Exhibit 10.2
EMPLOYMENT AGREEMENT dated May 1, 2003 between PALL CORPORATION, a New
York corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Executive").
In consideration of the mutual agreements hereinafter set forth, the
parties hereto agree as follows:
ss.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") beginning August
1, 2003 (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 later of (i) July 31, 2006, and (ii) the second anniversary of the date
on which such notice is given.
ss.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 or not
customarily performed by a corporate officer. 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 an elected officer of the
Company. The failure of any future Board of Directors to elect Executive as an
officer of the Company shall not, however, be deemed to relieve either party
hereto of any of his or its obligations under this Agreement.
(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 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.
ss.3. Compensation During Term of Employment
(a) Base Salary. With respect to the period beginning on the Term
Commencement Date and ending on the 31st day of July next following the Term
Commencement Date, the Company shall pay Executive a Base Salary (in addition to
the compensation provided for elsewhere in this Agreement) at the rate of
$450,000 per annum (hereinafter called the "Original Base Salary"). With respect
to each Contract Year beginning with the Contract Year which starts on the first
day of August next following the Term Commencement Date, 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. 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". For each Contract Year during
the Term of Employment beginning with the Contract Year which starts on the
first day of August next following the Term Commencement Date, 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 the month of June next preceding the Term Commencement Date. [To
illustrate the operation of the foregoing provisions of this paragraph: In an
Employment Agreement as to which the Term Commencement Date was August 1, 2003,
the executive's base salary for the Contract Year August 1, 2004 through July
31, 2005 would be not less than the Original Base Salary under that Employment
Agreement adjusted by the percentage increase (or decrease) of the Consumer
Price Index for June 2004 over (or below) said Index for June 2003.] 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 the month of June next
preceding the Term Commencement Date 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 on the first day of August next following the Term Commencement Date)
the Board of Directors fixes the Base Salary at an amount higher than the
Minimum Base Salary, then (unless the resolution 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. [To illustrate the operation of the foregoing
provisions of this paragraph: If the Board of Directors were to fix a Base
Salary for a Contract Year beginning, say, August 1, 2005 which is higher than
the Minimum Base Salary for that Contract Year, then June 2005 would become the
base month for the purposes of making the Consumer Price Index adjustment to
determine the Minimum Base Salary for subsequent Contract Years unless and until
the Board of Directors were to fix a Base Salary higher than the Minimum Base
Salary for a subsequent Contract Year.]
(b) 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 ending on the Saturday nearest to the 31st day of the month of July
next following the Term Commencement Date, 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, approved by
shareholders at the annual meeting of shareholders on November 14, 2001 and
amended by the Compensation Committee on July 16, 2002 and November 1, 2002
effective for the Fiscal Year beginning August 4, 2002, 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 the purpose 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 112.5% of
his Base Salary for such Fiscal Year.
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(c) Fringe Benefits and Perquisites. 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
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.
ss.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 any Plan
Bonus or pro rata portion thereof that Executive is entitled to receive in
accordance with the terms of the Bonus Plan 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 102.5% 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 102.5% 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, (i) Executive's Base
Salary prorated to the date on which the Term of Employment ends and (ii) any
Plan Bonus or pro rata portion thereof that Executive is entitled to receive in
accordance with the terms of the Bonus Plan.
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(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 the 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.
ss.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's 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.
ss.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.
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ss.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.
ss.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.
ss.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.
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ss.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.
ss.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.
ss.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.
ss.13. Notices
All notices given hereunder shall be in writing and shall be sent by
registered or certified mail or overnight delivery service such as Federal
Express or UPS Next Day Air or delivered by hand, and, if intended for the
Company, shall be addressed to it (if sent by mail or overnight delivery
service) or delivered to it (if delivered by hand) at its principal office for
the attention of the Corporate 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 or overnight delivery service) 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
on which it is mailed or on which it is delivered to the overnight delivery
service or, if delivered personally, on the date so delivered.
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ss.14. Termination of Existing Agreement
Any employment agreement between the parties hereto which is in effect
on the date hereof is hereby terminated and replaced and superseded by this
Agreement effective on the Term Commencement Date. All payments, of Base Salary
or otherwise, made by the Company under any such existing agreement with respect
to any period commencing on or after the Term Commencement Date shall be
credited against the corresponding payment obligations of the Company under this
Agreement with respect to such period.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PALL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Surry
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-Surry
Title: President
EXECUTIVE
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
[Form prepared 2/03]
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PALL CORPORATION
EXECUTIVE INCENTIVE BONUS PLAN
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1. Purpose
This document sets forth the Pall Corporation Executive Incentive Bonus
Plan as adopted by the Committee on and effective July 17, 2001, approved by
shareholders on November 14, 2001 and amended by the Committee on July 16, 2002
and November 1, 2002 effective for the Fiscal Year beginning August 4, 2002.
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, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 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
(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 ▇.▇.▇. 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 ▇.▇.▇. 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
▇.▇.▇. Target for the year, the Performance Percentage for the year
shall be 100%.
(ii) If the Return on Equity is less than the Maximum ▇.▇.▇.
Target for the year but exceeds the Minimum ▇.▇.▇. 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 ▇.▇.▇. Target for the year, by (B) the excess of
the Maximum ▇.▇.▇. Target for the year over the Minimum ▇.▇.▇. Target
for the year.
(iii) If the Return on Equity equals or is less than the
Minimum ▇.▇.▇. 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.
(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.
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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 Fiscal Year ending August 3, 2002 and 150% of the Executive's
Base Salary for each subsequent Fiscal 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 on such date in September next following the close of
such year as the Committee in its discretion shall determine (the first
"Bonus Payment Date"), 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;
(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;
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(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.
(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.
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(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.
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.
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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 on November 14,
2001 and amended by the Committee on July 16, 2002 and November 1, 2002
effective for the Fiscal Year beginning August 4, 2002.
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