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[ELECTED VICE PRESIDENT FORM]
[SPLIT BONUS, 1/98]
EMPLOYMENT AGREEMENT
AGREEMENT made as of January 12, 1998 between PALL CORPORATION, a New
York corporation (the "Company") and Xxxxxx Xxxxxxx ("Executive").
WHEREAS, the parties desire to terminate, as of January 11, 1998, any
employment agreement between them then in effect, and to enter into a new
employment agreement, on the terms and conditions hereinafter set forth, for a
term beginning January 12, 1998.
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
Section 2, for a term (hereinafter called the "Term Of Employment") beginning
January 12, 1998 and ending, unless sooner terminated under Section 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.
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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 Board of Directors or 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.
(b) If the Board of Directors or 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 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,
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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 January 12,
1998 and ending at the end of the Term of Employment, the
Company shall pay to Executive base compensation (in addition
to the compensation provided for elsewhere in this Agreement)
at such rate as the Chief Executive Officer may determine (the
amount so determined by the Chief Executive Officer being
herein called the "Base Salary") but at not less than the rate
of $143,000 per annum (hereinafter called the "Original Base
Salary") adjusted for each Contract Year (as hereinafter
defined) beginning with the Contract Year which starts August
1, 1998, as follows: The term "Contract Year" as used herein
means the period from August 1 of each year through July 31 of
the
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following year. For each Contract Year during the Term of
Employment beginning with the Contract Year which starts
August 1, 1998, the minimum compensation payable to Executive
under this Section 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 1997. 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
New Jersey - Long Island, NY-NJ-CT". To illustrate the
operation of the foregoing provisions of this Section 3(a):
Executive's Base Salary for the Contract Year August 1, 1998
through July 31, 1999 shall be not less than the Original Base
Salary adjusted by the percentage increase (or decrease) of
the Consumer Price Index for June 1998 over (or below) said
Index for June 1997. Further adjustment in the Minimum Base
Salary shall be made for each ensuing Contract Year, in each
case (i)
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using the Consumer Price Index for June 1997 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.
If with respect to any Contract Year (including the
Contract Year beginning August 1, l998) the Board of Directors
fix 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: (i) 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
fix a Base Salary for the Contract Year beginning August 1,
1998
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which is higher than the Minimum Base Salary, then June 1998
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) Formula Bonus Compensation. 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 in which the Term Commencement Date occurs,
Executive shall be entitled to a bonus (in addition to his
Base Salary) in such amount and computed in such manner as
shall be determined by the Board of Directors but in no event
shall the bonus payable to Executive under this 3(b) be less
than an amount computed by applying to the fiscal year in
question the following bonus formula:
"Formula Bonus Compensation" means the amount, if any, payable
to Executive under this 3(b)(i) and "Bonus Compensation" means
the total amount payable under 3(b)(i) and 3(b)(ii).
"Average Equity" means the average of stockholders'
equity as shown on the fiscal year-end consolidated balance
sheet of the Company as of the end of the fiscal year with
respect to which
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Bonus Compensation is being computed hereunder and as of the
end of the immediately preceding fiscal year (e.g., "Average
Equity" to be used in computing Bonus Compensation for the
fiscal year ending August 1, 1998 will be the average of
stockholders' equity as of August 2, 1997 and August 1, 1998)
except that the amount shown as the "equity adjustment from
foreign currency translation" on each such consolidated
balance sheet shall be disregarded and the amount of
$3,744,000 shall be the equity adjustment (increase) from
foreign currency translation used to determine stockholders'
equity at each such year-end balance sheet date.
"Net Earnings" means the after-tax consolidated net
earnings of the Company and its subsidiaries as certified by
its independent accountants for inclusion in the annual report
to stockholders.
"Return on Equity" means Net Earnings as a percentage
of Average Equity.
For fiscal year 1998, "Zero Bonus Percentage" shall
mean a Return on Equity of 12.5% and "Maximum Bonus
Percentage" shall mean a Return on Equity of 18.0%. For fiscal
years after fiscal 1998 the Company shall determine the Zero
Bonus Percentage
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and the Maximum Bonus Percentage, consistent in each case with
expected results based upon the Company's normal projection
procedures, or based on sound statistical or trend data, and
the determination by the Company of such percentages shall be
conclusive and binding on Executive.
If Return on Equity for the fiscal year in question
is the Zero Bonus Percentage or less, no Formula Bonus
Compensation shall be payable. If Return on Equity equals or
exceeds the Maximum Bonus Percentage, the Formula Bonus
Compensation payable to Executive shall be 42% of his Base
Salary. If Return on Equity is more than the Zero Bonus
Percentage and less than the Maximum Bonus Percentage, the
Formula Bonus Compensation shall be increased from zero
percent of Base Salary towards 42% of Base Salary in the same
proportion that Return on Equity increases from the Zero Bonus
Percentage to the Maximum Bonus Percentage. Thus, for example,
if Return on Equity for fiscal 1998 is 15.25% (the midpoint
between 12.5% and 18.0%) the Formula Bonus Compensation shall
be an amount equal to 21% of Executive's Base Salary (the
midpoint between zero percent of Base Salary and 42% of Base
Salary).
(ii) Business Segment Bonus Compensation. Inasmuch
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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 28% of Executive's Base
Salary.
(iii) Payment of Bonus Compensation. The Bonus compensation
shall be paid in installments as follows:
(iv) 50% of the amount thereof in August next following
the end of the fiscal year with respect to which the
Bonus Compensation is payable, and
(v) the balance thereof not later than January 15th next
following the end of the fiscal year with respect to
which the Bonus Compensation is payable.
With respect to any fiscal year of the Company
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which falls in part but not in whole within the Term of
Employment, the Bonus Compensation to which Executive is
entitled under this Section 3(b) and Section 3(c) shall be
prorated on the basis of the number of days of such fiscal
year falling within the Term of Employment except that if the
Term of Employment ends within five days before or after the
end of a fiscal year, there shall be no proration and the
Bonus Compensation shall be payable with respect to the full
fiscal year ending within such five-day period.
(c) Fringe Benefits and Perquisites. (i) During the Term of
Employment, Executive shall enjoy the customary perquisites of
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), at such time and
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on such terms and conditions as each such plan provides.
(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 OF
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
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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 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 at one-half of the rate of
Executive's Base Salary plus one-half of Executive's Bonus
Compensation (prorated to the last day of such period) which
would have been payable with respect to such period but for
such death or termination.
(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 that event, unless
the parties have agreed otherwise, the Term of Employment
shall be automatically renewed and
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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 paragraph
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 paragraph 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
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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 of Control. In event of a Change of Control (as
hereinafter defined), Executive shall have the right to
terminate the Term of Employment, by notice to the Company
given at any time after such Change of 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. A Change of Control shall be deemed to have
occurred at such time as a majority of the directors then in
office are not Continuing Directors as defined in subparagraph
(C)(6) of Article 12 of the Company's Restated Certificate of
Incorporation dated November 23, 1993 and filed by the New
York Department of State on December 7, 1993.
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 Section 1 or Section 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 Section 1 or Section 4
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hereof or terminates under Section 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 Section 1 following a Change of Control (as defined in Section
4(c)), the foregoing covenant not to compete shall not apply.
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
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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
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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.
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 Section 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 Section 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.
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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
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any waiver, change, modification, extension or discharge is sought.
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 President 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 ANY PRIOR EMPLOYMENT AGREEMENT
Any Employment Agreement in effect between the Company and Executive on
the date hereof is hereby terminated by mutual consent effective January 11,
1998 and is superseded and replaced by this Agreement.
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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
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XXXXXX XXXXXXX-SURRY
PRESIDENT AND
CHIEF FINANCIAL OFFICER
EXECUTIVE
/S/ XXXXXX XXXXXXX
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XXXXXX XXXXXXX
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