EXHIBIT 10.8
[Group Vice President
Split Bonus]
EMPLOYMENT AGREEMENT dated November 15, 2001 between PALL CORPORATION,
a New York corporation (the "Company") and Xxxxxx X. Xxxxxxx ("Executive").
WHEREAS, the parties hereto are parties to an employment agreement
dated February 1, 1992 as amended July 19, 1993, August 1, 1995 and August 1,
1998 (the "Existing Agreement"), and
WHEREAS, in light of the approval by the shareholders of the Company on
November 14, 2001 of the Pall Corporation Executive Incentive Bonus Plan, the
parties desire to terminate the Existing Agreement and simultaneously replace it
with this Agreement, effective August 1, 2001,
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the parties hereto agree as follows:
Section 1. Employment and Term
The Company hereby employs Executive, and Executive hereby agrees to
serve, as an executive employee of the Company with the duties set forth in
ss.2, for a term (hereinafter called the "Term of Employment") which began
August 1, 2001 (the "Term Commencement Date") and ending, unless sooner
terminated under ss.4, on the effective date specified in a notice of
termination given by either party to the other except that such effective date
shall not be earlier than the second anniversary of the date on which such
notice is given.
Section 2. Duties
(a) Executive agrees that during the Term of Employment he will
hold such offices or positions with the Company, and perform
such duties and assignments relating to the business of the
Company, as the Chief Executive Officer of the Company shall
direct except that Executive shall not be required to hold any
office or position or to perform any duties or assignment
inconsistent with his experience and qualifications. The
Company represents to Executive that the Board of Directors
(acting by its Compensation Committee) has authorized the
making of this Agreement and expressed its present intention
that during the Term of Employment Executive will be a Group
Vice President. The failure of any future Board of Directors
to elect Executive to the office just named shall not,
however, be deemed to relieve either party hereto of any of
his or its obligations under this Agreement.
(b) If the Chief Executive Officer of the Company so directs,
Executive shall serve as an officer of one or more
subsidiaries of the Company (provided that the duties of such
office are not inconsistent with Executive's experience and
qualifications and are duties customarily performed by a
corporate officer) and part or all of the compensation to
which Executive is entitled hereunder may be paid by such
subsidiary or subsidiaries. However, such employment and/or
payment of Executive by a subsidiary or subsidiaries shall not
relieve the Company from any of its obligations under this
Agreement except to the extent of payments actually made to
Executive by a subsidiary.
(c) During the Term of Employment Executive shall, except during
customary vacation periods and periods of illness, devote
substantially all of his business time and attention to the
performance of his duties hereunder and to the business and
affairs of the Company and its subsidiaries and to promoting
the best interests of the Company and its subsidiaries and he
shall not, either during or outside of such normal business
hours, engage in any activity inimical to such best interests.
Section 3. Compensation During Term of Employment
(a) Base Salary. With respect to the period beginning on the Term
Commencement Date and ending on July 31, 2002, the Company
shall pay Executive a Base Salary (in addition to the
compensation provided for elsewhere in this Agreement) at the
rate of $281,340 per annum (hereinafter called the "Original
Base Salary"). With respect to each Contract Year beginning
with the Contract Year which starts August 1, 2002, the
Company shall pay Executive a Base Salary at such rate as the
Board of Directors may determine but not less than the
Original Base Salary adjusted as follows: The term "Contract
Year" as used herein means the period from August 1 of each
year through July 31 of the following year. For each Contract
Year during the Term of Employment beginning with the Contract
Year which starts August 1, 2002, the minimum compensation
payable to Executive under this ss.3(a) (hereinafter called
the "Minimum Base Salary") shall be determined by increasing
(or decreasing) the Original Base Salary by the percentage
increase (or decrease) of the Consumer Price Index (as
hereinafter defined) for the month of June immediately
preceding the start of the Contract Year in question over (or
below) the Consumer Price Index for June 2001. The term
"Consumer Price Index" as herein used means the "Consumer
Price Index for all Urban Consumers" compiled and published by
the Bureau of Labor Statistics of the United States Department
of Labor for "New York - Northern N. J. - Long Island,
NY-NJ-CT-PA". To illustrate the operation of the foregoing
provisions of this ss.3(a): Executive's Base Salary for the
Contract Year August 1, 2002 through July 31, 2003 shall be
not less than the Original Base Salary adjusted by the
percentage increase (or decrease) of the Consumer Price Index
for June 2002 over (or below) said Index for June 2001.
Further adjustment in the Minimum Base Salary shall be made
for each ensuing Contract Year, in each case (i) using the
Consumer Price Index for June 2001 as the base except as
provided in the immediately following paragraph hereof and
(ii) applying the percentage increase (or decrease) in the
Consumer Price Index since said base month to the Original
Base Salary to determine the Minimum Base Salary. The Base
Salary shall be paid in such periodic installments as the
Company may determine but not less often than monthly.
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If with respect to any Contract Year (including the
Contract Year beginning August 1, 2002) the Board of Directors
fixes the Base Salary at an amount higher than the Minimum
Base Salary, then (unless the order fixing such higher Base
Salary provides otherwise), for the purpose of determining the
Minimum Base Salary for subsequent Contract Years: (1) the
amount of the higher Base Salary so fixed shall be deemed
substituted for the Original Base Salary wherever the Original
Base Salary is referred to in the immediately preceding
paragraph hereof, and (ii) the base month for determining the
Consumer Price Index adjustment shall be June of the calendar
year in which the Contract Year to which such higher Base
Salary is applicable begins (e.g., if the Board of Directors
fixes a Base Salary for the Contract Year beginning August 1,
2002 which is higher than the Minimum Base Salary, then June
2002 would become the base month for the purposes of making
the CPI adjustment to determine the Minimum Base Salary for
subsequent Contract Years).
(b) Bonus Compensation.
(i) Plan Bonus. With respect to each Fiscal Year of the
Company falling in whole or in part within the Term of
Employment beginning with the Fiscal Year ending August
3, 2002, Executive shall be eligible to receive a Bonus
(in addition to his Base Salary) in accordance with the
terms of the Pall Corporation Executive Incentive Bonus
Plan adopted by the Compensation Committee of the Board
of Directors of the Company on July 17, 2001 and
approved by shareholders at the annual meeting of
shareholders on November 14, 2001, a copy of which is
annexed hereto and incorporated herein by reference (the
"Bonus Plan"). Words and terms used herein with initial
capital letters and not defined herein are used herein
as defined in the Bonus Plan. For purposes of
determining the amount of the Bonus payable to Executive
for any Fiscal Year under the Bonus Plan (the "Plan
Bonus"), Executive's Target Bonus Percentage shall be
28% of his Base Salary for such Fiscal Year.
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(ii) Business Segment Bonus. Inasmuch as Executive's services
for the Company relate primarily to the operations of a
subsidiary, a division or other segment of the overall
operations of the Company and its subsidiaries (a
"Business Segment"), Executive shall be considered for
additional bonus compensation for each Fiscal Year based
on the results of operations of such Business Segment
for such Fiscal Year. The amount of such additional
bonus compensation, if any, shall be determined by the
Chief Executive Officer in his sole discretion but in no
event shall such additional bonus compensation exceed
42% of Executive's Base Salary.
(iii) Payment of Bonus Compensation. Executive's Bonus
Compensation (which term as used herein includes both
the Plan Bonus and the Business Segment Bonus, if any)
shall be paid in accordance with ss.5 of the Bonus Plan.
With respect to any Fiscal Year which falls in part but
not in whole within the Term of Employment, the pro rata
portion of the Bonus Compensation to which Executive is
entitled under this ss.3(b) shall be determined in
accordance with ss.3(c) of the Bonus Plan.
(c) Fringe Benefits and Perquisites. During the Term of
Employment, Executive shall enjoy the office, including but
not limited to office space and furnishings, secretarial
services, expense reimbursements, and any similar emoluments
customarily afforded to senior executive officers of the
Company at the same level as Executive. Executive shall also
be entitled to receive or participate in all "fringe benefits"
and employee benefit plans provided or made available by the
Company to its executives or management personnel generally,
such as, but not limited to, group hospitalization, medical,
life and disability insurance, and pension, retirement,
profit-sharing and stock option or purchase plans.
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(d) Vacations. Executive shall be entitled each year to a vacation
or vacations in accordance with the policies of the Company as
determined by the Board or by an authorized senior officer of
the Company from time to time. The Company shall not pay
Executive any additional compensation for any vacation time
not used by Executive.
Section 4. Termination by Reason of Disability, Death, Retirement or
Change in Control
(a) Disability or Death. If, during the Term of Employment,
Executive, by reason of physical or mental disability, is
incapable of performing his principal duties hereunder for an
aggregate of 130 working days out of any period of twelve
consecutive months, the Company at its option may terminate
the Term of Employment effective immediately by notice to
Executive given within 90 days after the end of such
twelve-month period. If Executive shall die during the Term of
Employment or if the Company terminates the Term of Employment
pursuant to the immediately preceding sentence by reason of
Executive's disability, the Company shall pay to Executive, or
to Executive's legal representatives, or in accordance with a
direction given by Executive to the Company in writing, the
following: (i) Executive's Base Salary to the end of the month
in which such death or termination for disability occurs and
Executive's Bonus Compensation prorated to said last day of
the month and (ii) for each month in the period from the end
of the month in which such death or termination for disability
occurs until the earlier of (x) the first anniversary of the
date of death or termination and (y) the date on which the
Term of Employment would have ended but for such death or
termination for disability, monthly payments of an amount
equal to 1/12th of 64% of the annual rate of Base Salary in
effect for Executive immediately prior to the date on which
Executive's death or termination for disability occurs (such
64% being comprised of one-half of such Base Salary and
one-half of Executive's Target Bonus Percentage set forth
in ss.3 (b) hereof).
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(b) Retirement. (i) The Term of Employment shall end
automatically, without action by either party, on Executive's
65th birthday unless, prior to such birthday, Executive and
the Company have agreed in writing that the Term of Employment
shall continue past such 65th birthday. In the latter event,
unless the parties have agreed otherwise, the Term of
Employment shall be automatically renewed and extended each
year, as of Executive's birthday, for an additional one-year
term, unless either party has given a Non-Renewal Notice. A
Non-Renewal Notice shall be effective as of Executive's
ensuing birthday only if given not less than 60 days before
such birthday, and shall state that the party giving such
notice elects that this Agreement shall not automatically
renew itself further, with the result that the Term of
Employment shall end on Executive's ensuing birthday. (ii) If
the Term of Employment ends pursuant to this ss.4(b) by reason
of a notice given by either party as herein permitted or
automatically at age 65 or any subsequent birthday, the
Company shall pay to Executive, or to another payee specified
by Executive to the Company in writing, Executive's Base
Salary and Bonus Compensation prorated to the date on which
the Term of Employment ends. (iii) Anything hereinabove to the
contrary notwithstanding, if any provision of this ss.4(b)
violates federal or applicable state law relating to
discrimination on account of age, such provision shall be
deemed modified or suspended to the extent necessary to
eliminate such violation of law. If at a later date, by reason
of changed circumstances or otherwise, the enforcement of such
provision as set forth herein would no longer constitute a
violation of law, then it shall be enforced in accordance with
its terms as set forth herein.
(c) Change in Control. In event of a Change in Control (as defined
in the Bonus Plan), Executive shall have the right to
terminate the Term of Employment, by notice to the Company
given at any time after such Change in Control, effective on
the date specified in such notice, which date shall not be
more than (but can be less than) one year after the giving of
such notice.
Section 5. Covenant Not to Compete
For a period of eighteen months after the end of the Term of Employment
if the Term of Employment is terminated by notice to the Company given by
Executive under ss.1 or ss.4 hereof, or for a period of twelve months after the
end of the Term of Employment if the Term of Employment is terminated by notice
to Executive given by the Company under ss.1 or ss.4 hereof or terminates under
ss.4 by reason of Executive attaining the age of 65, Executive shall not render
services to any corporation, individual or other entity engaged in any activity,
or himself engage directly or indirectly in any activity, which is competitive
to any material extent with the business of the Company or any of its
subsidiaries, provided, however, that if the Company terminates under ss.1
following a Change in Control (as defined in the Bonus Plan), the foregoing
covenant not to compete shall not apply.
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Section 6. Company's Right to Injunctive Relief
Executive acknowledges that his services to the Company are of a unique
character, which gives them a peculiar value to the Company, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law,
and that therefore, in addition to any other remedy which the Company may have
at law or in equity, the Company shall be entitled to injunctive relief for a
breach of this Agreement by Executive.
Section 7. Inventions and Patents
All inventions, ideas, concepts, processes, discoveries, improvements
and trademarks (hereinafter collectively referred to as intangible rights),
whether patentable or registrable or not, which are conceived, made, invented or
suggested either by Executive alone or by Executive in collaboration with others
during the Term of Employment, and whether or not during regular working hours,
shall be disclosed to the Company and shall be the sole and exclusive property
of the Company. If the Company deems that any of such intangible rights are
patentable or otherwise registrable under any federal, state or foreign law,
Executive, at the expense of the Company, shall execute all documents and do all
things necessary or proper to obtain patents and/or registrations and to vest
the Company with full title thereto.
Section 8. Trade Secrets and Confidential Information
Executive shall not, either directly or indirectly, except as required
in the course of his employment by the Company, disclose or use at any time,
whether during or subsequent to the Term of Employment, any information of a
proprietary nature owned by the Company, including but not limited to, records,
data, formulae, documents, specifications, inventions, processes, methods and
intangible rights which are acquired by him in the performance of his duties for
the Company and which are of a confidential information or trade-secret nature.
All records, files, drawings, documents, equipment and the like, relating to the
Company's business, which Executive shall prepare, use, construct or observe,
shall be and remain the Company's sole property. Upon the termination of his
employment or at any time prior thereto upon request by the Company, Executive
shall return to the possession of the Company any materials or copies thereof
involving any confidential information or trade secrets and shall not take any
material or copies thereof from the possession of the Company.
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Section 9. Mergers and Consolidations; Assignability
In the event that the Company, or any entity resulting from any merger
or consolidation referred to in this ss.9 or which shall be a purchaser or
transferee so referred to, shall at any time be merged or consolidated into or
with any other entity or entities, or in the event that substantially all of the
assets of the Company or any such entity shall be sold or otherwise transferred
to another entity, the provisions of this Agreement shall be binding upon and
shall inure to the benefit of the continuing entity in or the entity resulting
from such merger or consolidation or the entity to which such assets shall be
sold or transferred. Except as provided in the immediately preceding sentence of
this ss.9, this Agreement shall not be assignable by the Company or by any
entity referred to in such immediately preceding sentence. This Agreement shall
not be assignable by Executive, but in the event of his death it shall be
binding upon and inure to the benefit of his legal representatives to the extent
required to effectuate the terms hereof.
Section 10. Captions
The captions in this Agreement are not part of the provisions hereof,
are merely for the purpose of reference and shall have no force or effect for
any purpose whatsoever, including the construction of the provisions of this
Agreement, and if any caption is inconsistent with any provisions of this
Agreement, said provisions shall govern.
Section 11. Choice of Law
This Agreement is made in, and shall be governed by and construed in
accordance with the laws of, the State of New York.
Section 12. Entire Contract
This instrument contains the entire agreement of the parties on the
subject matter hereof except that the rights of the Company hereunder shall be
deemed to be in addition to and not in substitution for its rights under the
Company's standard printed form of "Employee's Secrecy and Invention Agreement"
or "Employee Agreement" if heretofore or hereafter entered into between the
parties hereto so that the making of this Agreement shall not be construed as
depriving the Company of any of its rights or remedies under any such Secrecy
and Invention Agreement or Employee Agreement. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
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Section 13. Notices
All notices given hereunder shall be in writing and shall be sent by
registered or certified mail or delivered by hand, and, if intended for the
Company, shall be addressed to it (if sent by mail) or delivered to it (if
delivered by hand) at its principal office for the attention of the Secretary of
the Company, or at such other address and for the attention of such other person
of which the Company shall have given notice to Executive in the manner herein
provided, and, if intended for Executive, shall be delivered to him personally
or shall be addressed to him (if sent by mail) at his most recent residence
address shown in the Company's employment records or at such other address or to
such designee of which Executive shall have given notice to the Company in the
manner herein provided. Each such notice shall be deemed to be given on the date
of mailing thereof or, if delivered personally, on the date so delivered.
Section 14. Termination of Existing Agreement
The Existing Agreement is hereby terminated and replaced and superseded
by this Agreement, effective August 1, 2001. All payments, of Base Salary or
otherwise, made by the Company under the Existing Agreement with respect to any
period commencing on or after August 1, 2001 shall be credited against the
corresponding payment obligations of the Company under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PALL CORPORATION
By: /s/ Xxxxxx Xxxxxxx-Surry
----------------------------------
Xxxxxx Xxxxxxx-Surry
President
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
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PALL CORPORATION
EXECUTIVE INCENTIVE BONUS PLAN
-----
1. Purpose
This document sets forth the Pall Corporation Executive Incentive Bonus
Plan as adopted effective July 17, 2001.
The purpose of the Plan is to encourage greater focus on performance
among the key executives of the Corporation by relating a significant portion of
their total compensation to the achievement of annual financial objectives.
2. Certain Definitions
As used herein with initial capital letters, the following terms shall
have the following meanings:
"Average Equity" shall mean, for any Fiscal Year, the average of
stockholders' equity as shown on the fiscal year-end consolidated balance sheet
of the Corporation and its subsidiaries as of the end of such Fiscal Year and as
of the end of the immediately preceding Fiscal Year except that the amounts
shown on said balance sheets as "Accumulated other comprehensive" income or
loss, as the case may be, shall be disregarded.
"Base Salary" shall mean, with respect to any Executive and for any
Fiscal Year, the annual rate of base salary in effect for the Executive as of
the first day of such year or, if later, as of the first day of the Executive's
Term of Employment, as determined under the Executive's Employment Agreement.
"Board of Directors" shall mean the Board of Directors of the
Corporation.
"Bonus" shall mean the bonus payable to an Executive under this Plan
for any Fiscal Year.
"CEO" shall mean the Chief Executive Officer of the Corporation.
"Change in Control" means the occurrence of any of the following:
(a) the "Distribution Date" as defined in Section 3 of the Rights
Agreement dated as of November 17, 0000 xxxxxxx xxx
Xxxxxxxxxxx xxx Xxxxxx Xxxxxx Trust Company of New York as
Rights Agent, as amended by Amendment No. 1 thereto dated
April 20, 1999, and as the same may have been further amended
or extended to the time in question or in any successor
agreement (the "Rights Agreement"); or
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(b) any event described in Section 11(a)(ii)(B) of the Rights
Agreement; or
(c) any event described in Section 13 of the Rights Agreement; or
(d) the date on which the number of duly elected and qualified
directors of the Corporation who were not either elected by
the Board of Directors or nominated by the Board of Directors
or its Nominating Committee for election by the shareholders
shall equal or exceed one-third of the total number of
directors of the Corporation as fixed by its by-laws;
provided, however, that no Change in Control shall be deemed to have occurred,
and no rights arising upon a Change in Control as provided in Section 6 shall
exist, to the extent that the Board of Directors so determines by resolution
adopted prior to the Change in Control.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation Committee of the Board of
Directors.
"Corporation" shall mean Pall Corporation.
"Covered Executive" shall mean, with respect to any Fiscal Year, each
individual who is a "Covered Employee" of the Corporation for such year for the
purpose of section 162(m) of the Code.
"Employment Agreement" shall mean, with respect to any executive
employee of the Corporation, an employment agreement between the Corporation and
such employee which provides that the employee shall be eligible to receive
annual bonuses under this Plan.
"Executive" shall mean an executive employee of the Corporation with
whom the Corporation has entered into an Employment Agreement.
"Fiscal Year" shall mean the fiscal year of the Corporation ending on
August 3, 2002, and each subsequent fiscal year of the Corporation.
"Maximum X.X.X. Target" shall mean, for any Fiscal Year, the Return on
Equity that must be achieved or exceeded in order for the Performance Percentage
for the year to equal 100%, as determined by the Committee prior to the first
day of such year or within such period of time thereafter as may be permitted
under the regulations issued under section 162(m) of the Code.
"Minimum X.X.X. Target" shall mean, for any Fiscal Year, the Return on
Equity that must be exceeded in order for any Bonus to be paid to any Executive
for the year, as determined by the Committee prior to the first day of such year
or within such period of time thereafter as may be permitted under the
regulations issued under section 162(m) of the Code.
"Net Earnings" shall mean, for any Fiscal Year, the after-tax
consolidated net earnings of the Corporation and its subsidiaries as certified
by the Corporation's independent accountants for inclusion in the annual report
to shareholders ("Annual Report"), adjusted so as to eliminate the effects of
any decreases in or charges to earnings for (a) the effect of foreign currency
exchange rates, (b) any acquisitions, divestitures, discontinuance of business
operations, restructuring or any other special charges, (c) the cumulative
effect of any accounting changes, and (d) any "extraordinary items" as
determined under generally accepted accounting principles, to the extent such
decreases or charges referred to in clauses (a) through (d) are separately
disclosed in the Corporation's Annual Report for the year.
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"Plan" shall mean the Pall Corporation Executive Incentive Bonus Plan,
as set forth herein and as amended from time to time.
"Return on Equity" shall mean, for any Fiscal Year, the percentage
determined by dividing the Net Earnings for the year by the Average Equity for
the year.
"Target Bonus Percentage" shall mean, with respect to any Executive,
the target bonus percentage specified for such Executive in his or her
Employment Agreement.
3. Determination of Bonus Amounts
For each Fiscal Year falling in whole or in part within an Executive's
Term of Employment, as defined in his or her Employment Agreement, the Executive
shall be entitled to receive a Bonus in an amount determined in accordance with
the provisions of this Section 3, subject, however, to the provisions of Section
4.
(a) The amount of the Bonus payable to an Executive for each such
Fiscal Year shall be equal to (i) the Target Bonus Percentage of the Executive's
Base Salary for such year, multiplied by (ii) the Performance Percentage for
such year, as determined under (b) below.
(b) The Performance Percentage for any Fiscal Year shall be determined
in accordance with he following provisions:
(i) If the Return on Equity equals or exceeds the Maximum
X.X.X. Target for the year, the Performance Percentage for the year
shall be 100%.
(ii) If the Return on Equity is less than the Maximum X.X.X.
Target for the year but exceeds the Minimum X.X.X. Target for the year,
the Performance Percentage for the year shall be equal to the quotient
resulting from dividing (A) the excess of the Return on Equity for the
year over the Minimum X.X.X. Target for the year, by (B) the excess of
the Maximum X.X.X. Target for the year over the Minimum X.X.X. Target
for the year.
(iii) If the Return on Equity equals or is less than the
Minimum X.X.X. Target for the year, the Performance Percentage for the
year shall be zero, and no Bonus shall be payable under the Plan for
such year to any Executive.
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(c) If an Executive's Term of Employment commences after the start of a
Fiscal Year, or ends prior to the close of a Fiscal Year, the amount of the
Bonus payable to the Executive for the Fiscal Year in which the Executive's Term
of Employment commences, or for the Fiscal Year in which the Executive's Term of
Employment ends, as determined in accordance with the other applicable
provisions of the Plan, shall be prorated on the basis of the number of days of
such Fiscal Year that fall within the Executive's Term of Employment; provided,
however, that (i) if an Executive's Term of Employment ends within 5 days prior
to the close of a Fiscal Year, there shall be no proration and the Executive
shall be entitled to receive the entire amount of the Bonus payable to the
Executive for such year, as determined in accordance with such other provisions,
and (ii) if the Executive's Term of Employment ends within 5 days following the
start of a Fiscal Year, the Executive shall not be entitled to receive any Bonus
with respect to such Fiscal Year.
4. Adjustment of and Limitation on Bonus Amounts
The amount of the Bonus otherwise payable to an Executive for any
Fiscal Year in accordance with Section 3 shall be subject to the following
adjustments and limitation:
(a) The Committee may, in its discretion, reduce the amount of the
Bonus otherwise payable to any Executive in accordance with Section 3, (i) to
reflect any decreases in or charges to earnings that were not taken into account
in determining Net Earnings for the year pursuant to clause (a), (b), (c) or (d)
contained in the definition of such term in Section 2, (ii) to reflect any
credits to earnings for extraordinary items of income or gain that were taken
into account in determining Net Earnings for the year, (iii) to reflect the
Committee's evaluation of the Executive's individual performance, or (iv) to
reflect any other events, circumstances or factors which the Committee believes
to be appropriate in determining the amount of the Bonus to be paid to the
Executive for the year.
(b) The Committee may, in its discretion, increase the amount of the
Bonus otherwise payable to any Executive who is not a Covered Executive, as
determined under Section 3, to reflect the Committee's evaluation of the
Executive's individual performance, or to reflect such other circumstances or
factors as the Committee believes to be appropriate in determining the amount of
the Bonus to be paid to the Executive for the year. The Committee shall not have
any discretion to increase the amount of the Bonus payable to any Covered
Executive for the year, as determined under Section 3.
(c) Notwithstanding any other provision herein to the contrary, the
amount of the Bonus otherwise payable to any Executive for any Fiscal Year shall
not exceed the lesser of (i) $1.0 million and (ii) 100% of the Executive's Base
Salary for the year.
5. Payment of Bonuses
The Bonus payable to an Executive for any Fiscal Year shall be paid in
accordance with the following provisions:
(a) Except as otherwise provided in (b) or (c) below,
(i) if the Executive is not a Covered Executive for such year,
50% of the estimated amount of the Executive's Bonus shall be paid to
the Executive at such date in August next following the close of such
year as the Committee in its discretion shall determine, and the
remaining amount of the Executive's Bonus shall be paid to the
Executive by no later than January 15 next following the close of such
year;
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(ii) if the Executive is a Covered Executive for such year,
50% of the amount of the Executive's Bonus shall be paid to the
Executive as soon as practicable after the Committee has certified in
writing that all conditions for the payment of such Bonus to the
Executive for such year have been satisfied, and the remaining amount
of the Executive's Bonus shall be paid to the Executive by no later
than January 15 next following the close of such year;
(iii) each amount payable to an Executive under (i) and (ii)
above, reduced by the amount of all federal, state and local taxes
required by law to be withheld therefrom, shall be paid to the
Executive in the form of a single lump sum cash payment.
(b) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Management Stock Purchase Plan (the "MSPP")
to have any part of the Bonus payable to the Executive for any Fiscal Year paid
in the form of Restricted Units to be credited to the Executive's account under
the MSPP, no cash payments shall be made to the Executive pursuant to (a) above
with respect to the part of the Executive Bonus that is subject to such
election; and the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged upon the
crediting of Restricted Units to the Executive's account under the MSPP in
accordance with the applicable provisions of such Plan.
(c) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Profit-Sharing Plan (the "Profit-Sharing
Plan") to have any part of the Bonus payable to the Executive for any Fiscal
Year reduced, and to have an amount equal to such part of the Executive's Bonus
contributed to the Profit-Sharing Plan as a 401(k) Contribution on the
Executive's behalf, an amount equal to such part of the Executive's Bonus shall
be contributed to the Profit-Sharing Plan on behalf of the Executive; and
thereupon, the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged.
However, no such contribution shall be made to the extent it would cause any
limitation applicable under the 401(k) Plan to be exceeded.
6. Change in Control
Notwithstanding any other provision in the Plan to the contrary (but
subject to the "provided, however" clause contained in the definition of "Change
in Control" in Section 2), upon the occurrence of a Change in Control, the
following provisions shall apply.
(a) The amount of the Bonus payable to any Executive for the Fiscal
Year in which a Change in Control occurs shall be at least equal to the Target
Bonus Percentage of the Executive's Base Salary for such year or, in the case of
any Executive whose Term of Employment commences after the start of such year or
ends prior to the close of such year, a pro rata portion thereof determined on
the basis of the number of days of such Fiscal Year that fall within the
Executive's Term of Employment.
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(b) Each Executive whose Term of Employment has not ended prior to the
occurrence of a Change in Control shall be entitled to receive a Bonus for each
Contract Year (as defined in the Executive's Employment Agreement) that falls in
whole or in part within the Executive's Term of Employment and that ends after
the Fiscal Year in which the Change in Control occurs. The amount of the Bonus
payable to the Executive for each such Contract Year shall be at least equal to
the Target Bonus Percentage of the Executive's Base Salary for such Contract
Year or, in the case of any Executive whose Term of Employment ends after the
start of such Contract Year but prior to the close of such year, a pro rata
portion thereof determined on the basis of the number of days of such Contract
Year that fall within the Executive's Term of Employment.
(c) The entire amount of the Bonus payable to an Executive for any
Fiscal Year or Contract Year pursuant to (a) or (b) above, reduced by the amount
of all federal, state and local taxes required to be withheld therefrom, shall
be paid to the Executive in a single cash lump sum as soon as practicable after
the close of such Fiscal Year or Contract Year.
7. Rights of Executives
An Executive's rights and interests under the Plan shall be subject to
the following provisions:
(a) An Executive's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Executive.
(b) Neither the Plan nor any action taken hereunder shall be construed
as giving any Executive any right to be retained in the employment of the
Corporation or any of its subsidiaries.
8. Administration
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan.
The Committee may delegate any ministerial or nondiscretionary function
pertaining to the administration of the Plan to any one or more officers of the
Corporation.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties. Notwithstanding
the foregoing, any determination made by the Committee after the occurrence of a
Change in Control that denies in whole or in part any claim made by any
individual for benefits under the Plan shall be subject to judicial review,
under a "de novo", rather than a deferential standard.
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9. Amendment or Termination
The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that (a) no amendment, suspension or termination of the Plan
shall adversely affect the rights of any Executive with respect to any Bonus
that has become payable to the Executive under the Plan, without his or her
written consent, and (b) following a Change in Control, no amendment to Section
6, and no termination of the Plan, shall be effective if such amendment or
termination adversely affects the rights of any Executive under the Plan.
10. Successor Corporation
The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Executives' rights under the Plan
in any agreement or plan which it may enter into or adopt to effect any such
merger, consolidation, reorganization or transfer of assets.
11. Governing Law
The Plan shall be governed by and construed in accordance with the laws
of the State of New York.
12. Effective Date
The Plan was adopted effective as of July 17, 2001 by the Board of
Directors, acting by the Committee, subject, however, to approval by the
shareholders of the Corporation by a majority of the votes cast in person or by
proxy at the 2001 annual meeting of the Corporation's shareholders, including
any adjournment thereof.
[The Plan was approved
by shareholders at the
annual meeting on
November 14, 2001.]
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