EXHIBIT 10.1
CHANGE-IN-CONTROL SEVERANCE
AGREEMENT
THIS CHANGE-IN-CONTROL SEVERANCE
AGREEMENT (“Agreement”) is made on
, 2008, 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, 2010, unless further extended as hereinafter
provided. Commencing on January 1, 2010 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 twenty-four (24) months beyond the
month in which such Change in Control occurred.
3. Company’s Covenants
Summarized . In order to induce the Executive to remain in the
employ of the Company and in consideration of the Executive’s
covenants set forth in Section 4 hereof, the Company agrees,
under the conditions described herein, to pay the Executive the
Severance Payments and the other payments and benefits described
herein. 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.
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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 in 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 (on the regularly scheduled payment dates), 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 (in accordance with
and at the times specified in such plans, programs and
arrangements), 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 (on the regularly
scheduled payment dates), 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 (in accordance with and at
the times specified in such plans, programs and
arrangements).
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.
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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 or (ii) by the
Executive with Good Reason, 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 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 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, provided, however,
that the Change in Control referenced in clause (i), (ii) or
(iii) of this sentence, as applicable, actually occurs and
that the termination referenced therein occurs within the six-month
period immediately preceding the Change in Control. 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 the Executive has been employed by the
Company for less than the full applicable two-year period, and
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).
Notwithstanding anything in the foregoing provisions of this
Section 6.1(A) to the contrary (and whether a termination
described in the first paragraph of this Section 6.1 actually
occurs on or after a Change in Control or is
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deemed to occur after a Change in Control), if
the Change in Control event does not constitute (under Code section
409A) a change in ownership or effective control of the Company or
a change in ownership of a substantial portion of the assets of the
Company, then an amount equal to the amount that would have been
paid under the Company’s Separation Pay Plan for Salaried
Employees, upon a termination other than “For Cause”
(as defined in the plan) that would qualify the Executive for
separation pay thereunder had a Change in Control not occurred,
shall be paid at the time and in the manner provided in the plan
and the remaining amounts payable under this Section 6.1(A)
shall be paid in lump sum.
(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.
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) 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
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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.
(D) Any part of any benefit under
Section 6.1(B) or (C) hereof that is subject to Code
section 409A shall be provided in a manner such that the amount of
expenses eligible for reimbursement, or in-kind benefits provided,
during the Executive’s taxable year shall not affect the
expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year of the Executive. The
reimbursement of an eligible expense shall be made promptly upon
submission of satisfactory documentation to the Company, but, in
any event, on or before the last day of the Executive’s
taxable year following the taxable year in which the expense was
incurred.
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
Code section 280G 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). If
the immediately preceding sentence requires the reduction of the
noncash Severance Payments, the order in which they shall be
reduced is the following: (i) the thirty six (36) months
of life and accident insurance benefits under the second paragraph
of Section 6.1(B) hereof, (ii) the rights, if any,
resulting from a deemed later termination under Section 6.1(C)
hereof with respect to benefit coverage under the Company’s
post-retirement health care plan, and (iii) the thirty six
(36) months of medical and dental insurance benefits under the
first paragraph of Section 6.1(B) hereof.
(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 Code section 280G(b)
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 registered public accounting firm,
does not constitute a “parachute payment” within the
meaning of Code section 280G(b)(2) (including by reason of Code
section 280G(b)(4)(A)) and, in calculating the Excise Tax, no
portion of such Total Payments shall be taken into account
which,
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in the opinion of Tax Counsel, constitutes
reasonable compensation for services actually rendered, within the
meaning of Code section 280G(b)(4)(B), 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 Code sections 280G(d)(3) and
(4).
(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).
6.3 Notwithstanding any other
provisions of this Agreement (including the following sentences of
this Section 6.3), to the extent that payments of any amounts
or benefits under Section 6.1 hereof are subject to Code
section 409A, payment of such amounts or benefits shall be delayed
until the Executive has incurred a separation from service under
Code section 409A, and may be further delayed subject to
Section 6.5 hereof. Subject to the immediately preceding
sentence, the
