<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1998 Commission File No. 0-2504
MINE SAFETY APPLIANCES COMPANY
(Exact name of registrant as specified in its charter)
Pennsylvania 25-0668780
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
121 Gamma Drive
RIDC Industrial Park
O'Hara Township
Pittsburgh, Pennsylvania 15238
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 412/967-3000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
As of July 31, 1998, there were outstanding 5,030,153 shares of common stock
without par value, including 577,080 shares held by the Mine Safety Appliances
Company Stock Compensation Trust.
<PAGE>
PART I FINANCIAL INFORMATION
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED BALANCE SHEET
(Thousands of dollars, except shares data)
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
<S> <C> <C>
ASSETS
Current assets
Cash $ 9,692 $ 5,264
Temporary investments, at cost plus accrued interest 37,015 14,657
Accounts receivable, less allowance (1998 - $3,461;
1997 - $3,704) 84,760 91,388
Inventories:
Finished products 32,316 36,626
Work in process 12,699 13,772
Raw materials and supplies 31,209 30,668
-------- ---------
Total inventories 76,224 81,066
-------- ---------
Other current assets 25,987 27,238
-------- ---------
Total current assets 233,678 219,613
-------- ---------
Property, plant and equipment 354,865 354,649
Accumulated depreciation (201,734) (199,465)
-------- ---------
Net property 153,131 155,184
-------- ---------
Other assets 25,744 31,607
-------- ---------
TOTALS $ 412,553 $406,404
======== =========
</TABLE>
<PAGE>
<TABLE>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Notes and accounts payable $ 62,202 $ 55,990
Federal, foreign, state and local income taxes 3,408 4,089
Other current liabilities 47,241 43,161
--------- ---------
Total current liabilities 112,851 103,240
--------- ---------
Long-term debt 12,006 12,270
Noncurrent liabilities (principally employee/retiree
benefits) and deferred credits 43,048 49,445
Shareholders' equity
Preferred stock, 4-1/2% cumulative - authorized
100,000 shares of $50 par value; issued 71,373
shares, callable at $52.50 per share 3,569 3,569
Second cumulative preferred voting stock - authorized
1,000,000 shares of $10 par value; none issued
Common stock - authorized 20,000,000 shares of no par
value; issued 6,779,231 and 6,779,231 (outstanding
4,454,475 and 4,455,915) 12,515 12,297
Cumulative translation adjustments (9,631) (5,744)
Minimum pension liability adjustment (538) (538)
Retained earnings 350,904 343,534
Common stock compensation trust (579,370 and 600,000 shares) (27,231) (28,200)
Less treasury shares, at cost:
Preferred - 49,313 and 49,313 shares (1,595) (1,595)
Common - 1,745,386 and 1,723,316 shares (83,345) (81,874)
--------- ---------
Total shareholders' equity 244,648 241,449
--------- ---------
TOTALS $ 412,553 $406,404
========= =========
</TABLE>
<PAGE>
MINE SAFETY APPLIANCES COMPANY
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Thousands of dollars)
<TABLE>
<CAPTION>
Six Months Ended
June 30
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES
Income from operations $ 10,290 $ 8,659
Depreciation 10,456 10,922
Deferred taxes,pensions, and other non-cash
charges/(credits) (7,845) (2,986)
Changes in operating assets and liabilities 13,306 7,235
Other - principally currency exchange adjustments (1,304) (6,441)
--------- ---------
Cash flow from operating activities 24,903 17,389
--------- ---------
INVESTING ACTIVITIES
Property additions (14,524) (15,135)
Property disposals 6,303 624
Acquisitions and other investing 3,814 (495)
--------- ---------
Cash flow from investing activities (4,407) (15,006)
--------- ---------
FINANCING ACTIVITIES
Additions to long-term debt 119 638
Reductions of long-term debt (361) (855)
Changes in notes payable and short term debt 12,175 4,158
Cash dividends (2,920) (3,051)
Company stock purchases and sales (284) (1,792)
--------- ---------
Cash flow from financing activities 8,729 (902)
--------- ---------
Effect of exchange rate changes on cash (2,439) (2,007)
--------- ---------
Increase/(decrease) in cash and cash equivalents 26,786 (526)
Beginning cash and cash equivalents 19,921 25,096
--------- ---------
Ending cash and cash equivalents $ 46,707 $ 24,570
========= =========
</TABLE>
<PAGE>
Note 1 - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
include all adjustments,consisting of only normal recurring adjustments, which
are, in the opinion of management of the registrant, necessary for a fair
statement of the operating results for the three and six-month periods ended
June 30, 1998 and 1997. These financial statements have been prepared in
accordance with the instructions to Form 10-Q and therefore do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations, and changes in cash flows in conformity with
generally accepted accounting principles.
Note 2 - Earnings per Share
Basic earnings per share is computed on the weighted average number of
shares outstanding during the period. Diluted earnings per share includes the
effect of the weighted average stock options outstanding during the period,
using the treasury stock method. Antidilutive options are not considered in
computing earnings per share.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net income $ 4,802 $ 5,055 $ 10,290 $ 8,659
Preferred stock dividends declared 13 12 25 12
--------- --------- --------- ---------
Income available to common
shareholders 4,789 5,043 10,265 8,647
--------- --------- --------- ---------
Basic shares outstanding 4,449 4,586 4,451 4,592
Stock options 20 11 15 11
--------- --------- --------- ---------
Diluted shares outstanding 4,469 4,597 4,466 4,603
--------- --------- --------- ---------
Antidilutive stock options 3 2 3 2
--------- --------- --------- ---------
</TABLE>
Note 3 - Comprehensive Income
Comprehensive income was $3,789,000 and $6,403,000 for the three
and six months ended June 30, 1998 respectively, and $5,103,000 and $3,443,000
for the three and six months ended June 30, 1997, respectively. Comprehensive
income includes net income and changes in accumulated other comprehensive
income, primarily cumulative translation adjustments, for the period.
<PAGE>
MINE SAFETY APPLIANCES COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Consolidated sales for the second quarter of 1998 were $124,168,000 compared
with $129,245,000 for the second quarter of 1997. Sales for the six months ended
June 30, 1998 were $246,313,000 compared with $242,718,000 for 1997.
Net income for the 1998 second quarter was $4,802,000, or $1.08 per share,
compared with 1997 second quarter income of $5,055,000, or $1.10 per share. Net
income for the six months ended June 30, 1998 was $10,290,000, or $2.31 per
share, compared with $8,659,000, or $1.88 per share in 1997.
The decline in sales in the second quarter was due to several factors. The most
significant was delays in shipping of safety and instrument products from U.S.
operations during implementation of new enterprise-wide information systems in
May. While shipments have returned to more normal levels in June, the backlog
created in May has not yet been cleared. Sales were also adversely affected by
transition issues related to some production operations relocated from the
company's Esmond, Rhode Island facility, which was closed in 1997.
Another factor in the reported sales decline was the continued strengthening of
the U.S. dollar relative to international currencies. Local currency sales in
most European markets showed some growth, but were below prior year levels when
translated to U.S. dollars. Sales declines in other international markets were
attributed to the Asian economic crisis and ripple effects in other regions,
especially Latin America. Sales to mining markets, especially in South Africa,
continued to be adversely affected by the recall of self-contained self-rescuer
products. These recalls have now been substantially completed. Worldwide sales
of specialty chemical products have continued at strong levels.
Second quarter earnings were affected by two unusual factors. A positive impact
was recorded from the divestitures of the HAZCO and Baseline business units,
which contributed $2.2 million to net income. A negative element was the
substantially reduced level of invoicing in the U.S. in May due to the systems
and production problems. However, incoming orders in that month were relatively
normal and on plan. In addition, MSA's German affiliate continued to record
restructuring and product recall-related charges.
For the six months, higher sales and income reflect strong first quarter
results.
Other income for the three months and six months periods is higher than the
comparable periods in 1997 primarily as a result of the previously discussed
divestitures.
The lower effective tax rates for the three and six months periods as compared
with the same periods in 1997 are mainly related to the tax effects of the
divestitures.
The company is cautious regarding the outlook for the second half, which has
elements of optimism. Incoming orders in U.S. markets have continued at healthy
levels during the second quarter while backlog has grown because of the
difficulties previously mentioned. Deliveries by U.S. operations have been
improving since May, however, further progress will be required to benefit
future periods. Incoming orders have also continued at strong levels and ahead
of invoicing in Europe, particularly in Germany, which augers well for shipments
in the second half. However, global outlook is tempered by speculation that the
consequences of the Asia economic crisis may worsen and adversely affect other
regions, including the U.S., throughout the remainder of the year.
The company's consumer products initiative has begun to bear fruit. Following an
intense competition with other major safety equipment suppliers, products from
MSA Safety Works were selected to be carried by a leading U.S. home improvement
chain. This is a very encouraging beginning for this important initiative.
<PAGE>
Currency exchange adjustments charged directly to the equity cumulative
translation adjustments account are shown below. Significant second quarter 1998
losses relate primarily to Australia, Japan and Canada. Significant year-to-date
1998 losses relate to Germany and Australia. Significant year-to-date 1997
losses relate primarily to Germany and Italy.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
(Thousands of dollars) (Thousands of dollars)
<S> <C> <C> <C> <C>
Translation (gains)/losses 1,013 (48) 3,887 5,216
</TABLE>
Available credit facilities along with internal cash resources are
adequate to provide for ensuing capital requirements. The company's financial
position and liquidity continue to be adequate. The current ratio and term
debt in relation to capital as of June 30, 1998 were 2.1 and 5.1%, respectively,
as compared to 2.1 and 5.4% at December 31, 1997.
<PAGE>
PART II OTHER INFORMATION
MINE SAFETY APPLIANCES COMPANY
Item 1. Legal Proceedings
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
(a) May 5, 1998 - Annual Meeting
(b) Directors elected at Annual Meeting:
Helen Lee Henderson
John T. Ryan III
Directors whose term of office continued after the meeting:
Joseph L. Calihan
Thomas H. Witmer
Calvin A. Campbell, Jr.
G. Donald Gerlach
Thomas B. Hotopp
(c) Election of two Directors for a term of three years
Helen Lee Henderson For 4,359,921
Withhold 54,586
Broker Nonvotes -0-
John T. Ryan III For 4,359,922
Withhold 54,585
Broker Nonvotes -0-
Approval of the adoption of the Company's 1998 Management
Share Incentive Plan:
For 4,048,687
Against 142,156
Abstain 16,771
Broker Nonvotes 206,893
Selection of Price Waterhouse LLP as Auditors for the
year ending December 31, 1998:
For 4,032,808
Against 326,298
Abstain 55,401
Broker Nonvotes -0-
(d) Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10) (f) Mine Safety Appliances Company Retirement
Plan for Directors, as amended and restated
effective as of May 5,1998
(10) (g) Mine Safety Appliances Company Supplemental
Pension Plan as of May 5,1998
(10) (h) Mine Safety Appliances Company 1990 Non-
Employee Directors' Stock Option Plan as
amended on May 5,1998
<PAGE>
(10) (i) First Amendment to 1987 Management Share
Incentive Plan Restricted Stock Agreement as
of June 2,1998
(10) (j) Mine Safety Appliances Company Executive
Insurance Program as Amended and Restated as
of May 5,1998
(10) (k) Mine Safety Appliances Company Annual
Incentive Bonus Plan as of May 5,1998
(10) (l) Severance Agreement as of May 20,1998
(10) (m) Severance Agreement as of May 20,1998
(10) (n) Severance Agreement as of May 20,1998
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended June 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MINE SAFETY APPLIANCES COMPANY
Date: August 14, 1998 By /S/ James E. Herald
James E. Herald
Vice President - Finance;
Principal Financial and
Accounting Officer
<PAGE>
EXHIBIT (10)(f)
MINE SAFETY APPLIANCES COMPANY
RETIREMENT PLAN FOR DIRECTORS,
As Amended and Restated Effective as of May 5, 1998
---------------------------------------------------
1. Purpose. The purpose of this plan, originally established
--------
December 17, 1987, is to provide to each individual serving as a member of the
Board of Directors from time to time (individually referred to as a "Director"
and collectively as the "Board") of Mine Safety Appliances Company (the
"Company"), a lifetime retirement benefit following the attainment of certain
age and service requirements described hereafter.
2. Eligibility. A Director who terminates his or her service on the
-----------
Board on or after attaining age 70 and completing at least 5 years of service as
a Director shall be entitled to an annual "Retirement Allowance" during his or
her lifetime, as described below. A Director who has not terminated his or her
service on the Board, but has attained age 70 and has completed at least 5 years
of service as a Director shall have a vested right to an annual "Retirement
Allowance" during his or her lifetime, as described below.
3. Retirement Allowance. Subject to Section 4 hereof, the amount of
--------------------
the annual Retirement Allowance paid to a retired Director shall be equal to the
amount of the annual Director's retainer payable at the time of the Director's
termination of service. The annual Retirement Allowance shall be paid in four
equal installments as of the first day of each calendar quarter, beginning with
the calendar quarter following the Director's termination of service and
including the calendar quarter in which the Director's death occurs. No
Retirement Allowance payments shall be made following the death of a retired
Director.
4. Effect of Change in Control. Notwithstanding any other
---------------------------
provision of this Plan, if a Director is vested in his or her Retirement
Allowance on the date of the Director's termination of service and that
termination date occurs on, or within the three-year period immediately
following, a Change in Control (as defined in this Section 4), then, not later
than the fifth (5th) business day following such termination date, the Company
shall pay the Director a lump sum amount equal to the actuarial equivalent of
the Director's Retirement Allowance (in lieu of making payment of such
Retirement Allowance in accordance with Section 3 hereof). For purposes of this
Section 4, "actuarial equivalent" shall be determined using the same assumptions
utilized under the Non-Contributory Pension Plan for Employees of
<PAGE>
Mine Safety Appliances Company (or successor plan thereto) immediately prior to
the Director's termination date, or, if more favorable to the Director,
immediately prior to the Change in Control.
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) any Person (as defined in this Section 4) is or becomes
the Beneficial Owner (as defined in this Section 4), 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 (which term shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12 of the
Exchange Act, as defined in this Section 4)) 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 May 5, 1998, 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 May 5, 1998 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
2
<PAGE>
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, 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
common 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.
Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the
----------------
Exchange Act.
Exchange Act shall mean the Securities and Exchange Act of 1934, as amended
------------
from time to time.
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
3
<PAGE>
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, or (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 date hereof
or any Affiliate of any such individual or entity, including, for purposes of
this Plan, 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.
5. Source of Payments. This plan shall not be formally funded; a
------------------
Director's right to the payment of a Retirement Allowance hereunder, if any,
shall be entirely contractual. The sole source of payment of Retirement
Allowances shall be the general assets of the Company.
6. Amendment and Termination. This plan may be amended or terminated
-------------------------
at any time by the Board, except that no such amendment or termination shall
limit or impair the right of any retired Director to the payment of the
Retirement Allowance hereunder or the vested right of any Director to the
payment of the Retirement Allowance.
IN WITNESS WHEREOF, Mine Safety Appliances Company has caused this
plan, as amended and restated effective as of May 5, 1998, to be executed by its
duly authorized officers this 5th day of May, 1998.
ATTEST: MINE SAFETY APPLIANCES COMPANY
/s/ Donald H. Cuozzo By /s/ John T. Ryan III
_________________________ ------------------------------------
Secretary Chairman and Chief Executive Officer
4
<PAGE>
EXHIBIT (10)(g)
MINE SAFETY APPLIANCES COMPANY
SUPPLEMENTAL PENSION PLAN
MAY 5, 1998
SECTION I
---------
PURPOSE
-------
I.1 Purpose. The purpose of the Mine Safety Appliances Company
-------
Supplemental Pension Plan, as originally adopted on April 24, 1984, is to
provide certain employees of Mine Safety Appliances Company with additional
retirement income by supplementing the pension benefit provided to such
employees under the Non-Contributory Pension Plan for Employees of Mine Safety
Appliances Company (the "Pension Plan") to the extent benefits payable
thereunder are limited by Section 415 of the Internal Revenue Code of 1986, as
amended from time to time (the "Code"). The purposes of this plan instrument
are (i) to memorialize in writing the existing supplemental pension plan of Mine
Safety Appliances Company, (ii) to provide an additional supplement to pension
benefits under the Pension Plan to the extent that they are limited by Section
401(a)(17) of the Code, and (iii) to provide certain Change-in-Control
protection of the supplemental benefits provided hereunder.
SECTION II
----------
DEFINITIONS
-----------
II.1 Definitions. The following definitions shall apply for purposes
-----------
of the Plan, unless a different meaning is plainly indicated by the context:
(a) Beneficial Owner shall have the meaning set forth in Rule 13d-3
----------------
under the Exchange Act.
(b) Board shall mean the Board of Directors of the Company, as
-----
constituted from time to time.
(c) Change in Control shall be deemed to have occurred if the event
-----------------
set forth in any one of the following paragraphs shall have occurred:
<PAGE>
(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 (which term
shall have the meaning set forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act)) 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 May 5, 1998, 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 May 5, 1998 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
<PAGE>
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, 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
common 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.
(d) Code shall mean the Internal Revenue
----
<PAGE>
Code of 1986, as amended from time to time.
(e) Committee shall mean the Compensation Committee of the Board.
---------
(f) Company shall mean Mine Safety Appliances Company and (except as
-------
used in the definitions of Change in Control and Person in this Section II) any
successor to all or a major portion of its assets or business, which successor
assumes the obligations of the Company under this Plan by operation of law or
otherwise.
(g) ERISA shall mean the Employee Retirement Income Security Act of
-----
1974, as from time to time amended.
(h) Exchange Act shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time.
(i) Participant shall mean an employee of the Company or a
-----------
Participating Affiliate (i) who is designated by the Board for participation
herein, and (ii) who participates in the Pension Plan and whose hypothetical
benefits under the Pension Plan determined on the basis of the provisions of the
Pension Plan without regard to the limitations of Sections 401(a)(17)and 415 of
the Code would exceed the actual benefits payable under the Pension Plan taking
into account such limitations.
(j) Participating Affiliate shall have the meaning given such term
-----------------------
in the Pension Plan.
(k) Pension Plan shall mean the Non-Contributory Pension Plan for
------------
Employees of Mine Safety Appliances Company, as it may be amended from time to
time.
(l) 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
<PAGE>
temporarily holding securities pursuant to an offering of such securities, or
(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 date hereof or any Affiliate of any such
individual or entity, including, for purposes of this Plan, 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.
(m) Plan shall mean The Mine Safety Appliances Company Supplemental
----
Pension Plan, as set forth in this plan instrument, as it may be amended from
time to time.
(n) Supplemental Retirement Benefit shall have the meaning set
-------------------------------
forth in Section 3.1 hereof.
SECTION III
-----------
BENEFITS
--------
III.1 Supplemental Retirement Benefit. Each Participant (or his or her
-------------------------------
joint annuitant or designated survivor or beneficiary) shall be entitled under
this Plan to receive a Supplemental Retirement Benefit equal to the difference
between (i) the benefits (if any) that
<PAGE>
would have been payable to such individual under the Pension Plan if the
limitations on benefits imposed on the Pension Plan by Section 415 of the Code
(and by Section 401(a)(17) of the Code as to any such individual who is an
employee of the Company or a Participating Affiliate on May 5, 1998 or becomes
such an employee at any time after May 5, 1998) were not imposed, and (ii) the
benefits (if any) actually payable to such individual under the Pension Plan.
Subject to Section 3.3 hereof, the benefits under this Plan shall be
payable at the same time or times and in the same manner as such benefits are
payable under the Pension Plan, and any election of an optional form of payment,
or designation of a survivor or beneficiary that is effective under the Pension
Plan shall also apply to the benefits payable under this Plan.
III.2 Vesting. A Participant shall be vested in his or her
-------
Supplemental Retirement Benefit only if vested in his or her benefit under the
Pension Plan.
III.3 Effect of Change in Control. Notwithstanding any other provision
---------------------------
of this Plan, if a Participant is vested in his or her Supplemental Retirement
Benefit on the date of the Participant's termination of employment and that
termination date occurs on, or within the three-year period immediately
following, a Change in Control, then, not later than the fifth (5th) business
day following such termination date, the Company shall pay the Participant a
lump sum amount equal to the actuarial equivalent of the Participant's
Supplemental Retirement Benefit (in lieu of making payment of such Supplemental
Retirement Benefit in accordance with Section 3.1 hereof). For purposes of this
Section 3.3, "actuarial equivalent" shall be determined using the same
assumptions utilized under the Pension Plan immediately prior to the
Participant's termination date, or, if more favorable to the Participant,
immediately prior to the Change in Control.
<PAGE>
SECTION IV
----------
ADMINISTRATION
--------------
IV.1 Administration. The Plan shall be administered by the Committee.
--------------
IV.2 Duties. The Committee shall perform the duties required, and
------
shall have the powers necessary, to administer the Plan and carry out the
provisions thereof.
IV.3 Powers. The powers of the Committee shall be as follows:
------
(a) To determine any question arising in connection with the
Plan (and its decision or action in respect thereof shall be final,
conclusive and binding upon the Company and the Participants and any
other individual interested herein);
(b) To engage the services of counsel or attorney (who may be
counsel or attorney for the Company) and an actuary, if it deems
necessary, and such other agents or assistants as it deems advisable
for the proper administration of the Plan; and
(c) To receive from the Company and from Participants such
information as shall be necessary for the proper administration of
the Plan.
IV.4 Claims Procedure. Subject to the provisions of this Plan, the
----------------
Committee shall make all determinations as to the right of any individual to a
benefit. Any denial by the Committee of the claim for benefits under the Plan
by a Participant or any other individual interested herein shall be stated in
writing by the Committee and delivered or mailed to the Participant or such
individual. Such notice shall set forth the specific reasons for the denial,
written to the best of the Committee's ability in a manner that may be
understood without legal or actuarial counsel. In
<PAGE>
addition, the Committee shall afford to any Participant (or his or her joint
annuitant, designated survivor or beneficiary) whose claim for benefits has been
denied a reasonable opportunity for a review of the decision denying the claim.
SECTION V
---------
NONALIENATION OF BENEFITS
-------------------------
Neither the Participant nor any other individual shall have any right to
assign or otherwise to alienate the right to receive payments under the Plan, in
whole or in part. The immediately preceding sentence shall not apply to any
benefit payable pursuant to a "qualified domestic relations order," as defined
in Section 414(p) of the Code, which the Committee determines is applicable to
any benefit hereunder.
SECTION VI
----------
AMENDMENT AND TERMINATION
-------------------------
The Company reserves the right at any time by action of the Board to
terminate the Plan or to amend its provisions in any way. Notwithstanding the
foregoing, no termination or amendment of the Plan may (i) reduce the benefits
payable under the Plan to the Participant (or his or her joint annuitant or
designated survivor or beneficiary) if the Participant's termination of
employment with the Company (and Participating Affiliates, if applicable) has
occurred prior to such termination of the Plan or amendment of its provisions,
or (ii) reduce the benefit to be paid with respect to the Participant on the
date of such termination of the Plan or amendment of its provisions below the
amount that would have been paid with respect to the Participant if his or her
employment had terminated on the day before such termination or amendment.
<PAGE>
SECTION VII
-----------
MISCELLANEOUS
-------------
VII.1 No Right to Employment. This Plan shall not be construed as
----------------------
providing any Participant with the right to be retained in the Company's employ
(or the employ of any Participating Affiliate) or to receive any benefit not
specifically provided hereunder.
VII.2 No Effect on Other Compensation and Benefits. Nothing contained
--------------------------------------------
herein shall exclude or in any manner modify or otherwise affect any existing or
future rights of any Participant to participate in and receive the benefits of
any compensation, bonus, pension, life insurance, medical and hospitalization
insurance or other employee benefit plan or program to which he or she otherwise
might be or become entitled as an officer or employee of the Company (or any
Participating Affiliate).
VII.3 No Amendment to Pension Plan. This Plan shall not be deemed to
----------------------------
constitute an amendment to, or a part of, the Pension Plan. All references
hereunder to the Pension Plan shall include any amended or successor plan or
plans maintained by the Company, the terms of which may be applicable at any
time to a Participant's defined benefit retirement benefit. If, however, the
Pension Plan terminates, merges with, or is replaced by a successor plan, and as
a result thereof the amount of the Supplemental Retirement Benefit to be paid to
any Participant hereunder would be reduced or calculated on a different basis,
or commence at a later date or dates, such Supplemental Retirement Benefit shall
not be less than an amount calculated pursuant to the provisions of this Plan
and in accordance with the terms of the Pension Plan, as in effect immediately
prior to such termination, merger or replacement.
VII.4 Governing Law. This Plan shall be construed in accordance with
-------------
and governed by the laws of the Commonwealth of Pennsylvania, without regard to
its conflicts of law principles.
VII.5 Status. This Plan is not intended to
------
<PAGE>
satisfy the requirements for qualification under Section 401(a) of the Code. It
is intended to be a nonqualified plan that is not subject to ERISA. The Plan
shall be construed and administered so as to effectuate this intent.
VII.6 Expenses. All expenses of establishing and administering the
--------
Plan shall be paid by the Company. No individual interested herein shall have
any interest in any specific assets of the Company by reason of the individual's
interest under the Plan, and such individuals shall have only the status of
unsecured creditors of the Company with respect to any benefits that become
payable under this Plan.
VII.7 Successors. The Company shall 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 the Company's obligations hereunder in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.
VII.8 Withholding Requirements. Payment of benefits under this Plan
------------------------
shall be subject to applicable withholding requirements.
IN WITNESS WHEREOF, Mine Safety Appliances Company has caused this plan
to be executed by its duly authorized officers this 5th day of May, 1998.
ATTEST: MINE SAFETY APPLIANCES COMPANY
/s/ Donald H. Cuozzo By /s/ John T. Ryan III
- ------------------------ ----------------------------
Secretary Chairman and Chief
Executive Officer
<PAGE>
EXHIBIT (10)(h)
MINE SAFETY APPLIANCES COMPANY
1990 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(As amended May 5, 1998)
The purposes of the 1990 Non-Employee Directors' Stock Option Plan
(the "Plan") are to promote the long-term success of Mine Safety Appliances
Company (the "Company") by creating a long-term mutuality of interests between
the non-employee Directors and shareholders of the Company, to provide an
additional inducement for such Directors to remain with the Company and to
provide a means through which the Company may attract able persons to serve as
Directors of the Company.
SECTION 1
Administration
The Plan shall be administered by a Committee (the "Committee")
appointed by the Board of Directors of the Company (the "Board") and consisting
of not less than two members of the Board. The Committee shall keep records of
action taken at its meetings. A majority of the Committee shall constitute a
quorum at any meeting, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by a majority
of the Committee, shall be the acts of the Committee.
The Committee shall interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. All questions of interpretation and
application of the Plan, or as to stock options granted under the Plan, shall be
subject to the determination of the Committee, which shall be final and binding.
Notwithstanding the above, the selection of the Directors to whom
stock options are to be granted, the timing of such grants, the number of shares
subject to any stock option, the exercise price of any stock option, the periods
during which any stock option may be exercised and the term of any stock option
shall be as hereinafter provided, and the Committee shall have no discretion as
to such matters.
<PAGE>
SECTION 2
Shares Available under the Plan
The aggregate number of shares which may be issued and as to which
grants of stock options may be made under the Plan is 50,000 shares of the
Common Stock, without par value, of the Company (the "Common Stock"), subject to
adjustment and substitution as set forth in Section 5. If any stock option
granted under the Plan is cancelled by mutual consent or terminates or expires
for any reason without having been exercised in full, the number of shares
subject thereto shall again be available for purposes of the Plan. The shares
which may be issued under the Plan may be either authorized but unissued shares
or treasury shares or partly each, as shall be determined from time to time by
the Board.
SECTION 3
Grant of Stock Options
On the third business day following the day of each annual meeting of
the shareholders of the Company, each person who is then a member of the Board
and who is not then an employee of the Company or any of its subsidiaries (a
"non-employee Director") shall automatically and without further action by the
Board or the Committee be granted a "nonstatutory stock option" (i.e., a stock
----
option which does not qualify under Section 422 of the Internal Revenue Code of
1986, as amended from time to time (the "Code")) to purchase 500 shares of
Common Stock, subject to adjustment and substitution as set forth in Section 5.
If the number of shares then remaining available for the grant of stock options
under the Plan is not sufficient for each non-employee Director to be granted an
option for 500 shares (or the number of adjusted or substituted shares pursuant
to Section 5), then each non-employee Director shall be granted an option for a
number of whole shares equal to the number of shares then remaining available
divided by the number of non-employee Directors, disregarding any fractions of a
share.
SECTION 4
Terms and Conditions of Stock Options
Stock options granted under the Plan shall be subject to the following
2
<PAGE>
terms and conditions:
(A) The purchase price at which each stock option may be exercised
(the "option price") shall be one hundred percent (100%) of the fair market
value per share of the Common Stock covered by the stock option on the date
of grant, determined as provided in Section 4(G).
(B) The option price for each stock option shall be paid in full upon
exercise and shall be payable in cash in United States dollars (including
check, bank draft or money order); provided, however, that in lieu of such
cash the person exercising the stock option may pay the option price in
whole or in part by delivering to the Company shares of the Common Stock
having a fair market value on the date of exercise of the stock option,
determined as provided in Section 4(G), equal to the option price for the
shares being purchased; except that (i) any portion of the option price
representing a fraction of a share shall in any event be paid in cash and
(ii) no shares of the Common Stock which have been held for less than one
year may be delivered in payment of the option price of a stock option.
The date of exercise of a stock option shall be determined under procedures
established by the Committee, and as of the date of exercise the person
exercising the stock option shall be considered for all purposes to be the
owner of the shares with respect to which the stock option has been
exercised. Payment of the option price with shares shall not increase the
number of shares of the Common Stock which may be issued under the Plan as
provided in Section 2.
(C) No stock option shall be exercisable by a grantee during the first
six months of its term except in case of death or disability as provided in
Section 4(E). Subject to the terms of Section 4(E) providing for earlier
termination of a stock option, no stock option shall be exercisable after
the expiration of ten years from the date of grant. A stock option to the
extent exercisable at any time may be exercised in whole or in part.
(D) No stock option shall be transferable by the grantee otherwise
than by Will, or if the grantee dies intestate, by the laws of descent and
distribution of the state of domicile of the grantee at the time of death.
All stock options shall be exercisable during the lifetime of the grantee
only by the grantee or the grantee's guardian or legal representative.
(E) If a grantee ceases to be a Director of the Company for any
3
<PAGE>
reason, any outstanding stock options held by the grantee shall be
exercisable and shall terminate according to the following provisions:
(i) If a grantee ceases to be a Director of the Company for any
reason other than resignation, removal for cause or death, any then
outstanding stock option held by such grantee shall be exercisable by
the grantee (but only to the extent exercisable by the grantee
immediately prior to ceasing to be a Director) at any time prior to
the expiration date of such stock option or within two years after the
date the grantee ceases to be a Director, whichever is the shorter
period, provided that, in the case of a grantee who is disabled within
--------
the meaning of Section 22(e)(3) of the Code (a "Disabled Grantee"),
any then outstanding stock option shall be exercisable in full whether
or not exercisable by the grantee immediately prior to ceasing to be a
Director;
(ii) If during his term of office as a Director a grantee resigns
from the Board or is removed from office for cause, any outstanding
stock option held by the grantee which is not exercisable by the
grantee immediately prior to resignation or removal shall terminate as
of the date of resignation or removal, and any outstanding stock
option held by the grantee which is exercisable by the grantee
immediately prior to resignation or removal shall be exercisable by
the grantee at any time prior to the expiration date of such stock
option or within 90 days after the date of resignation or removal,
whichever is the shorter period;
(iii) Following the death of a grantee during service as a
Director of the Company, any outstanding stock option held by the
grantee at the time of death (whether or not exercisable by the
grantee immediately prior to death) shall be exercisable by the person
entitled to do so under the Will of the grantee, or, if the grantee
shall fail to make testamentary disposition of the stock option or
shall die intestate, by the legal representative of the grantee at any
time prior to the expiration date of such stock option or within two
years after the date of death, whichever is the shorter period;
4
<PAGE>
(iv) Following the death of a grantee after ceasing to be a
Director and during a period when a stock option is exercisable, any
outstanding stock option held by the grantee at the time of death
shall be exercisable by such person entitled to do so under the Will
of the grantee or by such legal representative (but only to the extent
the stock option was exercisable by the grantee immediately prior to
the death of the grantee) at any time prior to the expiration date of
such stock option or within one year after the date of death,
whichever is the shorter period.
A stock option held by a grantee who has ceased to be a Director
of the Company shall terminate upon the expiration of the applicable
exercise period, if any, specified in this Section 4(E). Whether a
grantee is a Disabled Grantee shall be determined, in its discretion,
by the Committee, and any such determination by the Committee shall be
final and binding.
(F) All stock options shall be confirmed by an agreement, or an
amendment thereto, which shall be executed on behalf of the Company by the
Chief Executive Officer (if other than the President), the President or any
Vice President and by the grantee.
(G) Fair market value of the Common Stock shall be the mean between
the following prices, as applicable, for the date as of which fair market
value is to be determined as quoted in The Wall Street Journal (or in such
-----------------------
other reliable publication as the Committee, in its discretion, may
determine to rely upon): (a) if the Common Stock is listed on the New York
Stock Exchange, the highest and lowest sales prices per share of the Common
Stock as quoted in the NYSE-Composite Transactions listing for such date,
(b) if the Common Stock is not listed on such exchange, the highest and
lowest sales prices per share of Common Stock for such date on (or on any
composite index including) the principal United States securities exchange
registered under the Securities Exchange Act of 1934 (the "1934 Act") on
which the Common Stock is listed, or (c) if the Common Stock is not listed
on any such exchange, the highest and lowest sales prices per share of the
Common Stock for such date on the National Association of Securities
Dealers Automated Quotations System or any successor system then in use
5
<PAGE>
("NASDAQ"). If there are no such sale price quotations for the date as of
which fair market value is to be determined but there are such sale price
quotations within a reasonable period both before and after such date, then
fair market value shall be determined by taking a weighted average of the
means between the highest and lowest sales prices per share of the Common
Stock as so quoted on the nearest date before and the nearest date after
the date as of which fair market value is to be determined. The average
should be weighted inversely by the respective numbers of trading days
between the selling dates and the date as of which fair market value is to
be determined. If there are no such sale price quotations on or within a
reasonable period both before and after the date as of which fair market
value is to be determined, then fair market value of the Common Stock shall
be the mean between the bona fide bid and asked prices per share of Common
Stock as so quoted for such date on NASDAQ, or if none, the weighted
average of the means between such bona fide bid and asked prices on the
nearest trading date before and the nearest trading date after the date as
of which fair market value is to be determined, if both such dates are
within a reasonable period. The average is to be determined in the manner
described above in this Section 4(G). If the fair market value of the
Common Stock cannot be determined on the basis previously set forth in this
Section 4(G) for the date as of which fair market value is to be
determined, the Committee shall in good faith determine the fair market
value of the Common Stock on such date. Fair market value shall be
determined without regard to any restriction other than a restriction
which, by its terms, will never lapse.
(H) The obligation of the Company to issue shares of the Common Stock
under the Plan shall be subject to (i) the effectiveness of a registration
statement under the Securities Act of 1933, as amended, with respect to
such shares, if deemed necessary or appropriate by counsel for the Company,
(ii) the condition that the shares shall have been listed (or authorized
for listing upon official notice of issuance) upon each stock exchange, if
any, on which the Common Stock shares may then be listed and (iii) all
other applicable laws, regulations, rules and orders which may then be in
effect.
Subject to the foregoing provisions of this Section 4 and the other
provisions of the Plan, any stock option granted under the Plan may be subject
to such restrictions and other terms and conditions, if any, as shall be
determined, in its discretion, by the Committee and set forth in the agreement
referred to in Section 4(F), or an amendment thereto.
6
<PAGE>
SECTION 5
Adjustment and Substitution of Shares
If a dividend or other distribution shall be declared upon the Common
Stock payable in shares of the Common Stock, the number of shares of the Common
Stock set forth in Section 3, the number of shares of the Common Stock then
subject to any outstanding stock options and the number of shares of the Common
Stock which may be issued under the Plan but are not then subject to outstanding
stock options shall be adjusted by adding thereto the number of shares of the
Common Stock which would have been distributable thereon if such shares had been
outstanding on the date fixed for determining the shareholders entitled to
receive such stock dividend or distribution.
If the outstanding shares of the Common Stock shall be changed into or
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock set forth in Section 3, for each share of the Common
Stock subject to any then outstanding stock option, and for each share of the
Common Stock which may be issued under the Plan but which is not then subject to
any outstanding stock option, the number and kind of shares of stock or other
securities into which each outstanding share of the Common Stock shall be so
changed or for which each such share shall be exchangeable.
In case of any adjustment or substitution as provided for in this
Section 5, the aggregate option price for all shares subject to each then
outstanding stock option prior to such adjustment or substitution shall be the
aggregate option price for all shares of stock or other securities (including
any fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares. Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.
No adjustment or substitution provided for in this Section 5 shall
require the Company to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.
7
<PAGE>
SECTION 6
Effect of the Plan on the Rights of Company and Shareholders
Nothing in the Plan, in any stock option granted under the Plan, or in
any stock option agreement shall confer any right to any person to continue as a
Director of the Company or interfere in any way with the rights of the
shareholders of the Company or the Board of Directors to elect and remove
Directors.
SECTION 7
Amendment and Termination
The right to amend the Plan at any time and from time to time and the
right to terminate the Plan at any time are hereby specifically reserved to the
Board; provided always that no such termination shall terminate any outstanding
stock options granted under the Plan; and provided further that no amendment of
the Plan shall (a) be made without shareholder approval if shareholder approval
of the amendment is at the time required for stock options under the Plan to
qualify for the exemption from Section 16(b) of the 1934 Act provided by Rule
16b-3 or by the rules of the NASDAQ National Market System or any stock exchange
on which the Common Stock may then be listed, (b) amend more than once every six
months the provisions of the Plan relating to the selection of the Directors to
whom stock options are to be granted, the timing of such grants, the number of
shares subject to any stock option, the exercise price of any stock option, the
periods during which any stock option may be exercised and the term of any stock
option other than to comport with changes in the Code or the rules and
regulations thereunder or (c) otherwise amend the Plan in any manner that would
cause stock options under the Plan not to qualify for the exemption provided by
Rule 16b-3. No amendment or termination of the Plan shall, without the written
consent of the holder of a stock option theretofore awarded under the Plan,
adversely affect the rights of such holder with respect thereto.
Notwithstanding anything contained in the preceding paragraph or any
other provision of the Plan or any stock option agreement, the Board shall have
the power to amend the Plan in any manner deemed necessary or advisable for
stock options granted under the Plan to qualify for the exemption provided by
Rule 16b-3 (or any successor rule relating to exemption from Section 16(b) of
the 1934 Act), and
8
<PAGE>
any such amendment shall, to the extent deemed necessary or advisable by the
Board, be applicable to any outstanding stock options theretofore granted under
the Plan notwithstanding any contrary provisions contained in any stock option
agreement. In the event of any such amendment to the Plan, the holder of any
stock option outstanding under the Plan shall, upon request of the Committee and
as a condition to the exercisability of such option, execute a conforming
amendment in the form prescribed by the Committee to the stock option agreement
referred to in Section 4(F) within such reasonable time as the Committee shall
specify in such request.
SECTION 8
Effective Date and Duration of Plan
The effective date and date of adoption of the Plan shall be December
17, 1990, the date of adoption of the Plan by the Board, provided that on or
prior to December 31, 1991 such adoption of the Plan by the Board is approved by
the affirmative vote of the holders of at least a majority of the outstanding
shares of voting stock of the Company represented in person or by proxy at a
duly called and convened meeting of such holders. Notwithstanding any other
provision contained in the Plan, no stock option granted under the Plan may be
exercised until after such shareholder approval.
SECTION 9
Change in Control
Notwithstanding any other provision of the Plan to the contrary,
immediately prior to any Change in Control of the Company (as defined in this
Section 9), all stock options which are then outstanding hereunder shall become
fully vested and exercisable. As used in the immediately preceding sentence,
"immediately prior" to the Change in Control shall mean sufficiently in advance
of the Change in Control to permit the grantee to take all steps reasonably
necessary to exercise the option fully and to deal with the shares purchased
under the option so that those shares may be treated in the same manner in
connection with the Change in Control as the shares of Common Stock of other
shareholders.
A Change in Control shall be deemed to have occurred if the event set forth
-----------------
in any one of the following four paragraphs shall have occurred:
9
<PAGE>
(I) any Person (as defined in this Section 9) is or becomes
the Beneficial Owner (as defined in this Section 9), 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 (which term shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12 of the
Exchange Act, as defined in this Section 9)) 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 May 5, 1998, 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 May 5, 1998 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
10
<PAGE>
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, 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
common 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.
Beneficial Owner shall have the meaning set forth in Rule 13d-3 under the
----------------
Exchange Act.
Exchange Act shall mean the Securities and Exchange Act of 1934, as amended
------------
from time to time.
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, or (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
11
<PAGE>
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 date hereof or any Affiliate of any such individual or
entity, including, for purposes of this Plan, 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.
12
<PAGE>
EXHIBIT (10)(i)
FIRST AMENDMENT
TO
1987 MANAGEMENT SHARE INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
MINE SAFETY APPLIANCES COMPANY, a Pennsylvania corporation (the
"Company") and JOHN T. RYAN III (the "Grantee") having executed the above-
entitled Restricted Stock Agreement (the "Agreement") as of March 15, 1996, do
hereby execute this First Amendment thereto as of June 2, 1998.
1. The Agreement is hereby amended by the addition of the following new
Section 12:
"12. Additional Accelerated Lapse of Restrictions. Notwithstanding
--------------------------------------------
any other provision hereof, in addition to the 'Section 8 Events' which
will cause an accelerated lapse (pursuant to Section 8 of the 1987 Plan) of
any restrictions applicable to the Restricted Stock evidenced by this
Agreement, all such restrictions shall lapse immediately prior to any
occurrence of an event described in the following paragraph (an
'Acceleration Event'), regardless of the scheduled lapse of such
restrictions. As used in the immediately preceding sentence, 'immediately
prior' to the Acceleration Event shall mean sufficiently in advance of the
Acceleration Event to permit the Grantee to take all steps reasonably
necessary to deal with the Restricted Stock evidenced by this Agreement so
that those formerly restricted shares may be treated in the same manner in
connection with the Acceleration Event as the shares of the common stock of
the Company held by other shareholders.
"An 'Acceleration Event' shall be deemed to have occurred if there is
consummated a merger or consolidation of 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 (as defined
below) is or becomes the Beneficial Owner (as defined below), directly or
indirectly, of securities of the Company representing thirty percent (30%)
or more of the combined voting power of the Company's then outstanding
securities.
"'Affiliate' shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
"'Beneficial Owner' shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
<PAGE>
"'Exchange Act' shall mean the Securities and Exchange Act of 1934, as
amended from time to time.
"'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, or (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 date hereof or any Affiliate of any such individual or entity,
including, for purposes of this Plan, 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."
2. As amended by this First Amendment, the Agreement is hereby
specifically ratified and reaffirmed.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of June 2, 1998.
MINE SAFETY APPLIANCES COMPANY
By /s/ Donald H. Cuozzo
__________________________________
Donald H. Cuozzo
Vice President and Secretary
WITNESS: GRANTEE:
_________________________ __________________________________
John T. Ryan III
2
<PAGE>
EXHIBIT (10)(j)
MINE SAFETY APPLIANCES COMPANY
EXECUTIVE INSURANCE PROGRAM
As Amended and Restated as of May 5, 1998
Section 1 - Purpose
- -------------------
The purpose of the Executive Insurance Program ("EIP" or "Plan") is to
enable Mine Safety Appliances Company (the "Company") to assist certain of the
Company's senior management employees in providing life insurance benefits for
their families and dependents during their working career with the Company and
to provide them with additional flexibility and post-employment benefits upon
their retirement from active employment with the Company. This result is to be
accomplished by substituting, for each eligible employee, all but $50,000 of
group term life insurance with individual life insurance. All of the premium
cost will be paid by the Company.
Section 2 - Definitions
- -----------------------
The following definitions shall apply for purposes of the Plan unless
another meaning is clearly required by the context.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
----------------
Exchange Act.
"Beneficiary" shall mean any person, persons or entity who or which may be
-----------
designated by a Participant as the recipient of any benefits to which the same
may be entitled under the terms of the Plan upon the death of the Participant.
"Board" shall mean the Board of Directors of the Company as it may be
-----
constituted from time to time.
"Company" shall mean Mine Safety Appliances Company, including any
-------
subsidiaries or affiliates, or any successor thereto, except that in the
definitions provided in this Section 2 of Change in Control and of Person,
"Company" shall mean only the Mine Safety Appliances Company.
"Change in Control" shall be deemed to have occurred if the event set forth
-----------------
in
<PAGE>
any one of the following paragraphs 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 (which term shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12 of the
Exchange Act)) 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 May 5, 1998, 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 May 5, 1998 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
2
<PAGE>
effected to implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, 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
common 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.
"Death Benefit" shall mean the gross amount payable by an Insurer under the
-------------
terms of a policy issued hereunder upon the death of a Participant. A portion
of the Death Benefit, referred to as the "Insurance Amount" (as listed in the
"Table of Insurance Amounts" attached hereto), will be paid to the Participant's
Beneficiaries and the balance paid to the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
------------
from time to time.
"Insurer" shall mean the Connecticut Mutual Life Insurance Company and/or
-------
any other insurance carrier selected by the Company to issue Policies hereunder
and which is authorized to do business in the Commonwealth of Pennsylvania.
"Participant" shall mean any member of senior management of the Company
-----------
authorized by the Board to participate in the Plan.
3
<PAGE>
"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, or (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 date hereof or any Affiliate of any such individual or
entity, including, for purposes of this Plan, 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.
"Plan" shall mean the Executive Insurance Program described herein.
----
"Policy" shall mean an insurance contract issued by an Insurer on the life
------
of a Participant.
"Retired Participant" shall mean a Participant who has terminated his
-------------------
active employment as an employee of the Company on or after a date when his
combined age and service satisfy the "Rule of 70" as follows: the sum of the
Participant's age (measured in full and partial years, in increments of one-
twelfth (1/12) year) and the Participant's years of employment with the Company
(measured in full and partial years, in increments of one-twelfth (1/12) year)
equals or exceeds 70.
4
<PAGE>
Section 3 - Eligibility
- -----------------------
Those members of management who are eligible to participate in the
Executive Insurance Program shall be the Chief Executive Officer of the Company
and such other key members of senior management as shall be designated from time
to time by the Chief Executive Officer of the Company and approved for
participation by the Board of Directors.
Section 4 - Amount and Effective Date of Coverage
- -------------------------------------------------
The initial amount of life insurance coverage provided under the Plan to
those selected for participation as of the effective date of the Plan shall be
as described in the "Table of Insurance Amounts" attached hereto. The amount of
life insurance provided to executives who are selected for participation after
the effective date of the Plan shall be in an amount determined by the Chief
Executive Officer and approved by the Board at the time of their selection.
The effective date of insurance coverage hereunder shall be the later of
the date of the employee's selection for participation herein or acceptance by
the Insurer as a standard risk. The cancellation of a Participant's group term
life insurance in excess of $50,000, and his actual participation in this Plan
shall be conditioned upon his insurability in a standard risk category for the
benefit to be provided herein or, if not insurable in a standard risk category,
the acceptance by the Company of the non-standard risk category proposed by the
Insurer.
The Board reserves the right to change the amount of insurance on the life
of any Participant from time to time, and any such change in the level of
insurance shall be effective as of the later of the first day of the month
coincident with or next following the effective date of the change or the date
of acceptance by the Insurer of the new insurance amount at standard rates, or
acceptance by the Company of an offer of insurance made by the Insurer at non-
standard rates; provided, however, that, from and after the first date on which
the combined age and service of any Participant (whether a Retired Participant
or an active Participant) satisfy the Rule of 70 (as the satisfaction of such
Rule is described in the definition of Retired Participant which appears in
Section 2 hereof) or will have satisfied the Rule of 70 upon an assumed
immediate termination of employment (as the requirements for satisfaction of
such Rule may have been modified by any written Severance Agreement between the
Company and such Participant), the amount of insurance on the life of such
5
<PAGE>
Participant (sometimes referred to in this Plan as the "Insurance Amount")
cannot be decreased.
Section 5 - Payment for Coverage
- --------------------------------
The cost of the applicable amount of life insurance on the life of the
Participant shall be paid when due by the Company. The Company shall annually
furnish each Participant with a statement of imputed income reportable by the
Participant for income tax purposes as a result of the payment.
Section 6 - Payment of Proceeds Upon Death While Employed
- ---------------------------------------------------------
In the event of the death of the Participant while employed by the Company,
the gross death benefit payable under the Policy shall be split between the
Company and the Participant's Beneficiary. The Beneficiary shall receive an
amount equal to the Insurance Amount and the Company shall receive the
difference between the gross Death Benefit and the Insurance Amount. The
amounts payable to the Company and the Beneficiary shall be paid directly to
each payee by the Insurer directly from the Insurer.
Section 7 - Options Upon Retirement of a Participant
- ----------------------------------------------------
Subject to Section 8 hereof, at any time prior to the year in which a
Participant becomes a Retired Participant, he shall have the right to make an
irrevocable election in writing of one of the following three options with
respect to his Insurance Amount. If a Participant shall fail to make such an
election, he shall be deemed to have elected the supplemental retirement benefit
payments described in this Section 7 as Option 3.
(1) Maintain the Existing Arrangement. Under this option the Executive
----------------------------------
Insurance Program would remain as it existed prior to the Participant's
retirement. For federal income tax purposes, a Retired Participant will be
deemed to have received imputed income, but the Death Benefit received by the
Participant's Beneficiary will not be subject to federal income tax.
(2) Company-Paid Post-Retirement Death Benefit. Alternatively, the
------------------------------------------
6
<PAGE>
Participant can elect not to continue the Executive Insurance Program, but in
lieu thereof, can elect a non-insured post-retirement death benefit equal to the
Insurance Amount in effect at the date of the Participant's retirement. Under
this Option there is no imputed income for tax purposes to the Retired
Participant but the Death Benefit paid to the Participant's Beneficiary by the
Company will be subject to federal income tax when received.
(3) Supplemental Retirement Benefits. Rather than a continuation of the
--------------------------------
Death Benefit described in either Option 1 or Option 2 above, a Participant can
elect to receive a series of supplemental retirement payments which, in the
aggregate, equal three-quarters (75%) of the pre-retirement Insurance Amount.
Payment of the supplemental retirement benefits shall be made in a series of
approximately equal semi- monthly payments over a period of 15 years. Payment
of such semi-monthly payments to the Retired Participant shall commence no later
than sixty days after the Retired Participant's termination of employment with
the Company.
The Supplemental Retirement Benefit Option may be elected by a Participant
at any time on or after August 1, 1991. It shall be available to any
Participant who retires on or after that date as well as to any previously
Retired Participant who had previously elected either Option 1 or Option 2. If
the supplemental retirement payments of Option 3 are elected, and in the event
of the death of the Retired Participant prior to the completion of the 15-year
payment period, the then unpaid installments shall continue to be paid to the
Retired Participant's Beneficiary or, at the discretion of the Board, may be
commuted and paid to such Beneficiary in a single sum as soon as may be
practicable after the Board's decision to make such a single sum payment.
Section 8 - Effect of a Change in Control
- -----------------------------------------
Notwithstanding any other provision of this Plan, if a Participant's
termination of employment occurs on, or within the three-year period immediately
following, a Change in Control and the Participant thereupon becomes a Retired
Participant within the meaning of Section 2 hereof (the determination of such
Retired Participant status taking into account any relevant provision in any
written Severance Agreement the Participant may have with the Company), then,
not later than the fifth (5th) business day following such termination, the
Company shall pay the Retired Participant a lump sum amount equal to the present
value of the series of supplemental retirement payments described as Option 3 in
Section 7 hereof to which the Retired
7
<PAGE>
Participant would otherwise be entitled if the Retired Participant had elected
Option 3. The Company's payment of such lump sum shall be in lieu of making
payment to the Retired Participant in accordance with any option described in
Section 7 hereof. For purposes of this Section 8, such present value shall be
determined using a discount rate equal to 120% of the applicable rate provided
in section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended from
time to time.
Section 9 - Administration, Amendment, Termination
- --------------------------------------------------
The Board, or its delegate, shall be the "Administrator" of this Plan, and
shall have full power and authority to interpret, construe and administer the
same. Any such interpretation and construction shall be final and binding upon
any and all parties in interest. In addition, the Board shall have the right to
amend this Plan from time to time, and to terminate it at any time..
Notwithstanding the foregoing provisions of this Section 9, no amendment or
termination of this Plan by the Board and no act (or failure to act) by the
Board (or its delegate) as Administrator shall affect detrimentally the rights
under the Plan of any Retired Participant or of any active Participant whose
combined age and service have satisfied the Rule of 70 (as the satisfaction of
such Rule is described in the definition of Retired Participant which appears in
Section 2 hereof) or will have satisfied the Rule of 70 upon an assumed
immediate termination of employment (as the requirements for satisfaction of
such Rule may have been modified by any written Severance Agreement between the
Company and such Participant).
Section 10 - Miscellaneous Matters
- ----------------------------------
(a) No Right to Assets. No Participant, Beneficiary or other person or
------------------
entity claiming entitlement to any benefit from or through such person shall
have any right to or title in any policy or any other asset obtained by the
Company for the purpose of funding the benefits provided hereunder except as
otherwise expressly provided herein.
(b) Alienation. Except with respect to the designation of a
----------
Beneficiary to be the recipient of any death benefits hereunder, or the
assignment of the incidents of ownership of any death benefits hereunder, the
interest of Participants and their Beneficiaries under the Plan are not in any
way subject to their debts or other obligations and may not be voluntarily or
involuntarily sold, transferred, assigned,
8
<PAGE>
alienated or encumbered, and any attempt to do so shall be void
(c) Construction. The Plan shall be construed and administered
------------
according to the laws of the Commonwealth of Pennsylvania and any federal laws
which may from time to time be applicable. Whenever any words are used herein
in the masculine gender, they shall be construed as though they were also used
in the feminine gender in all cases where they would apply, and whenever any
words are used in the singular form, they shall be construed as though they were
also used in the plural form in all cases where they would so apply. Headings
of Sections of this instrument are inserted for convenience of reference only
and as such they constitute no part of this Plan and are not to be considered in
the construction hereof.
(d) Limitation of Benefit. All benefits hereunder except those
---------------------
described in Section 8 and Options 2 and 3 of Section 7 shall be payable solely
by the Insurer(s) under the Policies issued hereunder, and the Company does not
assume any liability or responsibility therefor or guarantee such benefits. The
liability and responsibility of the Company are strictly limited to the
provisions of this Plan.
9
<PAGE>
TABLE OF INSURANCE AMOUNTS
--------------------------
Title Amount
- ----- ------
Chairman $1,000,000
President $750,000
Vice President $600,000
Executive $300,000
10
<PAGE>
EXHIBIT (10)(k)
MINE SAFETY APPLIANCES COMPANY
ANNUAL INCENTIVE BONUS PLAN
MAY 5, 1998
1. Purposes.
--------
The purposes of the Mine Safety Appliances Company Annual Incentive
Bonus Plan are to attract and retain highly-qualified executives by providing
appropriate performance-based short-term incentive awards, to provide strong
financial incentive each year for the excellent performance of each
participating executive by making a significant percentage of the executive's
total cash compensation dependent upon the level of corporate and individual
performance attained for the year, and, by accomplishing those objectives, to
increase shareholder value.
2. Definitions in Last Section.
---------------------------
For purposes of the Plan, capitalized terms, unless defined where the
respective term first appears in the Plan, shall have the meanings given in the
last Section hereof.
3. Eligibility.
-----------
With respect to any Plan Year, all Company officers and such key
employees of the Company and its Subsidiaries as are designated by the Chief
Executive Officer shall participate in the Plan.
4. Bonuses.
-------
(a) Participant's Target Bonus. The Committee shall establish the
--------------------------
amount of the target Bonus for each Participant with respect to each Plan Year.
A Participant's target Bonus for a particular Plan Year shall be the dollar
amount resulting from multiplying the median market level salary (represented by
the salary midpoint as of the January 1st immediately following the Plan Year)
for an individual in the Participant's position by
<PAGE>
a percentage determined by the Committee. With respect to any Participant other
than the Chief Executive Officer, the Committee shall be assisted in determining
the applicable percentage by the recommendation of the Chief Executive Officer.
After a Participant's target Bonus has been established for a particular Plan
Year, it cannot be changed, except that, in the sole discretion of the Committee
(assisted by the recommendation of the Chief Executive Officer with respect to
any Participant other than the Chief Executive Officer), a Participant's target
Bonus can be adjusted if the Participant's position is changed during such Plan
Year (whether or not the Participant's title is changed).
(b) Participant's Performance Goal. For each Plan Year, the
------------------------------
applicable Performance Goal for each Participant shall be comprised of one or
more EBIT targets. In the case of the Chief Executive Officer, the Performance
Goal shall be the attainment of the target Consolidated EBIT. In the case of
any other Participant, the Performance Goal shall be the attainment of such EBIT
targets (including Consolidated EBIT, United States EBIT and Divisional EBIT) as
the Chief Executive Officer, in his sole discretion, shall determine to be
relevant to the Participant's performance and such EBIT targets shall be
weighted for their relevance to the Participant's performance in such manner as
the Chief Executive Officer, in his sole discretion, shall determine to be
appropriate; provided, however, that attainment of the target Consolidated EBIT
shall constitute at least 25% of the Performance Goal for each Participant who
is an officer of the Company. The Performance Goal for any such Participant may
be (but need not be) different each Plan Year and different Performance Goals
may be applicable to different Participants.
(c) Two-Stage Calculation of Bonus Earned by a Participant. The
------------------------------------------------------
calculation of the actual Bonus earned by a Participant with respect to a Plan
Year shall be done in two stages. The first stage shall be based on the degree
of attainment of the applicable Performance Goal during the relevant Plan Year
and shall calculate the tentative Bonus earned under the Plan as a percentage of
the Participant's target Bonus, which percentage shall
2
<PAGE>
vary depending upon the extent to which the Performance Goal has been attained
and may be lesser than, greater than, or equal to 100%. Notwithstanding the
immediately preceding sentence, but subject to Section 4(h) hereof, if less than
50% of an EBIT target which is a component of a Participant's Performance Goal
with respect to a particular Plan Year is achieved, no Bonus shall be paid to
the Participant with respect to that EBIT target for the Plan Year (that is, the
tentative Bonus with respect to that one weighted component of the Participant's
Performance Goal shall be zero), but any such failure to achieve 50% of that
EBIT target shall not affect the calculation of the tentative Bonus with respect
to the achievement of any other EBIT target which is also a weighted component
of the Participant's Performance Goal.
The second stage of the calculation shall multiply the tentative Bonus
so determined by a percentage which represents a personal performance factor
(the "Personal Performance Percentage"). The Personal Performance Percentage
shall vary based on the Participant's individual performance during the Plan
Year and may be lesser than, greater than, or equal to 100% In the case of the
Chief Executive Officer, the Personal Performance Percentage shall be determined
by the Committee in its sole discretion. In the case of any other Participant,
the Personal Performance Percentage shall be determined by the Chief Executive
Officer, in his sole discretion, with the assistance of a recommendation from
the Participant's direct supervisor (if other than the Chief Executive Officer).
Notwithstanding any other provision of this Section 4(c), the Personal
Performance Percentage with respect to each Participant shall not be less than
80% nor greater than 120%, and the Bonus paid to any Participant with respect to
any Plan Year shall not exceed 150% of the Participant's target Bonus with
respect to the Plan Year.
(d) Maximum Aggregate Bonuses for Plan Year. The maximum amount
---------------------------------------
payable as Bonuses hereunder with respect to any Plan Year shall not exceed 3%
of Consolidated EBIT for such Plan Year.
(e) Committee Review and Adjustment of Calculation.
----------------------------------------------
3
<PAGE>
The Committee shall review the Bonuses calculated pursuant to Sections 4(c) and
4(d) hereof with respect to each Plan Year and, subject to Section 4(d) and the
last sentence of Section 4(c) hereof, the Committee may, in its sole discretion,
adjust (including increasing, reducing or eliminating) the amount of any Bonus
before making a recommendation to the Board regarding the Bonuses (if any) to be
paid with respect to the Plan Year.
(f) Employment Requirement for Bonus Payment and Exceptions Thereto.
---------------------------------------------------------------
(i) Except as provided in Sections 4(f)(ii) and 4(f)(iii) hereof,
payment of a Bonus to a particular Participant for a Plan Year shall be made
only if, and to the extent that, the foregoing requirements of this Section 4
have been met with respect to the Plan Year and only if the Participant is
employed by the Company or one of its Subsidiaries for the entire Plan Year
(from the first day of the Plan Year through the last day of the Plan Year),
except as set forth in Section 4(h) hereof.
(ii) If, under circumstances described in this Section 4(f)(ii), a
Participant has been employed by the Company (or one of its Subsidiaries) for
only part of a Plan Year, a pro-rata Bonus shall be paid to the Participant.
The pro-rata Bonus shall be calculated by multiplying the Bonus which would be
payable if such employment had been for the entire Plan Year by a fraction, the
numerator of which shall be the Participant's days of such employment during the
Plan Year (except as provided in Section 4(f)(ii)(E) hereof) and the denominator
of which shall be 365. The circumstances under which such a pro-rata Bonus
shall become payable with respect to a Plan Year are the following:
(A) the Participant's employment has terminated during the Plan
Year under circumstances which qualify the Participant for retirement (including
early retirement) under the Non-Contributory Pension Plan for Employees of Mine
Safety Appliances Company (or any successor plan thereto);
4
<PAGE>
(B) the Participant has died during the Plan Year;
(C) the Participant was newly hired by the Company or one of its
Subsidiaries during the Plan Year and remained so employed on the last day of
the Plan Year;
(D) the individual (not initially a Participant) was already
employed by the Company or one of its Subsidiaries on the first day of the Plan
Year, but became a Participant later in the Plan Year in connection with a
promotion (either by designation by the Chief Executive Officer or by promotion
to a position as Company officer); and
(E) the Participant was disabled (within the meaning of the
Company's long-term disability plan) during part of the Plan Year; in that event
the numerator of the fraction used to calculate the pro-rata Bonus shall be
either the days of the Plan Year during which the Participant was actively at
work or such other number (which shall not be more than 365) as is determined by
the Committee in its sole discretion.
(iii) Subject to Section 4(d) and the last sentence of Section 4(c)
hereof, the Committee, in its sole discretion, may determine that the Company
shall pay a Bonus with respect to a Plan Year (in an amount and, notwithstanding
the first two sentences of Section 4(g) hereof, at a time determined in its sole
discretion) to any Participant whose employment with the Company or one of its
Subsidiaries has terminated during the Plan Year.
(g) Time of Payment; Termination for Cause. As soon as practicable after
--------------------------------------
the Plan Year, the following shall be accomplished: (i) the calculation of the
Bonuses with respect to a Plan Year pursuant to Sections 4(c) and 4(d) hereof,
(ii) the Committee's review of, and recommendation to the Board with respect to,
such Bonuses pursuant to Sections 4(e) and 4(f) hereof, and (iii) the action of
the Board making a final determination (subject to Section 4(d) and the last
sentence of
5
<PAGE>
Section 4(c) hereof) as to what Bonuses (if any) shall be paid with respect to
the Plan Year. Except as provided in the two immediately following sentences and
in Section 4(h) hereof, all Bonuses to which Participants become entitled under
this Section 4 with respect to a Plan Year shall be paid in lump sum cash
payments as soon as practicable after such Board determination, but not later
than the March 15th immediately following the Plan Year. Notwithstanding any of
the foregoing provisions of the Plan, if the employment of a Participant has
been terminated for cause (as determined in the sole discretion of the Committee
prior to the occurrence of any Change in Control) at any time before the Company
has paid the Participant's Bonus with respect to a Plan Year, no Bonus shall be
paid to the Participant with respect to such Plan Year. For purposes of the
Plan, after a Change in Control has occurred, the Committee shall have no power
to determine that a termination of a Participant's employment has been made for
cause.
(h) Change in Control. Notwithstanding any other provision of the
-----------------
Plan to the contrary, (i) if a Change in Control of the Company shall occur
following a Plan Year as to which the actual Bonuses to be paid have been
determined (but such Bonuses have not yet been paid), such Bonuses shall be paid
immediately in cash, (ii) if a Change in Control shall occur following a Plan
Year as to which the actual Bonuses to be paid have not yet been determined,
such Bonuses shall be immediately determined and paid in cash, and (iii) if a
Change in Control shall occur during a Plan Year as to which target Bonuses have
been established (but the actual Bonuses to be paid have not yet been
determined), such Plan Year shall be deemed to have been completed, the target
levels of performance set forth under the respective Performance Goals shall be
deemed to have been attained, the respective Personal Performance Percentages
shall be deemed to be 100%, and a pro rata portion of the Bonus so determined
for each Participant for such partial Plan Year (based on the number of full and
partial months which have elapsed with respect to such Plan Year) shall be paid
immediately in cash to each Participant for whom a target Bonus for such Plan
Year was established.
6
<PAGE>
5. Administration.
--------------
The Plan shall be administered by the Committee. The Committee shall
have the authority in its sole discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise all
the powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, to make adjustments in the Performance Goals in response to changes
in applicable laws, regulations, or accounting principles; to construe and
interpret the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; and to make all other determinations deemed necessary or
advisable for the administration of the Plan.
The Committee shall consist of two or more persons. The Committee may
appoint a chairperson and a secretary and may make such rules and regulations
for the conduct of its business as it shall deem advisable, and shall keep
minutes of its meetings. All determinations of the Committee shall be made by a
majority of its members either present in person or participating by conference
telephone at a meeting or by unanimous written consent. The Committee may
delegate to one or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee or any person
to whom it has delegated duties as aforesaid may employ one or more persons to
render advice with respect to any responsibility the Committee or such person
may have under the Plan. All decisions, determinations and interpretations of
the Committee (except those which are specifically stated herein to be subject
to Board action) shall be final and binding on all persons, including the
Company, the Participant (or any person claiming any rights under the Plan from
or through any Participant) and any shareholder.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Bonus
hereunder.
7
<PAGE>
6. General Provisions.
------------------
(a) No Right To Continued Employment. Nothing in the Plan or in any
--------------------------------
Bonus hereunder shall confer upon any Participant the right to continue in the
employ of the Company or any of its Subsidiaries or to be entitled to any
remuneration or benefits not set forth in the Plan or to interfere with or limit
in any way the right of the Company to terminate such Participant's employment.
(b) Withholding Taxes. The Company or Subsidiary employing any
-----------------
Participant shall deduct from all payments under the Plan any taxes required to
be withheld by federal, state or local governments.
(c) Amendment and Termination of the Plan. The Board may at any time
-------------------------------------
and from time to time alter, amend, suspend, or terminate the Plan in whole or
in part. Additionally, the Committee may make such amendments as it deems
necessary to comply with other applicable laws, rules and regulations.
Notwithstanding the foregoing, no amendment, suspension or termination of the
Plan shall affect adversely any of the rights of any Participant, without such
Participant's written consent, with respect to any target Bonus theretofore
established with respect to the Participant (or any Bonus to which the
Participant has become entitled) under the Plan.
(d) Participant Rights. No Participant in the Plan for a particular
------------------
Plan Year shall have any claim to be granted any target Bonus under the Plan for
any subsequent Plan Year, and there is no obligation for uniformity of treatment
for Participants.
(e) Unfunded Status of Bonuses. The Plan is intended to constitute
--------------------------
an "unfunded" plan for incentive compensation. With respect to any payments
which at any time are not yet made to a Participant with respect to a Bonus,
nothing contained in the Plan or any related document shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
8
<PAGE>
(f) Governing Law. The Plan and the rights of all persons claiming
-------------
hereunder shall be construed and determined in accordance with the laws of the
Commonwealth of Pennsylvania without giving effect to the choice of law
principles thereof, except to the extent that such law is preempted by federal
law.
(g) Effective Date. This Plan memorializes in writing the existing
--------------
annual bonus policy of the Company, while adding certain Change-in-Control
protection with respect to the Bonuses provided under the Plan; therefore, upon
approval by the Board during the 1998 Plan Year, the Plan (with such added
protection) shall take effect as of January 1, 1998 (the "effective date").
7. Definitions.
-----------
The following terms, as used herein, shall have the following
meanings:
(a) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Bonus" shall mean any annual incentive bonus to which a Participant
becomes entitled pursuant to the Plan; the establishment of a "target
Bonus" with respect to a Participant pursuant to Section 4(a) hereof
does not, by itself, entitle the Participant to payment of any Bonus
hereunder; a Bonus must be earned and become payable pursuant to other
provisions hereof.
(d) "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) any Person is or becomes the Beneficial Owner, directly
or indirectly, of
9
<PAGE>
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates (which term shall have the meaning
set forth in Rule 12b-2 promulgated under Section 12 of the Exchange
Act)) 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 effective 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 effective 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
10
<PAGE>
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, 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 common 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.
11
<PAGE>
(e) "Chief Executive Officer" shall mean the Chief Executive Officer of
the Company.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" shall mean the Compensation Committee of the Board.
(h) "Company" shall mean Mine Safety Appliances Company, a corporation
organized under the laws of the Commonwealth of Pennsylvania, or
(except as used in the definitions of Change in Control and Person in
this Section 7) any successor corporation.
(i) "EBIT" shall mean "earnings before interest and taxes". The Committee
shall establish target EBITs (and the formula and method(s) for
calculating EBIT amounts) for each Plan Year with respect to the
Company's consolidated worldwide operations ("Consolidated EBIT") and
the Company's United States operations ("United States EBIT"), and the
Chief Executive Officer shall establish target EBITs for the Company's
various divisions and Subsidiaries (respectively, "Divisional EBIT").
As soon as practicable after each Plan Year, the Committee shall
determine the levels of Consolidated EBIT, the United States EBIT and
the respective Divisional EBITs which were achieved during the Plan
Year.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(k) "Participant" shall mean an officer or other employee of the Company
or one of its Subsidiaries who is eligible to participate herein
pursuant to Section 3 hereof and for whom a target Bonus is
established with respect to the relevant Plan Year.
12
<PAGE>
(l) "Performance Goal" shall have the meaning given such term in Section
4(c) hereof.
(m) "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, or (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 date
hereof or any Affiliate of any such individual or entity, including,
for purposes of this Plan, 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.
(n) "Personal Performance Percentage" shall have the meaning given such
term in Section 4(c)
13
<PAGE>
hereof.
(o) "Plan" shall mean Mine Safety Appliances Company Annual Incentive
Bonus Plan, as amended from time to time.
(p) "Plan Year" shall mean the Company's fiscal year.
(q) "Subsidiary" shall mean any subsidiary of the Company which is
designated by the Board or the Committee to have any one or more of
its employees participate in the Plan.
14
<PAGE>
EXHIBIT (10)(l)
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT ("Agreement") is made on May 20, 1998, by
--
and between Mine Safety Appliances Company, a Pennsylvania corporation (the
"Company"), and (the "Executive").
---------------
WHEREAS, the Company considers it essential to the best interests of
its shareholders to foster 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
<PAGE>
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 Date of
Termination or, if more favorable to the Executive, as in
- 2 -
<PAGE>
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.
(A) In lieu of any further salary payments
- 3 -
<PAGE>
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, 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
- 4 -
<PAGE>
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 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
- 5 -
<PAGE>
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 be subject (in whole or part), to the Excise Tax,
then, 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, and the noncash Severance
Payments shall thereafter be reduced, to the extent necessary so that no portion
of the Total Payments is subject to the Excise Tax but only if (A) the net
amount of such Total Payments, as so reduced (and after subtracting the net
amount of federal, state and local income taxes on such reduced Total Payments)
is greater than or equal to (B) the net amount of such Total Payments without
such reduction (but after subtracting the net amount of federal, state and local
income taxes on such Total Payments and the amount of Excise Tax to which the
Executive would be subject in respect of such unreduced Total Payments);
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 determining whether and the extent to which the
Total Payments will be subject to the Excise Tax, (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 (the "Auditor") which was, immediately prior to the Change
in Control, the Company's independent 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) and, in calculating the Excise Tax,
no portion of such Total Payments shall be taken into account which, in the
opinion of Tax Counsel, constitutes reasonable compensation for services
actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in
excess of the Base Amount allocable to such reasonable compensation, and (iii)
the value of
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any non-cash 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) 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 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). If the Executive objects to the Company's
calculations, the Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive determines is necessary
to result in the proper application of subsection A of this Section 6.2.
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 Executive, 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).
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
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<PAGE>
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-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
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<PAGE>
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 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
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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
121 Gamma Drive
Pittsburgh, Pennsylvania 15238
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
(including, without limitation, the provision relating to one year's separation
pay in the Company's letter to you dated November 26, 1996, but only if an
amount becomes payable to you under Section 6.1(A) hereof). The validity,
interpretation, construction and performance of this
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<PAGE>
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.
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
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<PAGE>
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 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
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<PAGE>
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, 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
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<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
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.
(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
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<PAGE>
(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.
Mine Safety Appliances Company
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<PAGE>
EXHIBIT (10)(m)
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT ("Agreement") is made on May 20, 1998, by
--
and between Mine Safety Appliances Company, a Pennsylvania corporation (the
"Company"), and (the "Executive").
----------------
WHEREAS, the Company considers it essential to the best interests of
its shareholders to foster 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
<PAGE>
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 Date of
Termination or, if more favorable to the Executive, as in
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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.
(A) In lieu of any further salary payments
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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, 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
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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 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
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<PAGE>
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 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.
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<PAGE>
(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 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
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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-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)
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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 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,
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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
121 Gamma Drive
Pittsburgh, Pennsylvania 15238
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
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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.
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
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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 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
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(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, 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
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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 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.
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<PAGE>
(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 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
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<PAGE>
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 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.
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<PAGE>
(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.
(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
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<PAGE>
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.
MINE SAFETY APPLIANCES COMPANY
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<PAGE>
EXHIBIT (10)(n)
SEVERANCE AGREEMENT
-------------------
THIS SEVERANCE AGREEMENT ("Agreement") is made on May 20, 1998, by
--
and between Mine Safety Appliances Company, a Pennsylvania corporation (the
"Company"), and (the "Executive").
-----------------
WHEREAS, the Company considers it essential to the best interests of
its shareholders to foster 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
<PAGE>
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
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<PAGE>
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 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
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<PAGE>
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.
(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
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<PAGE>
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, 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)
- 5 -
<PAGE>
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 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 be subject (in whole or part), to the Excise Tax,
then, 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, and the noncash Severance
Payments shall thereafter be reduced, to the extent necessary so that no portion
of the Total Payments is subject to the Excise Tax but only if (A) the net
amount of such Total Payments, as so reduced (and after subtracting the net
amount of federal, state and local income taxes on such reduced Total Payments)
is greater than or equal to (B) the net amount of such Total Payments without
such reduction (but after subtracting the net amount of federal, state and local
income taxes on such Total Payments and the amount of Excise Tax to which the
Executive would be subject in respect of such unreduced Total Payments);
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 determining whether and the
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<PAGE>
extent to which the Total Payments will be subject to the Excise Tax, (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 (the "Auditor") which was,
immediately prior to the Change in Control, the Company's independent 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) and, in calculating the Excise Tax, no portion of such Total Payments
shall be taken into account which, in the opinion of Tax Counsel, constitutes
reasonable compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to
such reasonable compensation, and (iii) the value of any non-cash 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) 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 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). If the Executive objects to the Company's
calculations, the Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive determines is necessary
to result in the proper application of subsection A of this Section 6.2.
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 Executive, 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
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<PAGE>
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).
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.
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<PAGE>
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-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
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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 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
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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
121 Gamma Drive
Pittsburgh, Pennsylvania 15238
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
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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.
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
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<PAGE>
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 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
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<PAGE>
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, 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
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<PAGE>
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 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:
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<PAGE>
(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 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;
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<PAGE>
(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 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
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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.
(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.
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(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.
Mine Safety Appliances Company
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