Exhibit 10(h)
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT ("Agreement") is made on May 20, 1998, by and
between Mine Safety Appliances Company, a Pennsylvania corporation (the
"Company"), and Xxxx X. Xxxx III (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key management personnel;
and
WHEREAS, the Company's Board of Directors recognizes that, as is the
case with many publicly held corporations, the possibility of a change in
control exists and that such possibility, and the uncertainty which it may
engender among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Board of Directors has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a change in control;
NOW, THEREFORE, in consideration of the premises and the respective
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement (if not provided where a capitalized term initially appears) are
provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement shall commence on
the date hereof and end on December 31, 2000, unless further extended as
hereinafter provided. Commencing on January 1, 2000 and each January 1
thereafter, the Term shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company or the
Executive shall have given notice not to extend the Term; provided, however,
that if a Change in Control shall have occurred during the Term, the Term shall
expire no earlier than thirty-six (36) months beyond the month in which such
Change in Control occurred.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees, under
the conditions described herein, to pay the Executive the Severance Payments and
the other
payments and benefits described herein. Except as provided in Section 9.1
hereof, no Severance Payments shall be payable under this Agreement unless there
shall have been (or, under the terms of the second sentence of Section 6.1
hereof, there shall be deemed to have been) a termination of the Executive's
employment with the Company on or after a Change in Control and during the Term.
This Agreement shall not be construed as creating an express or implied contract
of employment and, except as otherwise agreed in writing between the Executive
and the Company, the Executive shall not have any right to be retained in the
employ of the Company.
4. Executive's Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential Change in
Control during the Term, the Executive will remain in the employ of the Company
until the earliest of (i) a date which is six (6) months from the date of such
Potential Change of Control, (ii) the date of a Change in Control, (iii) the
date of termination by the Executive of the Executive's employment for Good
Reason or by reason of death, Disability or Retirement, or (iv) the termination
by the Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 After a Change in Control and during the Term, during any
period that the Executive fails to perform the Executive's full-time duties with
the Company as a result of incapacity due to physical or mental illness, the
Company shall pay the Executive's full salary to the Executive at the rate in
effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation or
benefit plan, program or arrangement maintained by the Company during such
period, until the Executive's employment is terminated by the Company for
Disability; provided, however, that such salary payments shall be reduced by the
sum of the amounts, if any, payable to the Executive at or prior to the time of
any such salary payment under disability benefit plans of the Company or under
the Social Security disability insurance program, which amounts were not
previously applied to reduce any such salary payment.
5.2 If the Executive's employment shall be terminated for any
reason (other than Disability) on or after a Change in Control and during the
Term, the Company shall pay the Executive's full salary to the Executive through
the Date of Termination at the rate in effect immediately prior to the Date of
Termination or, if higher, the rate in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, together with
all compensation and benefits payable to the Executive through the Date of
Termination under the terms of the Company's compensation and benefit plans,
programs or arrangements as in effect immediately prior to the
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Date of Termination or, if more favorable to the Executive, as in effect
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason.
5.3 If the Executive's employment shall be terminated for any
reason on or after a Change in Control and during the Term, the Company shall
pay to the Executive the Executive's normal post-termination compensation and
benefits as such payments become due. Such post-termination compensation and
benefits shall be determined under, and paid in accordance with, the Company's
retirement, insurance and other compensation or benefit plans, programs and
arrangements as in effect immediately prior to the Date of Termination or, if
more favorable to the Executive, as in effect immediately prior to the
occurrence of the first event or circumstance constituting Good Reason.
6. Severance Payments; Legal Expenses.
6.1 If the Executive's employment is terminated on or after a
Change in Control and during the Term, (i) by the Company without Cause, (ii) by
the Executive with Good Reason, or (iii) by the Executive in a Window Period
Termination, then the Company shall pay the Executive the amounts (and provide
the Executive the benefits) described in this Section 6.1 (together, the
"Severance Payments"), in addition to any payments and benefits to which the
Executive is entitled under Section 5 hereof. For purposes of this Agreement,
the Executive's employment shall be deemed to have been terminated after a
Change in Control by the Company without Cause or after a Change in Control by
the Executive with Good Reason, if (i) the Executive's employment is terminated
by the Company without Cause prior to a Change in Control (whether or not a
Change in Control ever occurs) and such termination was at the request or
direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control, (ii) the Executive
terminates the Executive's employment for Good Reason prior to a Change in
Control (whether or not a Change in Control ever occurs) and the circumstance or
event which constitutes Good Reason occurs at the request or direction of such
Person, or (iii) the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason and such termination or the
circumstance or event which constitutes Good Reason is otherwise in connection
with or in anticipation of a Change in Control (whether or not a Change in
Control ever occurs). For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position taken by the
Executive shall be presumed to be correct unless the Company establishes to the
Committee by clear and convincing evidence that such position is not correct.
For purposes of this Agreement, termination of the Executive's employment "by
the Company without Cause" shall not include termination by the Company for
Disability or termination by reason of the Executive's death.
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(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any severance
benefit or separation pay otherwise payable to the Executive, the Company
shall pay to the Executive a lump sum severance payment, in cash, equal to
three times the sum of (i) the Executive's base salary as in effect
immediately prior to the Date of Termination (or, if higher, in effect
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason), and (ii) the average annual bonus earned by the
Executive pursuant to any annual bonus or incentive plan maintained by the
Company in which the Executive participated in respect of the two fiscal
years ending immediately prior to the fiscal year in which occurs the Date
of Termination (or, if higher, immediately prior to the fiscal year in
which occurs the first event or circumstance constituting Good Reason);
provided, however, that if there is only one bonus earned by the Executive
in the applicable two-year period, the average annual bonus will be deemed
to equal the bonus so earned; and, provided further that if the Executive
has been so recently hired by the Company that he has not earned any annual
bonus which can be used to calculate an average annual bonus pursuant to
this provision, he shall be deemed to have earned an average annual bonus
determined by multiplying his applicable base salary by a fraction, the
numerator of which is the total of the average annual bonuses of all
employees of the Company who have severance agreements with the Company
immediately prior to the Executive's Date of Termination and the
denominator of which is the total of the applicable base salaries of such
employees (as such terms are defined in their respective severance
agreements).
(B) For the thirty-six (36) month period immediately following
the Date of Termination, the Company shall arrange to provide the Executive
and the Executive's dependents with medical and dental insurance benefits
substantially similar to those "provided" (determined in accordance with
the next sentence hereof) to the Executive and the Executive's dependents
immediately prior to the Date of Termination or, if more favorable to the
Executive, those "provided" to them immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, at no
greater cost to the Executive than the cost to the Executive of the medical
and dental insurance benefits to which the Executive was actually entitled
immediately prior to such date or occurrence. For purposes of this
paragraph of Section 6.1(B), in determining which benefits were "provided"
at the applicable date, the Executive shall be deemed to have elected the
most comprehensive benefits and coverage available to the Executive at that
date (whether or not actually elected); further, such benefits shall
include,
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without limitation, an unrestricted right for the Executive and the
Executive's dependents to select their own care providers. The Company
shall provide such post-termination benefits under its medical and dental
plans, to the extent that the Executive's continued participation is
possible under the general terms and provisions of such plans. To the
extent that such participation is not possible, the Company shall arrange
to otherwise provide the Executive with such post-termination benefits.
For the thirty-six (36) month period immediately following the Date of
Termination, the Company shall arrange to provide the Executive with life
and accident insurance benefits substantially similar to those provided to
the Executive immediately prior to the Date of Termination or, if more
favorable to the Executive, those provided to the Executive immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason, at no greater cost to the Executive than the cost to the Executive
immediately prior to such date or occurrence.
Benefits otherwise receivable by the Executive pursuant to this
Section 6.1(B) shall be reduced to the extent benefits of the same type are
received by or made available to the Executive by a successor employer
during the thirty-six (36) month period following the Executive's
termination of employment (and any such benefits received by or made
available to the Executive shall be reported to the Company by the
Executive); provided, however, that the Company shall reimburse the
Executive for the excess, if any, of the cost of such benefits to the
Executive over the cost of the Executive's actual medical, dental, life and
accident insurance benefits immediately prior to the Date of Termination
or, if more favorable to the Executive, the first occurrence of an event or
circumstance constituting Good Reason.
(C) Notwithstanding any provision of the Company's Executive
Insurance Program (with any successor plan or program, the "EIP"), if the
Executive participates in the EIP, the Executive's right to be treated as a
"Retired Participant" under the EIP (as defined therein) after the Date of
Termination shall be determined by adding to the actual age and service
credit of the Executive, as determined under the provisions of the EIP, an
additional thirty-six (36) months of age and service credit.
(D) If the Executive would have become entitled to benefit
coverage under the Company's post-retirement health care plan, as in effect
immediately prior to the Date of Termination (or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an
event or circumstance constituting Good
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Reason), had the Executive's employment terminated subsequent to the Date
of Termination, on a date which would occur during the period of thirty-six
(36) months immediately following the Date of Termination, the Company
shall provide such post-retirement health care benefit coverage to the
Executive and the Executive's dependents commencing on the later of (i) the
date on which such coverage would have first become available, and (ii) the
date on which benefits described in Section 6.1(B) hereof terminate.
6.2 (A) Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such
Person) (all such payments and benefits, including the Severance Payments, being
hereinafter called "Total Payments") would not be deductible (in whole or part),
by the Company, an Affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent necessary
to make such portion of the Total Payments deductible (and after taking into
account any reduction in the Total Payments provided by reason of section 280G
of the Code in such other plan, arrangement or agreement), the cash Severance
Payments shall first be reduced (if necessary, to zero), and all other Severance
Payments shall thereafter be reduced (if necessary, to zero); provided, however,
that the Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
(B) For purposes of this limitation, (i) no portion of the Total
Payments the receipt or enjoyment of which the Executive shall have waived at
such time and in such manner as not to constitute a "payment" within the meaning
of section 280G(b) of the Code shall be taken into account, (ii) no portion of
the Total Payments shall be taken into account which, in the opinion of tax
counsel ("Tax Counsel") reasonably acceptable to the Executive and selected by
the accounting firm which was, immediately prior to the Change in Control, the
Company's independent auditor (the "Auditor"), does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code, including by
reason of section 280G(b)(4)(A) of the Code, (iii) the Severance Payments shall
be reduced only to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance
as deductions by reason of section 280G of the Code, in the opinion of Tax
Counsel, and (iv) the value of
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any noncash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Auditor in accordance with the principles of
sections 280G(d)(3) and (4) of the Code.
(C) If it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the Executive and the Company in applying the terms of this Section
6.2, the Total Payments paid to or for the Executive's benefit are in an amount
that would result in any portion of such Total Payments being subject to the
Excise Tax, then, if such repayment would result in (i) no portion of the
remaining Total Payments being subject to the Excise Tax and (ii) a
dollar-for-dollar reduction in the Executive's taxable income and wages for
purposes of federal, state and local income and employment taxes, the Executive
shall have an obligation to pay the Company upon demand an amount equal to the
sum of (i) the excess of the Total Payments paid to or for the Executive's
benefit over the Total Payments that could have been paid to or for the
Executive's benefit without any portion of such Total Payments being subject to
the Excise Tax; and (ii) interest on the amount set forth in clause (i) of this
sentence at the rate provided in section 1274(b)(2)(B) of the Code from the date
of the Executive's receipt of such excess until the date of such payment.
6.3 The payments provided to the Executive or for the Executive's
benefit in Section 6.1(A) shall be made not later than the fifth (5th) business
day following the Date of Termination; provided, however, that if the amounts of
such payments, and the limitation on such payments set forth in Section 6.2
hereof, cannot be finally determined on or before such day, the Company shall
pay to the Executive on such day an estimate of the payments under Section
6.1(A), as determined in good faith by the Company, the estimate to be of the
minimum amount of such payments to which the Executive is clearly entitled, and
shall pay the remainder of such payments (together with interest on the unpaid
remainder (or on all such payments to the extent the Company fails to make such
payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later than
the thirtieth (30th) day after the Date of Termination (or, if earlier, the
thirtieth (30th) day after the Executive's receipt of an excess parachute
payment). In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to the Executive, payable on the fifth (5th) business day
after demand by the Company (together with interest at 120% of the rate provided
in section 1274(b)(2)(B) of the Code). At the time that payments are made under
this Agreement, the Company shall provide the Executive with a written statement
setting forth the manner in which such payments were calculated and the basis
for such calculations including, without
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limitation, any opinions or other advice the Company has received from Tax
Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement).
6.4 The Company also shall pay to the Executive all reasonable
legal fees and expenses incurred by the Executive in disputing in good faith any
issue hereunder relating to the termination of the Executive's employment, in
seeking in good faith to obtain or enforce any benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder; provided, however, that no such fees and expenses
shall be paid unless the Executive prevails on at least one of the issues he
raises. Such payments shall be made within five (5) business days after delivery
of the Executive's written requests for payment accompanied with such evidence
of fees and expenses incurred as the Company reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in Control and during the
Term, any purported termination of the Executive's employment (other than by
reason of death) shall be communicated by written Notice of Termination from one
party hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. Further, a Notice of Termination for Cause based on
clause (ii) or (iii) of the definition of Cause herein is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board which was called and held for the purpose of considering such termination
(after reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (ii) or (iii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination," with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-
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time performance of the Executive's duties during such thirty (30) day period),
and (ii) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination (which, in the case of a termination
by the Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
until the earlier of (i) the date on which the Term ends or (ii) the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence.
7.4 Compensation During Dispute. If a purported termination occurs
on or after a Change in Control (or is deemed to have so occurred pursuant to
the second and third sentences of Section 6.1 hereof) and during the Term and
the Date of Termination is extended in accordance with Section 7.3 hereof, the
Company shall continue to pay the Executive the full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was participating when the notice
giving rise to the dispute was given until the Date of Termination, as
determined in accordance with Section 7.3 hereof. Amounts paid under this
Section 7.4 are in addition to all other amounts due under this Agreement (other
than those due under Section 5.2 hereof) and shall not be offset against or
reduce any other amounts due under this Agreement.
8. No Mitigation; Limited Offset. The Company agrees that, if the
Executive's employment with the Company terminates during the Term, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section 6
hereof or Section 7.4 hereof. Further, the amount of any payment or benefit
provided for in this Agreement (other than Section 6.1(B) hereof) shall not be
reduced by any compensation earned by the Executive as the result of employment
by another employer, by
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retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, each such amount, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.
10. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
To the Company:
Mine Safety Appliances Company
RIDC Industrial Park
000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
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Attention: General Counsel
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any other
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the Commonwealth of Pennsylvania. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under this Agreement which by their
nature may require either partial or total performance after the expiration of
the Term (including, without limitation, those under Sections 6 and 7 hereof)
shall survive such expiration.
12. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration.
14.1 All claims by the Executive for benefits under this Agreement
shall be directed to and determined by the Committee and shall be in writing.
Any denial by the Committee of a claim for benefits under this Agreement shall
be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Committee shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal to the Committee a decision of the Committee within sixty (60) days after
notification by the Committee that the Executive's claim has been denied.
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14.2 Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Pittsburgh, Pennsylvania in accordance with the rules of the American
Arbitration Association then in effect; provided, however, that the evidentiary
standards set forth in this Agreement shall apply. Judgment may be entered on
the arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to
seek specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(A) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(B) "Auditor" shall have the meaning set forth in Section 6.2 hereof.
(C) "Base Amount" shall have the meaning set forth in section
280G(b)(3) of the Code.
(D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(E) "Board" shall mean the Board of Directors of the Company.
(F) "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from the Executive's incapacity due to physical or mental
illness or any such actual or anticipated failure after the issuance of a Notice
of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof)
after a written demand for substantial performance is delivered to the Executive
by the Board, which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive's
duties, or (ii) the engaging by the Executive in conduct which is demonstrably
and materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act,
or failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to act, was in the best
interest of the Company and (y) in the event of a dispute concerning the
application of this provision, no claim by the Company that Cause exists shall
be given effect unless the Company establishes to
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the Committee by clear and convincing evidence that Cause exists.
(G) A "Change in Control" shall be deemed to have occurred if the
event set forth in any one of the following paragraphs of this Section 15(G)
shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing thirty
percent (30%) or more of the combined voting power of the Company's
then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause
(i) of paragraph (III) below; or
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on
the date hereof, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved or recommended by
a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so
approved or recommended; or
(III) there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least fifty-one percent (51%) of the combined voting power
of the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly,
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of securities of the Company representing thirty percent (30%) or more
of the combined voting power of the Company's then outstanding
securities; or
(IV) the shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least fifty-one percent (51%) of the
combined voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
Stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(H) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(I) "Committee" shall mean (i) the individuals (not fewer than three
in number) who, on the date six months before a Change in Control, constitute
the Personnel Committee of the Board, plus (ii) in the event that fewer than
three individuals are available from the group specified in clause (i) above for
any reason, such individuals as may be appointed by the individual or
individuals so available (including for this purpose any individual or
individuals previously so appointed under this clause (ii)); provided, however,
that the maximum number of individuals constituting the Committee shall not
exceed five.
(J) "Company" shall mean Mine Safety Appliances Company, a
Pennsylvania corporation and, except in determining under Section 15(G) hereof
whether or not any Change in Control of the Company has occurred, shall include
any successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
(K) "Date of Termination" shall have the meaning set forth in Section
7.2 hereof.
(L) "Disability" shall be deemed the reason for the
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termination by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
have been absent from the full-time performance of the Executive's duties with
the Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(M) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(N) "Excise Tax" shall mean any excise tax imposed under section 4999
of the Code.
(O) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(P) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express written
consent) on or after any Change in Control, or prior to a Change in Control
under the circumstances described in clauses (ii) and (iii) of the second
sentence of Section 6.1 hereof (treating all references in paragraphs (I)
through (VII) below to a "Change in Control" as references to a "Potential
Change in Control"), of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or failure to act
described in paragraph (I), (V), (VI) or (VII) below, such act or failure to act
is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(I) the assignment to the Executive of any duties
inconsistent with the Executive's status as an executive officer of
the Company or a substantial adverse alteration in the nature or
status of the Executive's responsibilities from those in effect
immediately prior to the Change in Control;
(II) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof or as the same may be
increased from time to time;
(III) the relocation of the Executive's principal place of
employment to a location more than thirty-five (35) miles from the
Executive's principal place of employment immediately prior to the
Change in Control or the Company's requiring the Executive to be based
anywhere other than such principal place of employment (or permitted
relocation thereof) except for required travel on the Company's
business to an extent
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substantially consistent with the Executive's present business travel
obligations;
(IV) the failure by the Company to pay to the Executive any
portion of the Executive's current compensation, or to pay to the
Executive any portion of an installment of deferred compensation under
any deferred compensation program of the Company, within seven (7)
days of the date such compensation is due;
(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control which is material to the Executive's
total compensation, including but not limited to the Company's annual
incentive plan, the 1998 Management Share Incentive Plan, the
Executive Insurance Program, the Supplemental Savings Plan or the
Supplemental Pension Plan or any substitute plans adopted prior to the
Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to
such plan, or the failure by the Company to continue the Executive's
participation therein (or in such substitute or alternative plan) on a
basis not materially less favorable, both in terms of the amount or
timing of payment of benefits provided and the level of the
Executive's participation relative to other participants, as existed
immediately prior to the Change in Control;
(VI) except for any changes required by applicable law, the
failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under
any of the Company's pension, savings, life insurance, medical, health
and accident, or disability plans in which the Executive was
participating immediately prior to the Change in Control, the taking
of any other action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any
material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the failure by the Company to provide the
Executive with the number of paid vacation days to which the Executive
is entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the
time of the Change in Control; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements
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of Section 7.1 hereof; for purposes of this Agreement, no such
purported termination shall be effective.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
For purposes of any determination regarding the existence of Good
Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes to the Committee by clear and
convincing evidence that Good Reason does not exist.
(Q) "Notice of Termination" shall have the meaning set forth in
Section 7.1 hereof.
(R) "Pension Plans" shall mean all tax-qualified and non-qualified
supplemental or excess benefit pension plans maintained by the Company and any
other plan or agreement entered into between the Executive and the Company which
is designed to provide the Executive with supplemental retirement benefits.
(S) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities,(iv) a corporation
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
or (v) any individual or entity [including the trustees (in such capacity) of
any such entity which is a trust] which is, directly or indirectly, the
Beneficial Owner of securities of the Company representing five percent (5%) or
more of the combined voting power of the Company's then outstanding securities
immediately before the Effective Date or any Affiliate of any such individual or
entity, including, for purposes of this Section 15(S), any of the following: (A)
any trust (including the trustees thereof in such capacity) established by or
for the benefit of any such individual; (B) any charitable foundation (whether a
trust or a corporation, including the trustees or directors thereof in such
capacity) established by any such individual; (C) any spouse of any such
individual; (D) the ancestors (and spouses) and lineal descendants (and spouses)
of such individual and such spouse; (E) the brothers and sisters (whether by the
whole or half blood or by adoption)of either such individual or such spouse; or
(F) the lineal descendants (and their spouses) of such brothers and sisters.
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(T) "Potential Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if consummated,
would constitute a Change in Control;
(III) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing fifteen percent
(15%) or more of either the then outstanding shares of common stock of
the Company or the combined voting power of the Company's then
outstanding securities (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company
or its affiliates); or
(IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(U) "Retirement" shall be deemed the reason for the termination by
the Executive of the Executive's employment if such employment is terminated in
accordance with the Company's retirement policy, including early retirement,
generally applicable to its salaried employees.
(V) "Severance Payments" shall have the meaning set forth in Section
6.1 hereof.
(W) "Tax Counsel" shall have the meaning set forth in Section 6.2
hereof.
(X) "Term" shall mean the period of time described in Section 2
hereof (including any extension, continuation or termination described therein).
(Y) "Total Payments" shall mean those payments so described in
Section 6.2 hereof.
(Z) "Window Period Termination" shall mean a termination of the
Executive's employment by the Executive without Good Reason by giving a Notice
of Termination during the one-year period beginning on the date of a Change in
Control and ending on the first anniversary thereof.
-18-
MINE SAFETY APPLIANCES COMPANY
By:
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Xxxxxx X. Xxxxxx
President
_
Xxxx X. Xxxx III
Address: 0000 Xxxxx Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
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