Document:

exhibit_109.htm

    

    WALGREEN
CO.

    LONG-TERM
PERFORMANCE INCENTIVE PLAN

    

    RESTRICTED
STOCK UNIT AWARD AGREEMENT

    

    

    EMPLOYEE:  Alan
G. McNally

    

    AWARD
DATE:  October 10, 2008

    

    TOTAL
NUMBER OF RESTRICTED STOCK UNITS:  26,600

    

    VESTING
DATE:  Defined in Section 4 below

    

    

    This document (referred to below as the
“Agreement” or the “Award Agreement”) spells out the terms and conditions of the
Restricted Stock Unit Award provided by Walgreen Co., an
Illinois corporation (the “Company”), to the individual employee designated
above (the “Employee”) pursuant to the Walgreen Co. Long-Term Performance
Incentive Plan and related plan documents (the “Plan”) on and as of the Award
Date designated above.  Except as otherwise defined herein,
capitalized terms used in this Agreement have the respective meanings set forth
in the Plan.

    

    The
parties hereto agree as follows:

    

    1. Grant of Restricted Stock
Units.  Pursuant to the approval and direction of the
Compensation Committee of the Company’s Board of Directors (the “Committee”)
under Sections 3.2, 5 and 6 of the Plan, the Company hereby grants to the
Employee, the number of restricted stock units specified above (the “Restricted
Stock Units”), subject to the terms and conditions of the Plan and this
Agreement.

     

    2. Restrictions.  The
Restricted Stock Units may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, whether voluntarily or involuntarily or by
operation of law.  The Employee shall have no rights in the shares of
Company common stock (the “Common Stock”) underlying the Restricted Stock Units
until the termination of the applicable Period of Restriction (as defined in
Section 4 below) or as otherwise provided in the Plan or this
Agreement.  The Employee shall not have any voting rights with respect
to the Restricted Stock Units.

     

    3. Restricted Stock Unit
Account and Dividend Equivalents.  The Company shall maintain
an account (the “Account”) on its books in the name of the
Employee.  Such Account shall reflect the number of Restricted Stock
Units awarded to the Employee as well as any additional Restricted Stock Units
credited as a result of dividend equivalents, administered as
follows:

     

    (a) The
Account shall be for recordkeeping purposes only, and no assets or other amounts
shall be set aside from the Company’s general assets with respect to such
Account.

     

    (b) As of
each record date with respect to which a cash dividend is to paid with respect
to shares of Common Stock, the Company shall credit the Employee’s Account with
an equivalent amount of Restricted Stock Units based upon the value of Common
Stock on such date.

     

    (c) If
dividends are paid in the form of shares of Common Stock rather than cash, then
the Employee will be credited with one additional Restricted Stock Unit for each
share of Common Stock that would have been received as a dividend had the
Employee’s outstanding Restricted Stock Units been shares of Common
Stock.

     

    (d) Additional
Restricted Stock Units credited via dividend equivalents shall vest or be
forfeited at the same time as the Restricted Stock Units to which they
relate.

     

    4. Period of
Restriction.  Subject to the provisions of the Plan and this
Agreement, unless vested or forfeited earlier as described in Section 5, 6 or 7
of this Agreement, as applicable, the Restricted Stock Units awarded hereunder
shall become vested and settled as described in Section 8 below, as of the
vesting dates defined below.  The period prior to the vesting date
with respect each Restricted Stock Unit is referred to as the “Period of
Restriction.”

     

    One half
of the Restricted Stock Units shall become vested as of the earlier of the date
a new Chief Executive Officer begins employment with the Company and the
six-month anniversary of the Award Date.  If the Employee continues to
serve as Chief Executive Officer beyond the six-month anniversary of the Award
Date, then the other half of the Restricted Stock Units shall become vested over
the course of the ensuing 12-month period of continued employment as Chief
Executive Officer, as follows:  One twelfth of such remaining
Restricted Stock Units shall become vested as of the end of each full month
following the six-month anniversary of the Award Date.  The foregoing
is subject to ability of the Committee to waive or accelerate such vesting
restrictions in its discretion.

    

    5. Vesting upon Termination due
to Disability or Death.  If, while the Restricted Stock Units
are subject to a Period of Restriction, the Employee terminates employment or
Board membership with the Company by reason of Disability (as defined in the
Plan) or death, then any portion of the Restricted Stock Units subject to a
Period of Restriction shall become fully vested as of the date of termination
due to Disability or death, without regard to the Period of Restriction set
forth in Section 4 of this Agreement.

     

    6. Vesting upon Change in
Control.  In the event of a “Change in Control” of the Company,
as defined in Section 11.2 of the Plan, pursuant to Section 11.1 of the Plan the
Restricted Stock Units shall cease to be subject to the Period of Restriction
set forth in Section 4 of this Agreement.  To the extent the
Restricted Stock Units are deemed deferred compensation subject to Internal
Revenue Code Section 409A, a Change in Control shall not be deemed to have
occurred for purposes of this Agreement unless the underlying transaction or
transactions constitute a qualifying change in control in accordance with the
definition set forth in Code Section 409A and the regulations issued
thereunder.

     

    7. Forfeiture.  Any
portion of the Restricted Stock Units that does not become vested in accordance
with Section 4, 5 or 6 above shall be forfeited as of the date such vesting
restrictions can no longer be met in accordance with Section 4
above.  

     

    8. Settlement of Vested
Restricted Stock Units.  Subject to the requirements of
Sections 11 and 12 below, as promptly as practicable after Restricted Stock
Units cease to be subject to a Period of Restriction in accordance with Section
4, 5, or 6 of this Agreement, the Company shall transfer to the Employee one
share of Common Stock for each Restricted Stock Unit becoming vested at such
time; provided, however, the Company may withhold shares otherwise transferable
to the Employee to the extent necessary to satisfy withholding taxes in
accordance with Section 11 below.  The Employee shall have no rights
as a stockholder with respect to the Restricted Stock Units awarded hereunder
prior to the date of issuance to the Employee of a certificate or certificates
for such shares.  Certificates for the shares of Common Stock shall be
issued and delivered to the Employee, the Employee’s legal representative, or a
brokerage account for the benefit of the Employee, as the case may be, or such
shares may be held in book entry form.  Restricted Stock Units payable
under this Agreement are intended to be exempt from Internal Revenue Code
Section 409A under the exemption for short-term
deferrals.  Accordingly, Restricted Stock Units will be settled no
later than the 15th day of
the third month following the later of (i) the end of the Employee’s taxable
year in which the Restricted Stock Units cease to be subject to a Period of
Restriction, or (ii) the end of the fiscal year of the Company in which the
Restricted Stock Units cease to be subject to a Period of
Restriction.

     

    9. Settlement Following Change
in Control.  Notwithstanding any provision of this Agreement to
the contrary, in connection with or after the occurrence of a Change in Control
as defined in Section 11.2 of the Plan, the Company may, in its sole discretion,
fulfill its obligation with respect to all or any portion of the Restricted
Stock Units that cease to be subject to a Period of Restriction in accordance
with Section 6 above, by:

     

    (a) delivery
of (i) the number of shares of Common Stock that corresponds with the number of
Restricted Stock Units that have ceased to be subject to a Period of Restriction
or (ii) such other ownership interest as such shares of Common Stock that
correspond with the vested Restricted Stock Units may be converted into by
virtue of the Change in Control transaction in accordance with Section 8
above;

     

    (b) payment
of cash in an amount equal to the fair market value of the Common Stock that
corresponds with the number of vested Restricted Stock Units at that time;
or

     

    (c) delivery
of any combination of shares of Common Stock (or other converted ownership
interest) and cash having an aggregate fair market value equal to the fair
market value of the Common Stock that corresponds with the number of Restricted
Stock Units that have become vested at that time.

     

    10. Adjustment in
Capitalization.  In the event of any change in the Common Stock
of the Company, the provisions of Section 10.2 of the Plan shall govern such
that the number of Restricted Stock Units subject to this Agreement shall be
equitably adjusted by the Committee.

     

    11. Tax
Withholding.  Whenever a Period of Restriction applicable to
the Employee’s rights to some or all of the Restricted Stock Units lapses as
provided in Section 4, 5 or 6 of this Agreement, the Company or its agent shall
notify the Employee of the related amount of tax that must be withheld under
applicable tax laws. Regardless of any action the Company, any Subsidiary of the
Company, or the Employee’s employer takes with respect to any or all income tax,
social security, payroll tax, payment on account or other tax-related
withholding (“Tax”) that the Employee is required to bear pursuant to all
applicable laws, the Employee hereby acknowledges and agrees that the ultimate
liability for all Tax is and remains the responsibility of the
Employee.

     

    Prior to receipt of any shares that
correspond to Restricted Stock Units that vest in accordance with this
Agreement, the Employee shall pay or make adequate arrangements satisfactory to
the Company and/or any Subsidiary of the Company to satisfy all withholding and
payment on account obligations of the Company and/or any Subsidiary of the
Company.  In this regard, the Employee authorizes the Company and/or
any Subsidiary of the Company to withhold all applicable Tax legally payable by
the Employee from the Employee’s wages or other cash compensation paid to the
Employee by the Company and/or any Subsidiary of the Company or from the
proceeds of the sale of shares.  Alternatively or in addition, the
Company may sell or arrange for the sale of Common Stock that the Employee is
due to acquire to satisfy the withholding obligation for Tax and/or withhold any
Common Stock.  Finally, the Employee agrees to pay the Company or any
Subsidiary of the Company any amount of any Tax that the Company or any
Subsidiary of the Company may be required to withhold as a result of the
Employee’s participation in the Plan that cannot be satisfied by the means
previously described.  The Company may refuse to deliver Common Stock
if the Employee fails to comply with its obligations in connection with the tax
as described in this section.

    

    The Company advises the Employee to
consult his legal and/or tax advisors with respect to the tax consequences for
the Employee under the Plan.

    

    12. Securities
Laws.  This award is a private offer that may be accepted only
by an individual who is an employee of the Company or a Subsidiary of the
Company and who satisfies the eligibility requirements outlined in the Plan and
the Committee’s administrative procedures.  If a Registration
Statement under the Securities Act of 1933, as amended, is not in effect with
respect to the shares of Common Stock to be issued pursuant to this Agreement,
the Employee hereby represents that he is acquiring the shares of Common Stock
for investment and with no present intention of selling or transferring them and
that he will not sell or otherwise transfer the shares except in compliance with
all applicable securities laws and requirements of any stock exchange on which
the shares of Common Stock may then be listed.

     

    13. No Employment or
Compensation Rights.  Participation in the Plan is subject to
all of the terms and conditions of the Plan and this Agreement.  This
Agreement shall not confer upon the Employee any right to continuation of
employment by the Company, nor shall this Agreement interfere in any way with
the Company’s right to terminate Employee’s employment at any
time.  Neither the Plan nor this Agreement forms any part of any
contract of employment between the Company and the Employee, and neither the
Plan nor this Agreement confers on the Employee any legal or equitable rights
(other than those related to the Restricted Stock Unit award) against the
Company or directly or indirectly gives rise to any cause of action in law or in
equity against the Company.

     

    14. Plan Terms and Committee
Authority.  This Agreement and the rights of the Employee
hereunder are subject to all of the terms and conditions of the Plan, as it may
be amended from time to time, as well as to such rules and regulations as the
Committee may adopt for administration of the Plan.  It is expressly
understood that the Committee is authorized to administer, construe and make all
determinations necessary or appropriate for the administration of the Plan and
this Agreement, all of which shall be binding upon Employee.  Any
inconsistency between this Agreement and the Plan shall be resolved in favor of
the Plan.  The Employee hereby acknowledges receipt of a copy of the
Plan and this Agreement.

     

    15. Non-Competion,
Non-Solicitation and Confidentiality.  As a condition to the
receipt of this Restricted Stock Unit award, the Employee must agree to the
terms and conditions set forth in the Non-Competition, Non-Solicitation and
Confidentiality Agreement attached hereto as Exhibit A by executing that
Agreement.  Failure to execute and return the Non-Competition,
Non-Solicitation andConfidentiality Agreement within 60 days of the Award Date
shall constitute a decision by the Employee to decline to accept this Restricted
Stock Unit award.

     

    16. Amendment or Modification,
Waiver.  Except as set forth in the Plan, no provision of this
Agreement may be amended or waived unless such amendment or waiver is agreed to
in writing, signed by the Employee and by a duly authorized officer of the
Company. No waiver of any condition or provision of this Agreement shall be
deemed a waiver of a similar or dissimilar condition or provision at the same
time, any prior time or any subsequent time.

     

    17. Governing Law and
Jurisdiction.  This Agreement is governed by the substantive
and procedural laws of the state of Illinois.  The Employee and the
Company shall submit to the exclusive jurisdiction of, and venue in, the courts
in Illinois in any dispute relating to this Agreement.

     

    

     

    ****

     

    Please
sign the attached Exhibit A to confirm your agreement to be bound by the terms
and conditions set forth in Exhibit A, and to acknowledge your receipt of the
Plan and this Award Agreement and your acceptance of the Restricted Stock Unit
award issued hereunder.

     

                                                               Very
truly yours,

    

     

    

    

                                                                                  

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    WALGREEN
CO. NON- COMPETITION, NON- SOLICITATIONAND CONFIDENTIALITY
AGREEMENT

    

    This
Exhibit forms a part of the Restricted Stock Unit Award Agreement covering
Restricted Stock Units awarded to an employee of Walgreen Co. or one of its
subsidiary companies (hereinafter referred to as “Employee’’ and the
“Company”).

     

    WHEREAS,
the Company develops and/or uses valuable business, technical, proprietary,
customer and patient information it protects by limiting its disclosure and by
keeping it secret or confidential;

     

    WHEREAS,
Employee acknowledges that during the course of employment, he or she has or
will receive, contribute, or develop such confidential information;
and

     

    WHEREAS,
the Company desires to protect from its competitors such confidential
information and also desires to protect its legitimate business interests and
goodwill in maintaining its employee and customer relationships.

     

    NOW
THEREFORE, in consideration of the Restricted Stock Unit award issued to
Employee pursuant the Award Agreement to which this is attached as Exhibit A,
Employee agrees to the following:

     

    1.           Non-Disclosure
And Non-Use.  Employee agrees
not to disclose any Confidential Information, as defined below, to any person or
entity other than the Company, either during or after Employee’s employment,
without the Company’s prior written consent.  Employee further agrees
not to use any Confidential Information, either during or at any time after his
or her employment, without the Company’s prior written consent, except as may be
necessary to perform his or her job duties during employment with the
Company.

     

    Confidential
Information means information not generally known by the public about processes,
systems, products, services, including proposed products and services, business
information, know-how, or trade secrets of the Company.  Confidential
Information includes, but is not limited to, the following:

     

    (a)           Customer
records, identity of vendors, suppliers, or landlords, profit and performance
reports, prices, selling and pricing procedures and techniques, and financing
methods of the Company;

     

    (b)           Customer
lists and information pertaining to identities of the customers, their special
demands, and their past, current and anticipated requirements for the products
or services of the Company;

     

    (c)           Specifications,
procedures, policies, techniques, manuals, databases and all other information
pertaining to products or services of the Company, or of others for which the
Company has assumed an obligation of confidentiality;

     

    (d)           Business
or marketing plans, accounting records, financial statements and information,
and projections of the Company;

     

    (e)           Software
developed or used by the Company;

     

    (f)           Information
related to the Company’s retailing, distribution or administrative facilities;
and

     

    (g)           Any
other information identified or defined as confidential information by Company
policy.

     

    2.           Non-Competition
and Non-Solicitation.  In order to
protect the legitimate business interests and goodwill of the Company, and to
protect Confidential Information, Employee covenants and agrees that for the
entire period of his or her employment with the Company, and for one year after
the termination of such employment by either party for any reason, Employee will
not:

     

    (a)           contact
any Customer of the Company for the benefit of a Competing Business or interfere
with, or attempt to disrupt the relationship, contractual, or otherwise, between
the Company and any of its Customers.

    

    (b)           hire
employees of the Company.  This restriction includes without
limitation a prohibition on directly or indirectly employing, or knowingly
permitting any Person or business directly or indirectly controlled by Employee,
regardless of whether such Person or business is a Competing Business, from
employing, any person who is employed by the Company.  For the period
following the termination of Employee's employment with the Company, the term
"employee" means an individual employed by the Company as of the date of, or
within 90 days of, Employee's last day worked with the Company.

    

    (c)           solicit
employees of the Company.  This restriction includes without
limitation a prohibition on directly or indirectly (i) interfering with, or
attempting to disrupt the relationship, contractual, or otherwise, between the
Company and any of its employees, and (ii) soliciting, inducing, or attempting
to induce employees of the Company to terminate employment with the
Company.

    

    (d)           compete
with the Company.  This restriction includes without limitation a
prohibition on directly or indirectly engaging or investing in, owning,
managing, operating, financing, controlling, participating in the ownership,
management, operation, financing or control of, or being associated or in any
manner connected with, any Competing Business, whether as a consultant,
independent contractor, agent, employee, officer, partner, director, shareholder
(except (i) limited partnership investments in private equity funds which may
invest in venture capital-backed companies (where Employee's investment
represents less than 1% percent ownership interest of any such company) or (ii)
investments of less than 1% ownership interest of the outstanding securities of
a corporation or other entity whose securities are listed on a stock exchange or
quotation system and such entity files periodic reports with the Securities and
Exchange Commission), distributor, representative, or otherwise, alone or in
association with any other Person(s).  Notwithstanding the foregoing,
Employee may render services for a Competing Business if:  such
service does not conflict with any other restrictions noted in this Paragraph 2;
the Competing Business is diversified, and Employee becomes employed in a part
of the business that is not in direct or indirect competition with Company; and,
prior to the Employee beginning employment with the Competing Business, the
Company receives written assurances satisfactory to the Company, from both the
Competing Business and Employee, that Employee will not render services directly
or indirectly in connection with any product, system, service, or process of any
person or organization which is the same as, comparable to, or competes directly
or indirectly with a product, system, service, or process of the
Company

    

    Employee
agrees that the restrictions contained in paragraphs 2(a), 2(b), and 2(c) have
no geographic limitation.  Employee agrees that the restrictions
contained in Paragraph 2(d) are geographically limited to (a) the entirety of
the United States and (b) any other country if the Company conducts business
within such country at any time during Employee's employment with the
Company.

    

    Employee
acknowledges that (i) the Company's business is and following the date hereof
will be national in scope, (ii) the Company's products and services are and
following the date hereof will be marketed throughout the United States and
(iii) the Company has competed and following the date hereof will compete with
other businesses that are or could be located in any part of the United
States.  Employee further covenants and agrees that restrictive
covenants contained in this Agreement are reasonable and necessary to protect
the legitimate business interests of the Company because of the nature and scope
of the Company's business.

    

    If a
court or arbitrator of competent jurisdiction determines that one or more of the
provisions of this Paragraph 2 are invalid, illegal, or unenforceable for
any reason, then such provision or provisions shall be deemed to be reduced in
scope or length, as the case may be, to the extent required to make this
Paragraph enforceable.  If Employee violates the provisions of this
Paragraph 2, the periods described therein shall be extended by that number
of days which equals the aggregate of all days during which at any time any such
violations occurred.

    

    For
purposes of this Paragraph 2, the following definitions shall
apply:

    

    (1)           “Competing
Business” means any business engaged in by any Person that is in competition
with any business engaged in by the Company (“Company Business”) during the term
of Employee’s employment with the Company; provided that the foregoing shall
only apply to any Company Business with respect to which Employee possesses
Confidential Information and is substantially engaged or provides substantial
support during Employee’s employment with the Company.

    

    (2)           “Customer”
means any patient or other customer or prospective customer of any Company
business unit with respect to which Employee is substantially engaged or
provides substantial support during Employee’s employment with the
Company.

    

    (3)           “Person”
means any individual, corporation, partnership, limited liability company or
other entity.

    

    For
purpose of this Agreement, Employee’s effective date of termination of
employment with the Company shall mean the later of: the Employee’s last day
worked for the Company, or the last date for which Employee receives
compensation for his or her services with the Company.

     

    3.           Non-Inducement.  Employee agrees
that during the term of his or her employment and for one year following the
Employee’s termination of employment, Employee will not directly or indirectly
assist or encourage any Person or entity in carrying out any activity that would
be prohibited by the provisions of this Agreement if such activity were carried
out by Employee.

     

    4.           Property.  Employee agrees
that upon leaving the employment of the Company, he or she will not take with
him or her any of the Company’s property, including Confidential Information and
trade secrets, regardless of the form in which it was held or acquired by
Employee, and will immediately return to the Company any and all documents,
notes, records, notebooks, mobile telephones, cellular telephones, computers,
PDAs (personal digital assistants), portable digital storage devices, and
similar repositories of or containing or relating to Confidential Information
and Company trade secrets, and including, but not limited to, all copies, notes
or abstracts thereof.

     

    5.           Consideration
and Acknowledgments.  Employee
acknowledges and agrees that the covenants described in Paragraphs 1 through 4
of this Agreement are essential terms, and the underlying restricted stock unit
award would not be provided by the Company in the absence of these
covenants.  Employee further acknowledges that these covenants are
supported by adequate consideration as set forth in this Agreement, that full
compliance with these covenants will not prevent Employee from earning a
livelihood following the termination of his or her employment, and that these
covenants do not place undue restraint on Employee and are not in conflict with
any public interest.  Employee further acknowledges and agrees that
Employee fully understands these covenants, has had full and complete
opportunity to discuss and resolve any ambiguities or uncertainties regarding
these covenants before signing this Agreement, that these covenants are
reasonable and enforceable in every respect, and has voluntarily agreed to
comply with these covenants for their stated term.  Employee agrees
that in the event he or she is offered employment with a Competing Business at
any time in the future, Employee shall immediately notify the Competing Business
of the existence of the covenants set forth in Paragraphs 1 through 4
above.

     

    6.           Enforcement
of This Agreement.  Employee
acknowledges that compliance with the covenants set forth in Paragraphs 1
through 4 of this Agreement is necessary to enable the Company to maintain its
competitive position, and that any actual or threatened breach of these
covenants will result in irreparable and continuing damage to the Company for
which there will be no adequate remedy at law.  In the event of any
actual or threatened breach of these covenants, the Company shall be entitled to
injunctive relief, including the right to a temporary restraining order, and
other relief, including damages, as may be proper along with the Company’s
attorneys’ fees and court costs.  The foregoing stipulated damages and
remedies of the Company are in addition to, and not to the exclusion of, any
other damages the Company may be able to prove.  In addition, if any
court shall at any time hold these covenants to be unenforceable or unreasonable
in scope, territory or period of time, then the scope, territory or period of
time of the covenants shall be that determined by the court to be
reasonable.  Employee consents to the jurisdiction of the Circuit
Court of Lake or Cook County, Illinois for purposes of the enforcement of this
agreement.

     

    7.           Severability.  If any phrase or
provision of this Agreement is declared invalid or unenforceable by a court of
competent jurisdiction, such phrase, clause or provision shall be deemed severed
from this Agreement, but will not affect the enforceability of any other
provisions of this Agreement, which shall otherwise remain in full force and
effect.  If any restriction or limitation in this Agreement is deemed
to be unreasonable, unenforceable or unduly restrictive by a court of competent
jurisdiction, it shall not be stricken in its entirety and held totally void and
unenforceable, but shall remain effective to the maximum extent permissible as
determined by said court.

     

    8.           Entire
Agreement.  This Agreement
represents the entire agreement between the parties and supersedes and renders
null and void all prior agreements, arrangements or communications between the
parties covering the same or similar subject matter, whether oral or
written.  In particular, to the extent Employee has signed more than
one version of this Agreement in connection with restricted stock unit awards
for multiple years, the latest of such executed Agreements shall
apply.  The terms of this Agreement may not be altered or modified
except by written agreement of Employee and the
Company.  Notwithstanding the foregoing, to the extent that, pursuant
to an employment contract or otherwise, Employee is currently or in the future
becomes subject to any similar obligations that are more restrictive in any
respects than Employee’s obligations under this Agreement, then the more
restrictive terms shall govern.

     

    9.           Notification.  Employee further
agrees that the Company may notify anyone later employing him or her of the
existence and provisions of this Agreement.

     

    10.           Successors
and Assigns.  This Agreement
shall be enforceable by the Company and its successors and permitted
assigns.

     

    11.           General.  Employee agrees
that:

     

    (a)           For
purposes of this Agreement, Employee’s past and any future service as a
nonemployee member of the Board of Directors of Walgreen Co. shall be considered
as employment with the Company;

     

    (b)           Waiver
of any of the provisions of this Agreement by the Company in any particular
instance shall not be deemed to be a waiver of any provision in any other
instance and/or of the Company’s other rights at law or under this
Agreement;

     

    (d)           The
provisions of this Agreement shall be considered severable;

     

    (d)           This
Agreement shall accrue to and be binding upon the Company and Employee;
and

     

    (e)           The
captions in this Agreement shall be for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.

     

    12.           Governing
Law.  The law of the
State of Illinois shall govern this Agreement without regard to its choice of
law provisions.

     

    

    ***                    ***                    ***                    ***                    ***

    

    By my
signature below, I acknowledge receipt of the Restricted Stock Unit Agreement to
which this Agreement is attached as Exhibit A, and I and agree to the terms and
conditions expressed in this Non-Competition, Non-Solicitation and
Confidentiality Agreement.

     

    Employee
Name:   Alan G. McNally

     

    Employee
Name:                                                      Alan
G. McNally

     

    Employee
Signature:                                                      /s/ Alan G.
McNally                                           

     

    Date:                                                      Nov. 11,
2008                                           

     

    PLEASE
SIGN AND RETURN THIS COPYexh10.htm

    EXHIBIT
10.1

     

    Execution
Version

     

    INDEMNIFICATION
AGREEMENT

     

    THIS
INDEMNIFICATION AGREEMENT (the “Agreement”),
dated January 5, 2009, is between West Pharmaceutical Services, Inc., a
Pennsylvania corporation, (the “Company”)
and Donald E. Morel, Jr. (the “Indemnitee”).

     

    Background

     

    The Company and the Indemnitee
recognize the substantial increase in corporate litigation, in general,
subjecting officers and directors to expensive litigation risks at the same time
as liability insurance has been severely limited.  The Indemnitee does
not regard the current protection available as adequate given the present
circumstances, and the Indemnitee and other officers and directors of the
Company may not be willing to serve as officers and directors without adequate
protection.

     

    The Company desires to attract and
retain the services of highly qualified individuals, such as the Indemnitee, to
serve as officers and directors of the Company and to indemnify its officers and
directors so as to provide them with the maximum protection permitted by
law.

     

    In order to accomplish these goals, the
Company considers it appropriate to offer a contractual indemnification
agreement on the terms set out below.

     

    Terms

     

    In light of the foregoing, the Company
and the Indemnitee hereby agree as follows:

     

    Indemnification.

     

    Third Party Proceedings. The
Company shall indemnify the Indemnitee if the Indemnitee is or was a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) by reason of the fact
that the Indemnitee is or was a director, officer, trustee, fiduciary, employee
or agent of the Company, or any affiliate of the Company, by reason of any
action or inaction on the part of the Indemnitee while an officer or director,
or by reason of the fact that the Indemnitee is or was serving at the request of
the Company as a director, officer, trustee, fiduciary, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including an employee benefit plan, against any liability, penalty, damages,
excise tax assessed with respect to an employee benefit plan, costs, expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement (if
such settlement is approved pursuant to Section 2(g)) (“Expenses”)
actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf
in connection with such action, suit or proceeding if the Indemnitee acted in
good faith and in a manner the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the Indemnitee’s
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, in and of itself, create a presumption that (i) the
Indemnitee did not act in good faith and in a manner which the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, (ii) with respect to any criminal action or proceeding, the
Indemnitee did not have reasonable cause to believe his conduct was
lawful.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Proceedings By or in the Right of the
Company. The Company shall indemnify the Indemnitee if the Indemnitee was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company or any subsidiary of
the Company to procure a judgment in its favor by reason of the fact that the
Indemnitee is or was a director, officer, trustee, fiduciary, employee or agent
of the Company, or any affiliate of the Company, by reason of any action or
inaction on the part of the Indemnitee while an officer or director or by reason
of the fact that the Indemnitee is or was serving at the request of the Company
as a director, officer, trustee, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including an
employee benefit plan, against Expenses actually and reasonably incurred by the
Indemnitee in connection with the defense or settlement of such action or suit
if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which the Indemnitee shall have been adjudged to be liable to the Company
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, the Indemnitee is
fairly and reasonably entitled to indemnity for such Expenses which the court
shall deem proper.

     

    Mandatory
Indemnification.  Notwithstanding any other provisions of this
Agreement, to the fullest extent permitted by applicable law:

     

    To the
extent that the Indemnitee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 1(a) and 1(b) or in defense of any
claim, issue or matter therein, the Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred by the Indemnitee in connection
therewith.

     

    If the
Indemnitee is successful, on the merits or otherwise, as to one or more but less
than all claims, issues or matters in such proceeding, the Company shall
indemnify the Indemnitee against all Expenses actually and reasonably incurred
by or on behalf of the Indemnitee in connection with (i) each successfully
resolved claim, issue or matter and (y) each claim, issue, or matter related to
any claim, issue or matter on which the Indemnitee was successful.

     

    For
purposes of this Section
1(c), and without limitation, the termination of any claim, issue or
matter in such a proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.

     

    Indemnification for Expenses of a
Witness.  Notwithstanding any other provision of this
Agreement, to the extent that the Indemnitee is, by reason of the fact that the
Indemnitee is or was a director, officer, trustee, fiduciary, employee or agent
of the Company, or any affiliate of the Company, by reason of any action or
inaction on the part of the Indemnitee while an officer or director or by reason
of the fact that the Indemnitee is or was serving at the request of the Company
as a director, officer, trustee, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including an
employee benefit plan, a witness in any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Company) to which the Indemnitee
is not a party, the Indemnitee shall be indemnified against all expenses
actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf
in connection therewith.

     

    Expenses and Indemnification
Procedure.

     

    Advancement of Expenses. The
Company shall advance all Expenses actually and reasonably incurred by or on
behalf of the Indemnitee in connection with any civil or criminal action, suit
or proceeding referenced in Section 1 unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists, subject to the terms and in accordance with the
procedures set forth in this Section 2.

     

    
      
        
        

      

      
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    Presumptions Regarding
Advances. For purposes of any advancement hereunder, the Indemnitee shall
be deemed to have acted (i) in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of the Company, and (ii) with
respect to any criminal action or procedure, to have had no reasonable cause to
believe his conduct was unlawful if, under either (i) or (ii), his action is
based on the records or books of account of the Company, or the records or books
of account of another corporation, partnership, joint venture, trust or other
enterprise (collectively, the “other
enterprises”), including financial statements, or on information supplied
to him by the officers of the Company or other enterprises in the course of
their duties, or on the advice of legal counsel for the Company or other
enterprises or on information or records given or reports made to the Company or
other enterprises by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Company or other
enterprises. the Indemnitee hereby undertakes to repay such amounts advanced
only if, and to the extent that, it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby.

     

    Notice/Cooperation by the
Indemnitee. the Indemnitee shall, as a condition precedent to his right
to be indemnified under this Agreement, give the Company notice in writing as
soon as practicable of any claim made against the Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to West Pharmaceutical Services, Inc., 101 Gordon
Drive, PO Box 645, Lionville, Pennsylvania 19341, Facsimile: (610) 594-3013,
Attention: John R. Gailey (or such other address as the Company may from time to
time designate in writing to the Indemnitee); provided, however, that the
failure to so notify the Company shall not relieve the Company of any obligation
which it may have to the Indemnitee under this Agreement or otherwise unless and
only to the extent that such failure or delay materially prejudices the
Company.  Notice shall be deemed received on the third business day
after the date postmarked if sent by domestic certified or registered mail,
properly addressed; otherwise, notice shall be deemed received when such notice
shall actually be received by the Company. In addition, the Indemnitee shall
give the Company such information and cooperation as it may reasonably require
and as shall be within the Indemnitee’s power.

     

    Procedure. Any indemnification
and advances provided for in Section 1 and this Section 2 shall be made no
later than 45 days after receipt of the written request of the Indemnitee,
coupled with appropriate documentation to support the requested payment. If a
claim under this Agreement, under any statute, or under any provision of the
Company’s Articles of Incorporation or Bylaws providing for indemnification is
not paid in full by the Company within 45 days after receipt of a fully
documented written request for payment thereof has first been received by the
Company, the Indemnitee may, but need not, at any time thereafter bring an
action against the Company to recover the unpaid amount of the claim and,
subject to Section 13,
the Indemnitee shall also be entitled to be paid for the expenses (including
attorneys’ fees) of bringing such action. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred in
connection with any action, suit or proceeding in advance of its final
disposition) that the Indemnitee has not met the standards of conduct which make
it permissible under applicable law for the Company to indemnify the Indemnitee
for the amount claimed, but the burden of proving such defense shall be on the
Company, and the Indemnitee shall be entitled to receive interim payments of
Expenses pursuant to Section
2(a) unless and until such defense may be finally adjudicated by court
order or judgment from which no further right of appeal exists. It is the
parties’ intention that if the Company contests the Indemnitee’s right to
indemnification, the question of the Indemnitee’s right to indemnification shall
be for the court to decide, and neither the failure of the Company (including
its Board of Directors, any committee or subgroup of the Board of Directors,
independent legal counsel, or its shareholders) to have made a determination
that indemnification of the Indemnitee is proper in the circumstances because
the Indemnitee has met the applicable standard of conduct required by applicable
law, nor an actual determination by the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its shareholders) that the Indemnitee has not met such
applicable standard of conduct, shall create a presumption that the Indemnitee
has or has not, as the case may be, met the applicable standard of
conduct.

     

    Notice to Insurers. If, at the
time of the receipt of a notice of claim pursuant to Section 2(c), the Company has
directors’ and officers’ liability insurance in effect, the Company shall give
prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company
shall thereafter take all necessary or desirable action to cause such insurers
to pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.

     

    
      
        
        

      

      
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    Selection of Counsel. If the
Company shall be obligated under Section 1 or Section 2 to pay the Expenses
of any proceeding against the Indemnitee, the Company, if appropriate, shall be
entitled to assume the defense of such proceeding, with counsel approved by the
Indemnitee, upon the delivery to the Indemnitee of written notice of its
election to do so. After delivery of such notice, approval of such counsel by
the Indemnitee and the retention of such counsel by the Company, the Company
will not be liable to the Indemnitee under this Agreement for any fees of
counsel subsequently incurred by the Indemnitee with respect to the same
proceeding; provided that (i) the Indemnitee shall have the right to employ
separate counsel in any such proceeding at the Indemnitee’s expense; and (ii) if
(A) the employment of counsel by the Indemnitee has been previously authorized
by the Company, (B) the Indemnitee shall have reasonably concluded that there
may be a conflict of interest between the Company and the Indemnitee in the
conduct of any such defense, or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, then the reasonable
fees and expenses of the Indemnitee’s counsel shall be at the expense of the
Company.

     

    Settlements. The Company shall
not be liable to the Indemnitee under the Agreement for any amounts paid in
settlement of any action or claim effected without its written
consent.  The Company shall not settle any action or claim in any
manner which would impose any penalty or limitation on the Indemnitee without
the Indemnitee’s written consent, which consent will not unreasonably be
withheld.

     

    Change in
Control.

     

    If, at
any time subsequent to the date of this Agreement, members of the Incumbent
Board do not constitute a majority of the members of the Board of Directors, or
there is otherwise a Change in Control, then upon the request of the Indemnitee,
the Company shall cause the determination of indemnification and advances
required by Section 2 to
be made by independent legal counsel, to be selected by the Company and the
Indemnitee or failing such agreement, as determined by the Chief Judge of the
Federal District Court for the Eastern District of Pennsylvania. The fees and
expenses incurred by the independent legal counsel in making the determination
of indemnification and advances shall be borne solely by the Company. If such
independent legal counsel is unwilling and/or unable to make the determination
of indemnification and advances, then the Company shall cause the
indemnification and advances to be made by a majority vote or consent of a Board
of Directors committee consisting solely of members of the Incumbent
Board.

     

    For
purposes of this Agreement, “Change in
Control” means the occurrence of any of the following
events:

     

    1. The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)) (each, a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (1) the then-outstanding shares of common
stock of the Company (the “Outstanding
Company Common Stock”) or (2) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding
Company Voting Securities”);  provided, however, that, for purposes
of this clause (a), the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition directly from the Company, (B) any acquisition by the Company, (C)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any company controlled by, controlling or under
common control with the Company, or (D) any acquisition by any entity pursuant
to a transaction that complies with clauses (c)(1), (c)(2) and (c)(3) of this
definition;

     

    2. Individuals
who, as of January 1, 2009, constitute the Board of Directors (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board of Directors; provided, however, that any individual
becoming a director subsequent to January 1, 2009 whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board of Directors;

     

    
      
        
        

      

      
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    3. Consummation
of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company or any of its subsidiaries,
a sale or other disposition of all or substantially all of the assets of the
Company, or the acquisition of assets or stock of another entity by the Company
or any of its subsidiaries (each, a “Business
Combination”), in each case unless, following such Business Combination,
(1) all or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation that, as a result of such
transaction, owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (2) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (3) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board of
Directors providing for such Business Combination; or

     

    4. Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.

     

    Additional Indemnification
Rights:

     

    Scope. Notwithstanding any
other provision of this Agreement, the Company shall indemnify the Indemnitee to
the fullest extent permitted by law, notwithstanding that such indemnification
is not specifically authorized by the other provisions of this Agreement, the
Company’s Articles of Incorporation, the Company’s Bylaws or by statute. In the
event of any change, after the date of this Agreement, in any applicable law,
statute, or rule which expands the right of a Pennsylvania corporation to
indemnify a member of its board of directors or an officer, such changes shall
be, ipso facto, within
the purview of the Indemnitee’s rights and Company’s obligations under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Pennsylvania corporation to indemnify a member of
its board of directors or an officer, such changes (to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement) shall
have no effect on this Agreement or the parties’ rights and obligations
hereunder.

     

    Non-exclusivity. The
indemnification provided by this Agreement shall not be deemed exclusive of any
rights to which an the Indemnitee may be entitled under the Company’s Articles
of Incorporation, its Bylaws, any agreement, any vote of Shareholders or
disinterested directors, the Pennsylvania Business Corporation Law of 1988, as
amended (the “BCL”), or
otherwise, both as to action in the Indemnitee’s official capacity and as to
action in another capacity while holding such office.

     

    Continuation of Indemnity. All
agreements and obligations of the Company contained herein shall vest upon the
Indemnitee’s commencement of service and shall continue during the period the
Indemnitee is a director, officer, employee or agent of the Company (or is or
was serving at the request of the Company as a director, officer, employee or
agent of other enterprises) and shall continue thereafter, so long as the
Indemnitee shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal or investigative,
by reason of the fact that the Indemnitee was a director, officer, employee or
agent of the Company or serving in any other capacity referred to
herein.

     

    
      
        
        

      

      
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    Mutual Acknowledgment. Both
the Company and the Indemnitee acknowledge that, in certain instances, federal
law or public policy may override applicable state law and prohibit the Company
from indemnifying its directors and officers under this Agreement or otherwise.
For example, the Company and the Indemnitee acknowledge that the Securities and
Exchange Commission (the “SEC”) has
taken the position that indemnification is not permissible for liabilities
arising under certain federal securities laws, and federal legislation prohibits
indemnification for certain violations of the Employee Retirement Income
Security Act of 1974 (“ERISA”).  The
Indemnitee understands and acknowledges that the Company has undertaken with the
SEC to submit the question of indemnification to a court in certain
circumstances for a determination of the Company’s right under public policy to
indemnify the Indemnitee.

     

    Officer and Director Liability
Insurance. The Company shall, from time to time, make the good faith
determination whether or not it is practicable for the Company to obtain and
maintain a policy or policies of insurance with reputable insurance companies
providing the officers and directors of the Company with coverage for losses
from wrongful acts, or to ensure the Company’s performance of its
indemnification obligations under this Agreement.  Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
directors’ and officers’ liability insurance, the Indemnitee shall be insured in
such a manner as to provide the Indemnitee the same rights and benefits as are
accorded to the most favorably insured of the Company’s directors, if the
Indemnitee is a director; or of the Company’s officers, if the Indemnitee is not
a director of the Company but is an officer; or one of the Company’s key
employees, if the Indemnitee is not an officer or director but is a key
employee. Notwithstanding the foregoing, the Company shall have no obligation to
obtain or maintain such insurance if the Company determines in good faith that
such insurance is not reasonably available, if the premium costs for such
insurance are disproportionate to the amount of coverage provided, if the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or if the Indemnitee is covered by similar insurance
maintained by an affiliate of the Company.

     

    Severability. Nothing in this
Agreement is intended to require or shall be construed as requiring the Company
to do or fail to do any act in violation of applicable law. The Company’s
inability, pursuant to court order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. The provisions of
this Agreement shall be severable as provided in this Section 7. If this Agreement
or any portion hereof shall be invalidated on any ground by any court of
competent jurisdiction, then the Company shall nevertheless indemnify the
Indemnitee to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated, and the balance of this
Agreement not so invalidated shall be enforceable in accordance with its
terms.

     

    Modification and
Waiver.  No supplement, modification, termination or amendment
of this Agreement shall be binding unless executed in writing by both of the
parties hereto.  No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing
waiver.

     

    Exceptions. Any other
provision herein to the contrary notwithstanding, the Company shall not be
obligated pursuant to the terms of this Agreement:

     

    Claims Initiated by the
Indemnitee. To indemnify or advance expenses to the Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by the
Indemnitee and not by way of defense, except with respect to proceedings brought
to establish or enforce a right to indemnification under this Agreement or any
other statute or law or otherwise as required under the BCL, but such
indemnification or advancement of expenses may be provided by Company in
specific cases if the Board of Directors, at its sole discretion, finds it to be
appropriate;

     

    Insured Claims. To indemnify
the Indemnitee for expenses or liabilities of any type whatsoever (including,
but not limited to, judgments, fines, ERISA excise taxes or penalties, and
amounts paid in settlement) which have been paid directly to the Indemnitee by
an insurance carrier under a policy of officers’ and directors’ liability
insurance maintained by the Company or other enterprise;

     

    
      
        
        

      

      
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    Claims Under Section 16(b). To
indemnify the Indemnitee for expenses or the payment of profits arising from the
purchase and sale, or sale and purchase, by the Indemnitee of securities in
violation of Section 16(b) of the Exchange Act, or any similar successor
statute; or

     

    Illegal
Activity.  To indemnify the Indemnitee if a court of competent
jurisdiction finally adjudges that such indemnification is illegal, including,
without limitation, by virtue of such indemnification being in violation of
public policy or any provision of law.

     

    Interpretation; Construction of
Certain Phrases.

     

    The
headings of particular provisions of this Agreement are inserted for convenience
only and will not be construed as a part of this Agreement or serve as a
limitation or expansion on the scope of any term or provision of this
Agreement.  The words “include,”
“includes”
or “including”
shall be deemed to be followed by the words “without
limitation.”  The words “hereof,”
“herein”
and “herewith”
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole and not to any particular provision of this
Agreement.

     

    For
purposes of this Agreement:

     

    references
to the “Company”
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that if the Indemnitee is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of other
enterprises, the Indemnitee shall stand in the same position under the
provisions of this Agreement with respect to the resulting or surviving
corporation as the Indemnitee would have with respect to such constituent
corporation if its separate existence had continued;

     

    references
to “other
enterprises” shall include employee benefit plans; references to “fines”
shall include any excise taxes assessed on the Indemnitee with respect to an
employee benefit plan;

     

    references
to “serving
at the request of the Company” shall include any service as a director,
officer, employee or agent of the Company which imposes duties on, or involves
services by, the Indemnitee with respect to an employee benefit plan, its
participants, or beneficiaries;

     

    if the
Indemnitee acted in good faith and in a manner the Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, the Indemnitee shall be deemed to have acted in a manner
“not
opposed to the best interests of the Company” as referred to in this
Agreement;

     

    references
to “affiliates”
shall mean any entity which, directly or indirectly, is in the control of, is
controlled by, or is under common control with, the Company; and

     

    references
to “Sections”
or “clauses”
shall be to Sections or clauses of this Agreement.

     

    Counterparts;
Effectiveness.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but both of which
shall constitute one and the same agreement. This Agreement shall become
effective when each party hereto shall have received counterparts thereof signed
and delivered (by telecopy or other electronic means) by the other party
hereto.

     

    Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the Company and its
successors and assigns, and the Indemnitee and the Indemnitee’s estate, heirs,
legal representatives and assigns.

     

    
      
        
        

      

      
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    Attorneys’ Fees. If any action
is instituted by the Indemnitee under this Agreement to enforce or interpret any
of the terms hereof, the Indemnitee shall be entitled to be paid all court costs
and expenses, including reasonable attorneys’ fees incurred by the Indemnitee
with respect to such action, unless as a part of such action, the court of
competent jurisdiction determines that each of the material assertions made by
the Indemnitee as a basis for such action was not made in good faith or was
frivolous. In the event of an action instituted by or in the name of the Company
under this Agreement or to enforce or interpret any of the terms of this
Agreement, the Indemnitee shall be entitled to be paid all court costs and
expenses, including attorneys’ fees incurred by the Indemnitee in defense of
such action (including with respect to the Indemnitee’s counterclaims and
cross-claims made in such action), unless as a part of such action the court
determines that each of the Indemnitee’s material defenses to such action was
made in bad faith or was frivolous.

     

    Notice. All notices, requests,
demands, consents and other communications hereunder shall be in writing and
shall be given or made (and shall be deemed to have been duly given or made upon
receipt) by delivery in person, by overnight courier service, or by facsimile
with receipt confirmed (followed by delivery of an original via overnight
courier service). The address for notice to the Company shall be as set forth in
Section 2(c), and the
address for notice to the Indemnitee shall be as set forth on the signature page
of this Agreement, or as subsequently modified in a notice given in accordance
with this Section
14.

     

    Consent to Jurisdiction. The
Company and the Indemnitee each hereby irrevocably consent to the jurisdiction
of the courts of the Commonwealth of Pennsylvania for all purposes in connection
with any action or proceeding which arises out of or relates to this Agreement.
Any action or proceeding instituted under or to enforce this Agreement shall be
brought only in the state courts of the Commonwealth of
Pennsylvania.

     

    Subrogation. In the event of
payment under this Agreement, Company shall be subrogated to the extent of such
payment to all of the rights of recovery of the Indemnitee, who shall execute
all papers required and shall do everything that may be necessary to secure such
rights, including the execution of such documents necessary to enable Company
effectively to bring suit to enforce such rights.

     

    Choice of Law. This Agreement
shall be governed by and its provisions construed in accordance with the laws of
the Commonwealth of Pennsylvania, as applied to contracts between Pennsylvania
residents entered into and to be performed within Pennsylvania.

     

    [Remainder of Page
Left Blank; Signature Page Follows]

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

     

    IN
WITNESS WHEREOF, the parties hereto have signed this Agreement on the date first
above written.

     

    West
Pharmaceutical Services, Inc.

    

    

    By: JOHN R. GAILEY III_______________

    John
R. Gailey III, Vice President

    and
Secretary

    

    

    

    DONALD E. MOREL,
JR._______________

    Donald E.
Morel, Jr.

    

    Address
for Notice:

    1703
Lookaway Court

    New Hope,
PA  18938

    

    
      
         

      

      
        9

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