator of which is 1095. The severance compensation paid hereunder will not be reduced to the extent of any other compensation for Executive's services that Executive 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 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 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. (d) Employee and Executive Benefits. Executive 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 Executive was entitled on the date of a Change in Control or on the date of Constructive Termination of Executive's employment (whichever benefits are more favorable to Executive) until the earlier of (i) a period of 36 months after termination of Executive's employment, (ii) Executive's retirement under the Retirement Plan, or (iii) Executive's eligibility for similar benefits with a new employer. Assistance in finding new employment will be made available to Executive by the Company if Executive so requests. Upon termination of Executive's employment, Company cars must be returned to the Company. 4. 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 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 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 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 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 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. Payment of Severance Compensation. (a) The severance compensation set forth in Section 3 (a) will be payable in 36 equal monthly installments commencing on the first day of the month following the month in which Executive's employment terminates. However, Executive may elect in writing, in accordance with the provisions of this Section, to receive Executive's severance compensation in a lump sum at a later time or in installments in amounts and at times elected by Executive, but Executive's election will not entitle Executive to receive severance compensation sooner than permitted by the preceding sentence. (b) Executive 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. Executive's election to receive installment payments or to defer payments will not be valid unless it is made prior to the time Executive is entitled to receive any payments under this Agreement. The last such election in effect on the day before a termination of employment 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 Executive's employment and no later than the third calendar year following the attainment of normal retirement age under the Retirement Plan. 6. Non-Disclosure and Confidentiality. (a) Executive agrees that Executive will keep secret and maintain in confidence all confidential information of the Company and will not use such information other than for the Company's benefit or disclose such information to anyone outside of the Company, either during or after Executive's employment with the Company. (b) Executive will promptly deliver to the Company on the termination of Executive's employment with the Company, or at any time the Company requests, all memoranda, notes, records and other documents (and all copies thereof) relating to the Company's business or confidential matters which Executive then has or controls. (c) All inventions, improvements, new ideas and techniques which relate to the Company's business which Executive makes or conceives during Executive's employment with the Company or within six months thereafter will be the Company's property. Without additional compensation to Executive, Executive will promptly inform the Company of such inventions, improvements, ideas and techniques, and will assist the Company in preserving them and will not disclose them to anyone else without the Company's consent. (d) Executive understands that, as used in this Section, the phrase "confidential information of the Company" includes all information of a technical, commercial or other nature of or about the Company (such as formulae, trade secrets, customer lists and know-how) not made available to the general public. 7. Legal Fees. The Company will pay all legal fees and expenses which Executive may incur as a result of the Company's contesting the validity or enforceability of this Agreement. 8. 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. 9. 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. 10. 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 10 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. 11. 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. 12. Miscellaneous. (a) In consideration for the benefit of having the protection afforded by this Agreement, Executive agrees that the provisions of Section 6 (Non-Disclosure and Confidentiality) and Section 9 (Non-Competition) of this Agreement apply to Executive, and Executive will be bound by them, whether or not a Change in Control occurs or Executive actually receives the benefits specified in Section 3 hereof. (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 6 (Non- Disclosure and Confidentiality) and Section 9 (Non-Competition) 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 Amended and Restated Change in Control Agreement, which shall be null and void and of no further effect. This 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. - --------------------- By:----------------------------- [NAME] William G. Little, Chairman of the Board and Chief Executive Officer Exhibit "A" List of Persons Engaged In Competition With the Company's Business Stelmi Trading International, including its subsidiary American Stelmi, Inc. Pharmaceutical packaging division of Swiss Group Datwyler, including its subsidiary Helvoet Pharma, Inc. Comar, Inc. Alusuisse SA, including its subsidiary Lawson Mardon Wheaton, Inc. Sharp Ivers-Lee Corporation Accupac Anderson Packaging, Inc. Packaging Coordinators, Inc. (PCI) Pharmaceutical Packaging Specialties, Inc. Nastech, Inc. Emisphere Technologies Incorporated Elan Corporation, PLC TheraTech, Inc. ALZA Corporation EX-10.(C) 4 SCHEDULE OF AGREEMENT WITH EXECUTIVE OFFICERS SCHEDULE OF AGREEMENTS WITH EXECUTIVE OFFICERS ---------------------------------------------- The Company has entered into agreement with the following individuals. Such agreements are substantially identical in all material respects to the form of agreement set forth in Exhibit (10) (h). George R. Bennyhoff Steven A. Ellers John R. Gailey III Stephen M. Heumann Lawrence P. Higgins Donald E. Morel, Jr. Anna Mae Papso EX-27 5 FDS -- ART. 5 FDS FOR 1ST QUARTER 10-Q
5 This schedule contains summary financial information extracted from the financial statements included in the Company's Form 10-Q for the quarterly period ended March 31, 2000 and is qualified in its entirety by reference to such financial information. 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 55,000 0 69,300 0 43,100 26,000 491,800 263,100 562,800 133,500 130,700 0 0 4,300 220,400 562,800 107,700 107,700 79,500 79,500 0 0 3,000 7,400 2,700 5,100 0 0 0 5,100 .35 .35
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