EXHIBIT 10.4
PALL CORPORATION
MANAGEMENT STOCK PURCHASE PLAN
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1. PURPOSE.
This document sets forth the Pall Corporation Management Stock Purchase
Plan as amended and restated effective as of January 1, 2005.
The purpose of the Plan is to encourage key employees of the
Corporation and its Affiliated Companies to increase their ownership of shares
of the Corporation's Common Stock by providing such employees with an
opportunity to elect to have portions of their total annual compensation paid in
the form of Restricted Units, and to have additional matching Restricted Units
credited with respect thereto.
The Plan also provides certain employees with an opportunity to elect
to defer payment with respect to the Restricted Units credited to them that
become vested. With respect to these provisions, the Plan is intended to
constitute an unfunded plan of deferred compensation for "a select group of
management or highly compensated employees" within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
2. DEFINITIONS.
As used herein, the following terms shall have the following meanings:
"ACCOUNT" and "SUBACCOUNT" shall mean, respectively, the account, and
each Subaccount within such Account, that is established for a Participant
pursuant to Section 8.
"AFFILIATED COMPANIES" shall mean each direct or indirect subsidiary of
the Corporation.
"BENEFICIARY" shall mean the person or persons designated by a
Participant in accordance with Section 12 to receive any payment that is
required to be made under the Plan upon the Participant's death.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
"BONUS" shall mean, with respect to any Eligible Employee for any Plan
Year, the Bonus payable to such Eligible Employee during such year under the
Corporation's Executive Incentive Bonus Plan, or, if applicable, under the terms
of the Eligible Employee's employment agreement with the Corporation, or under
any other plan, program or arrangement of annual incentive compensation
maintained by the Corporation or any of its Affiliated Companies.
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"BONUS PAYMENT DATE" shall mean each date on which Bonus payments are
made under the Corporation's Executive Incentive Bonus Plan.
"BUSINESS DAY" shall mean any day on which the Corporation's principal
office in the U.S. is open for business.
"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, 1989
between the Corporation and United States Trust
Company of New York, as Rights Agent as amended by
Amendment No. 1 dated as of 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.
"CLOSING PRICE" shall mean, as of any date, the closing price of a
share of Common Stock as reported in the New York Stock Exchange Consolidated
Transactions for such date.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the CEO and such other officers of the
Corporation as the CEO in his discretion may appoint from time to time. The CEO
shall have the power to remove any other member of the Committee at any time.
"COMMON STOCK" shall mean the shares of common stock ($0.10 par value)
of the Corporation.
"COMPENSATION COMMITTEE" shall mean the Compensation Committee of the
Board of Directors.
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"CORPORATION" shall mean Pall Corporation.
"CREDITING DATE" shall mean, with respect to any Initial Award
Restricted Unit Subaccount, Purchased Restricted Unit Subaccount or Matching
Restricted Unit Subaccount maintained for a Participant under Section 8, the
date as of which Restricted Units, or Matching Restricted Units, were first
credited to such Subaccount pursuant to Section 5(a), (b), (c), (d), or (e).
"DEFERRED VESTED UNITS" shall mean Vested Units with respect to which
the Participant has elected to defer payment in accordance with the provisions
of Section 7(d) hereof.
"DELAYED PAYMENT DATE" shall mean the date on which payment with
respect to a Participant's Post-2004 Bonus and Base Salary Units is to be made
pursuant to Section 7(f)(i) or Section 7(f)(ii)(B), or the date on which payment
with respect to a Participant's Deferred Vested Units is to be made pursuant to
Section 7(f)(iii).
"DISABLED" shall mean, with respect to any Participant on or after
January 1, 2005, that the Participant (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months; or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under any accident and health plan maintained by the
Corporation or any of its Affiliated Companies for its employees.
"DIVIDEND EQUIVALENT UNITS" shall mean additional Restricted Units or
additional Deferred Vested Units credited to a Participant's Account pursuant to
Section 5(f), Section 7(d)(vi) or Section 7(f)(vi).
"DIVIDEND PAYMENT DATE" shall mean each date on which the Corporation
pays a dividend on its Common Stock.
"ELIGIBLE EMPLOYEE" shall mean, with respect to any Plan Year, any
Employee who has been designated under Section 4 as eligible to be credited with
Restricted Units for such Plan Year.
"EMPLOYEE" shall mean any person employed by the Corporation or any of
its Affiliated Companies.
"INVOLUNTARY TERMINATION" shall mean a Participant's Termination of
Employment initiated by the Corporation, or by any of its Affiliated Companies,
for any reason other than for disability or becoming Disabled or for cause.
"MATCHING RESTRICTED UNITS" shall mean Restricted Units that are
credited to a Participant's Account pursuant to Section 5(e), to match
Restricted Units that are credited to the Participant's Account under Section
5(b), (c) or (d).
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"PARTICIPANT" shall mean any Employee for whom an Account has been
established, and is being maintained, pursuant to Section 8 hereof.
"PLAN" shall mean the Pall Corporation Management Stock Purchase Plan
as set forth herein and as amended from time to time.
"PLAN YEAR" shall mean the period beginning on August 1 of each
calendar year and ending on July 31 of the following calendar year.
"POST-2004 BONUS AND BASE SALARY UNITS" shall mean, with respect to any
Participant, (i) all Restricted Units credited to the Participant after January
31, 2005 pursuant to elections made by the Participant under Section 5(b), (ii)
all Restricted Units credited to the Participant after January 31, 2005 pursuant
to elections made by the Participant under Section 5(c), and (iii) all Dividend
Equivalent Units credited to the Participant with respect to the Restricted
Units described in clauses (i) and (ii) of this paragraph.
"RESTRICTED UNIT" shall mean a Unit credited to a Participant pursuant
to Section 5 that has not yet become vested in accordance with the provisions of
Section 6.
"RETIREMENT" shall mean a Participant's Termination of Employment for
any reason other than death, if at the time of such Termination of Employment
the Participant has attained age 62 and is eligible to receive (i) a Retirement
Benefit under the Pall Corporation Cash Balance Pension Plan or (ii), in the
case of any Participant who is not a resident of the U.S., a similar type of
benefit under any plan or program maintained by the Corporation or any of its
Affiliated Companies (or to which the Corporation or any of its Affiliated
Companies makes contributions) that provides benefits to Employees upon their
retirement.
"TERMINATION OF EMPLOYMENT" shall mean the cessation of a Participant's
employment with the Corporation and all of its Affiliated Companies irrespective
of the reason therefor and irrespective of whether initiated by the Corporation,
an Affiliated Company, the Participant or otherwise.
"TRADING DAY" shall mean any day on which the New York Stock Exchange
is open for trading.
"UNIT" shall mean a unit of measurement equivalent to one share of
Common Stock, with none of the attendant rights of a shareholder of such share,
including, without limitation, the right to vote such share and the right to
receive dividends thereon, except to the extent otherwise specifically provided
herein.
"VESTED UNIT" shall mean a Unit credited to a Participant pursuant to
Section 5 that has become vested in accordance with the provisions of Section 6.
"VESTING DATE" shall mean, with respect to any Restricted Units
credited to a Participant's Account, the date on which such Restricted Units
become vested in accordance with the provisions of Section 6.
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3. MAXIMUM NUMBER OF SHARES OF COMMON STOCK AVAILABLE.
The number of shares of Common Stock that may be distributed with
respect to Restricted Units and Deferred Vested Units credited to Participants
under the Plan, (including Dividend Equivalent Units credited with respect to
such Units) shall be limited to 2,000,000 shares of Common Stock. If any
Restricted Units initially credited to a Participant shall be forfeited, the
number of shares of Common Stock no longer payable with respect to the
Restricted Units so forfeited shall thereupon be released and shall thereafter
be available for the crediting of new Restricted Units under the Plan. The
limitation provided under this Section 3 shall be subject to adjustment as
provided in Section 9.
The shares of Common Stock distributed under the Plan may be authorized
and unissued shares, shares held in the treasury of the Corporation, or shares
purchased on the open market by the Corporation at such time or times and in
such manner as it may determine. The Corporation shall be under no obligations
to acquire shares of Common Stock for distribution to Participants before
payment in Common Stock is due.
4. ELIGIBILITY.
An Employee shall be eligible to be credited with Restricted Units
under Section 5 during any Plan Year only if he or she has been designated by
the Compensation Committee as an Eligible Employee with respect to such year.
Upon the recommendation of the CEO, the Compensation Committee may
select as an Eligible Employee for any Plan Year any Employee who is expected to
make significant contributions during the course of such year to the success of
the Corporation and its Affiliated Companies and to the growth of their
businesses.
Any person who has been selected as an Eligible Employee for any Plan
Year shall continue to be an Eligible Employee in the Plan for each subsequent
Plan Year during the period of his or her employment, subject, however, to the
Compensation Committee's right to terminate such individual's eligibility
effective beginning as of the first base salary payment date or, if earlier, the
first Bonus Payment Date occurring after the date on which the Compensation
Committee makes its determination to terminate such individual's eligibility.
5. CREDITING OF RESTRICTED UNITS.
For each Plan Year, Eligible Employees shall be credited with
Restricted Units in accordance with the following provisions:
(a) INITIAL AWARD UNITS. To the extent that the Compensation Committee
in its sole discretion so determines, any Employee who is designated as an
Eligible Employee for the first time at any time after August 1, 1999 shall be
credited, as of the date specified by the Compensation Committee in such
determination, with such number of Restricted Units as the Compensation
Committee may determine for such Employee, or the Compensation Committee may
determine not to grant any Initial Award Units to such Eligible Employee.
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(b) BONUS UNITS. Each Employee who is an Eligible Employee for any Plan
Year beginning on or after August 1, 1999 may elect to have any part or all of
any Bonus that may become payable to the Participant during such year paid in
the form of Restricted Units that will be credited to his or her Account
hereunder and distributed in accordance with the provisions of this Plan,
instead of being paid to the Eligible Employee in cash. If an Eligible Employee
has so elected, the Eligible Employee's Account shall be credited on the first
Bonus Payment Date during such year with a number of Restricted Units determined
by dividing (i) the total amount of the portion of the Eligible Employee's Bonus
payable during such year which the Eligible Employee elected to have paid in the
form of Restricted Units, by (ii) the Closing Price of a share of Common Stock
on such Bonus Payment Date or, if such date is not a Trading Day, on the next
following day that is a Trading Day. In the event that an Eligible Employee's
Bonus is payable in a unit of currency other than U.S. dollars, the portion of
the bonus which the Eligible Employee has elected to have paid in the form of
Restricted Units shall be converted to U.S. dollars on the Crediting Date (the
first Bonus Payment Date during the Plan Year in which such Bonus is payable) at
a rate equal to the exchange rate of such currency and U.S. dollars on such
Crediting Date as reported in The Wall Street Journal in its issue following the
Crediting Date.
(c) BASE SALARY UNITS. Each Employee who is an Eligible Employee for
any Plan Year beginning on or after August 1, 1999 may elect to have up to 50%
of the amount of the base salary otherwise payable to the Eligible Employee on
each payday during such year paid in the form of Restricted Units that will be
credited to his or her Account hereunder and distributed in accordance with the
provisions of this Plan, instead of being paid to the Eligible Employee in cash.
If an Eligible Employee has so elected, the amount specified in such election
shall be withheld from the payment of base salary otherwise required to be made
to the Eligible Employee on each payday during such year, and the Eligible
Employee's Account shall be credited on January 31 and on July 31 of such year,
with a number of Restricted Units determined by dividing (i) the aggregate
amount so withheld from the start of such year, in the case of the Restricted
Units to be credited on January 31, or from January 31, in the case of the
Restricted Units to be credited on July 31, by (ii) the Closing Price of a share
of Common Stock on the applicable crediting date or, if such date is not a
Trading Day, on the next following day that is a Trading Day. In the event that
an Eligible Employee's base salary is payable in a unit of currency other than
U.S. dollars, the aggregate amount withheld shall be converted to U.S. dollars
on the January 31 or July 31 Crediting Date, as the case may be, at a rate equal
to the exchange rate of such currency and U.S. dollars on such Crediting Date as
reported in The Wall Street Journal in its issue following the Crediting Date.
(d) CASH PAYMENT UNITS. Each Employee who is an Eligible Employee for
any Plan Year beginning on or after August 1, 1999 may make a direct cash
payment to the Corporation at least seven days prior to (i) the first Bonus
Payment Date during such Plan Year and/or (ii) January 31 of such Plan Year. The
Crediting Dates with respect to such direct cash payments shall be (i) the first
Bonus Payment Date of the Plan Year with respect to cash payments made at least
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seven days prior to such Bonus Payment Date and (ii) January 31 with respect to
cash payments made at least seven days prior to that date. In consideration of
any such cash payment, the Eligible Employee shall have his or her Account
credited, on the relevant Crediting Date, with a number of Restricted Units
determined by dividing (i) the amount of such cash payment by (ii) the Closing
Price of a share of Common Stock on such Crediting Date or, if such date is not
a Trading Day, on the next following day that is a Trading Day. In the event
that an Eligible Employee's direct cash payment is made in a unit of currency
other than U.S. dollars, the amount of such payment shall be converted to U.S.
dollars on the relevant Crediting Date, at a rate equal to the exchange rate of
such currency and U.S. dollars on such Crediting Date as reported in The Wall
Street Journal in its issue following the Crediting Date.
The aggregate amount of the direct cash payments that an Eligible
Employee may make under this Section 5(d) during any Plan Year (the "Cash
Purchase Year") shall not exceed the sum of (x) the amount by which 50% of the
Eligible Employee's base salary for the Plan Year immediately preceding the Cash
Purchase Year exceeds the portion thereof which the Eligible Employee has
elected under Section 5(c) to have paid in the form of Restricted Units, plus
(y) the amount by which the Bonus payable to the Eligible Employee during the
Cash Purchase Year (based on results of operations for the immediately preceding
Plan Year) exceeds the portion thereof which the Eligible Employee elected under
Section 5(b) to have paid in the form of Restricted Units.
(e) MATCHING UNITS. On each date on which any Restricted Units are
credited to an Eligible Employee's Account pursuant to the provisions of
paragraphs (b), (c) or (d) of this Section 5, there shall also be credited to
the Eligible Employee's Account on that date a number of Matching Restricted
Units equal to (i) 50% of the number of Base Salary Units credited on January
31, 2005 and August 1, 2005 and (ii) 100% of the number of Cash Payment Units
purchased after September 10, 2004 and credited on January 31, 2005 and 100% of
the number of Restricted Units of all kinds (other than Dividend Equivalent
Units) credited after August 1, 2005.
(f) DIVIDEND EQUIVALENTS. Until the Vesting Date for the Restricted
Units that have been credited to a Participant's Account pursuant to paragraphs
(a), (b), (c), (d) and (e) of this Section 5, additional Restricted Units shall
be credited to the Participant's Account, with respect to the Restricted Units
so credited, as of each Dividend Payment Date. The number of additional
Restricted Units to be so credited shall be determined separately for each
Initial Award Restricted Unit Subaccount, for each Purchased Restricted Unit
Subaccount, and for each Matching Restricted Unit Subaccount, maintained for a
Participant pursuant to Section 8. The number of additional Restricted Units to
be credited to each such Subaccount shall be determined by first multiplying (A)
the total number of Restricted Units standing to the Participant's credit in
such Subaccount on the day immediately preceding such Dividend Payment Date
(including all Dividend Equivalent Units credited to such Subaccount on all
previous Dividend Payment Dates), by (B) the per-share dollar amount of the
dividend paid on such Dividend Payment Date and then, dividing the resulting
amount by the Closing Price of one share of Common Stock on such Dividend
Payment Date.
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(g) ELECTION PROCEDURES. Any election made by an Eligible Employee
under paragraph (b) or (c) of this Section 5 shall be made in accordance with,
and shall be subject to, the provisions set forth below.
(i) any such election shall be made in writing, on a form furnished
to the Eligible Employee for such purpose by the Committee and filed by
the Eligible Employee with the Committee.
(ii) An election under Section 5(b) with respect to the Bonus
payable to an Eligible Employee during the Plan Year beginning August
1, 2005 (based on the application of the bonus formula to the fiscal
year ending July 31, 2005) shall be made no later than December 31,
2004. An election under Section 5(b) with respect to the Bonus payable
to an Eligible Employee during any Plan Year beginning on or after
August 1, 2006 shall be made no less than one year before the beginning
of such Plan Year (e.g., an election with respect to the Bonus payable
during the Plan Year beginning August 1, 2006 (based on the application
of the bonus formula to the fiscal year ending July 31, 2006), must be
made by the last Business Day of July 2005).
(iii) An election under Section 5(c) with respect to base salary
payable to an Eligible Employee during any Plan Year shall be made on
or prior to the last Business Day preceding the start of such Plan
Year, except as otherwise provided under subparagraph (iv) or (v)
below.
(iv) In the case of any Eligible Employee who, in the absence of
any election under Section 5(c) with respect thereto, would be required
to include in his or her gross income for U.S. federal income tax
purposes the base salary payable to the Eligible Employee during any
Plan Year beginning on or after August 1, 2005, an election under
Section 5(c) with respect to the Eligible Employee's base salary for
any such Plan Year shall be made in accordance with the following
provisions:
(A) For the Plan Year beginning on August 1, 2005,
any such election with respect to base salary payable to the
Eligible Employee during the period from August 1 through
December 31 of such Plan Year shall be made on or prior to
March 15, 2005, and any such election with respect to base
salary payable to the Eligible Employee during the period from
January 1 through July 31 of such Plan Year shall be made on
or prior to the last Business Day preceding the start of such
Plan Year.
(B) For each Plan Year beginning on or after August
1, 2006, any such election with respect to base salary payable
to the Eligible Employee during the period from August 1
through December 31 of such Plan Year shall be made on or
prior to the close of the calendar year immediately preceding
the start of such Plan Year, and any such election with
respect to base salary payable to the Eligible Employee during
the period from January 1 through July 31 of such Plan Year
shall be made on or prior to the last Business Day preceding
the start of such Plan Year.
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(C) If prior to the start of any Plan Year beginning
on or after August 1, 2006, regulations, rulings or other IRS
guidance are issued under section 409A of the Code ("section
409A Guidance") that permit base salary payable with respect
to services performed by an employee during his or her
employer's fiscal year to be deferred pursuant to an election
made by no later than the close of the employer's preceding
fiscal year, clause (B) above shall not apply with respect to
any such Plan Year starting after the date on which such
section 409A Guidance is issued. Instead, an election under
Section 5(c) with respect to base salary payable to the
Eligible Employee during any portion of such Plan Year shall
be made on or prior to the last Business Day of the Plan Year
immediately preceding such Plan Year. However, if, prior to
the date on which such section 409A Guidance is issued, an
Eligible Employee made an election under Section 5(c) in
accordance with clause (B) above with respect to base salary
payable to the Eligible Employee during the period from August
1 through December 31 of such Plan Year, the election so made
shall remain in effect except to the extent the Committee, in
its discretion, permits such election to be modified prior to
the start of such Plan Year.
(v) Any Employee who is hired after the start of a Plan Year
but who is designated under Section 4 as an Eligible Employee for such
year may make election under Section 5(c) with respect to his or her
base salary for such year at any time during the 30-day period
commencing on his or her date of hire; provided, however, that any
election so made shall be effective only with respect to base salary
payable to the Eligible Employee for periods of service beginning after
the date on which he or she files such election with the Committee.
(vi) In his or her election form, the Eligible Employee shall
specify, by dollar amount (which shall be an even multiple of $100) or
by percentage (which shall be an even multiple of 1%), the portion of
his or her Bonus and/or base salary that the Eligible Employee wishes
to have paid in the form of Restricted Units credited to his or her
Account, instead of in cash. The dollar amount or percentage so
specified shall be at least equal to any minimum amount or percentage
which the Committee in its discretion may have determined to be
applicable to elections under Section 5(b) and/or Section 5(c) for the
Plan Year.
(vii) Except as otherwise provided in the last sentence of
paragraph (iv)(C) above, any election made under Section 5(b) or (c)
for any Plan Year shall be irrevocable.
(h) OTHER ELECTION RULES. Elections made under Section 5(b) or (c)
shall be subject to the following rules:
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(i) If an Eligible Employee who has made an election under
Section 5(b) with respect to the Bonus payable to the Eligible Employee
during any Plan Year terminates employment with the Company and all of
its Affiliated Companies for any reason prior to any Bonus Payment Date
for such Bonus but is nevertheless entitled to receive a Bonus payment
on such date, the portion of such payment that is otherwise required to
be paid by means of the crediting of Restricted Units to the Eligible
Employee's Account pursuant to his or her election under Section 5(b)
shall not be paid in such form, but shall be paid instead in the form
of a single lump sum cash payment. Such payment shall be made within 30
days after such Bonus Payment Date.
(ii) If an Eligible Employee who has made an election under
Section 5(c) with respect to the base salary payable to the Eligible
Employee during any Plan Year terminates employment with the Company
and all of its Affiliated Companies for any reason prior to any date on
which Restricted Units are to be credited to his or her Account with
respect to amounts withheld from his or her base salary pursuant to
such election, no Restricted Units shall be so credited on such date
but instead, the aggregate amount so withheld as of the date of the
Eligible Employee's termination of employment shall be paid to the
Eligible Employee, without interest thereon, in a single lump sum cash
payment. Payment shall be made within 30 days after such termination
date.
(iii) Any election made by an Eligible Employee under Section
5(b) or (c) shall not be given effect if, at any time during the
12-month period ending on the date as of which any Restricted Units are
otherwise required to be credited to his or her Account pursuant to
such election, the Eligible Employee received a hardship withdrawal
under Section 7.2 of the Pall Corporation Profit-Sharing Plan.
6. VESTING OF UNITS.
Restricted Units credited to a Participant's Account, and Dividend
Equivalent Units credited with respect thereto, shall become vested in
accordance with the provisions set forth below.
(a) All Restricted Units standing to a Participant's credit in any
Initial Award Restricted Unit Subaccount, Purchased Restricted Unit Subaccount
or Matching Restricted Unit Subaccount maintained for the Participant under
Section 8 (including, in each case, all such Units that are Dividend Equivalent
Units) shall become vested on the earliest to occur of the following dates:
(i) the third anniversary of the Crediting Date for any such
Subaccount with a Crediting Date on or before July 31, 2003,
(ii) the fourth anniversary of the Crediting Date for any such
Subaccount with a Crediting Date after July 31, 2003,
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(iii) the date of the Participant's death,
(iv) the date as of which the Participant first incurs a
disability that entitles the Participant to a Social Security
certificate of disability award under the Federal Social Security Act,
or, on and after January 1, 2005, the date on which the Participant
becomes Disabled,
(v) the date on which a Change in Control occurs.
(b) If a Participant's Termination of Employment occurs as a result of
Retirement or Involuntary Termination prior to the third anniversary of a
Crediting Date occurring on or before July 31, 2003, or prior to the fourth
anniversary of a Crediting Date occurring after July 31, 2003, for any Initial
Award Restricted Unit Subaccount, Purchased Restricted Unit Subaccount or
Matching Restricted Unit Subaccount maintained for the Participant under Section
8 and prior to the occurrence of a Change in Control, as of the date of the
Participant's Termination of Employment:
(i) all Units in any such Purchased Restricted Unit Subaccount
(including all such Units that are Dividend Equivalent Units), shall
become vested;
(ii) the Earned Portion (as defined below) of all Units in any
such Initial Award Restricted Unit Subaccount and in any such Matching
Restricted Unit Subaccount (including all such Units that are Dividend
Equivalent Units), shall become vested; and
(iii) the Unearned Portion (as defined below) of all Units in
any such Initial Award Restricted Unit Subaccount and in any such
Matching Restricted Unit Subaccount (including all such Units that are
Dividend Equivalent Units) shall be forfeited, and the Participant
shall have no further rights with respect thereto.
For purposes of the foregoing, the "Earned Portion" of the Units in any
Initial Award Restricted Unit Subaccount and in any Matching Restricted Unit
Subaccount maintained for a Participant shall mean the percentage of such Units
determined (A) by dividing by 36 the number of months in the period beginning on
the Crediting Date for such Subaccount (if such Crediting Date is on or before
July 31, 2003) and ending on the date of the Participant's Termination of
Employment, or (B) by dividing by 48 the number of months in the period
beginning on the Crediting Date for such Subaccount (if such Crediting Date is
after July 31, 2003) and ending on the date of the Participant's Termination of
Employment, in either case (A) or (B) with any fraction of a month included in
such period treated as a full month; and the "Unearned Portion" of the Units in
any such Subaccount shall mean the percentage of such Units determined by
subtracting from 100% the Earned Portion of such Units, as determined under the
preceding clause.
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(c) If a Participant's Termination of Employment occurs for any reason
other than death, disability or becoming Disabled, Retirement or Involuntary
Termination prior to the third anniversary of a Crediting Date occurring on or
before July 31, 2003, or prior to the fourth anniversary of a Crediting Date
occurring after July 31, 2003, for any Initial Award Restricted Unit Subaccount,
Purchased Restricted Unit Subaccount or Matching Restricted Unit Subaccount
maintained for the Participant under Section 8 and prior to the occurrence of a
Change in Control, as of the date of the Participant's Termination of
Employment:
(i) all Units in any such Initial Award Restricted Unit
Subaccount and in any such Matching Restricted Unit Subaccount
(including all such Units that are Dividend Equivalent Units), shall be
forfeited, and the Participant shall have no further rights with
respect thereto; and
(ii) all Units in any such Purchased Restricted Unit
Subaccount (including all such Units that are Dividend Equivalent
Units) shall become vested.
7. PAYMENT FOR VESTED UNITS.
Payment with respect to a Participant's Vested Units shall be made in
accordance with the provisions set forth below.
(a) TIME FOR PAYMENT. Payment with respect to a Participant's Vested
Units shall be made to the Participant or, in the event of the Participant's
death, to his or her Beneficiary, within 30 days after the Vesting Date for such
Units, except as otherwise provided in paragraph (d), (f)(i) or (f)(ii)(B)
below.
(b) FORM AND AMOUNT OF PAYMENT. Except as provided in paragraph (c)
below, payment to be made with respect to any of a Participant's Vested Units at
the time specified in paragraph (a) above, or at the time specified in paragraph
(f)(i) below, shall be made in the form of a single lump sum payment consisting
of (i) a number of shares of Common Stock equal to the total number of whole
Vested Units payment for which is to be made at such time (including, in the
case of any Vested Units payment for which is to be made under paragraph (f)(i),
all Dividend Equivalent Units credited with respect to such Vested Units
pursuant to paragraph (f)(vi) below), and (ii) a cash payment for any fractional
part of a Unit payment for which is to be made at such time. The amount of such
cash payment shall be determined by multiplying such fractional part by the
Closing Price of a share of Common Stock on the first Trading Day preceding the
date of payment.
(c) PAYMENT ON ACCOUNT OF TERMINATION. Payment to be made at the time
specified in paragraph (a) above, or at the time specified in paragraph
(f)(ii)(B) below, with respect to a Participant's Units that become vested
pursuant to Section 6(c)(ii) shall be made, in either case, by the issuance of a
number of shares of Common Stock determined by dividing the lesser of (x) the
aggregate value of the number of such Units payment for which is to be made at
such time, determined by multiplying such number of Units by the Closing Price
of a share of Common Stock on the date or dates as of which such Units were
credited to the Participant's Account, or (y) the aggregate value of the number
of such Units payment for which is to be made at such time, determined by
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multiplying such number of Units by the Closing Price of a share of Common Stock
on the Vesting Date for such Units, by (z) the Closing Price of a share of
Common Stock on such Vesting Date or, if such Vesting Date was not a Trading
Day, the Closing Price of a share of Common Stock on the first Trading Day
preceding such Vesting Date. If payment for any of such Units is to be made at
the time specified in paragraph (f)(ii)(B) below, payment with respect to such
Units shall consist of the number of shares of Common Stock determined in
accordance with the preceding sentence, plus the number of Dividend Equivalent
Units credited with respect to such Units pursuant to paragraph (f)(vi) below.
If the total number of shares of Common Stock determined in accordance with the
provisions of either of the two preceding sentences includes a fractional part
of a share, payment with respect to such fractional part shall be made in cash,
in an amount determined by multiplying such fractional part by the Closing Price
of a share of Common Stock on the first Trading Day preceding the date of
payment.
(d) DEFERRED PAYMENT. Subject to the provisions of paragraph (e) below,
payment with respect to part or all of a Participant's Restricted Units that
become vested on any Vesting Date pursuant to Section 6(a)(i) or (ii) shall be
deferred, and shall be made at the time and in the manner hereinafter set forth,
if the Participant so elects in accordance with the following provisions:
(i) An election by the Participant hereunder with respect to
any Restricted Units that become vested on any Vesting Date shall be
made in writing, on a form furnished to the Participant for such
purpose by the Committee. The form shall be filed with the Committee at
least one year prior to such Vesting Date.
(ii) In the Participant's election form, the Participant shall
specify the number of such Restricted Units with respect to which the
Participant wishes to defer payment, and the date on which payment with
respect to such Units shall be made (the "Payment Date").
(iii) The Participant may select, as the Payment Date for such
Units, (A)(1) the first Business Day of the third calendar year
following the calendar year in which the Vesting Date for such Units
occurs, or any later calendar month, or (2) in the case of any such
Units that become vested on or after January 31, 2006, the first
Business Day of any calendar year or month after the fifth anniversary
of the Vesting Date for such Units; (B)(1) the first Business Day of
the calendar year following the date on which the Participant's
Termination of Employment occurs for any reason, or (2) in the case of
any such Units that become vested on or after January 31, 2006, the
later of (x) the first Business Day referred to in clause (B)(1) or (y)
the first Business Day of the calendar month following the fifth
anniversary of the Vesting Date for such Units; or (C) the earlier of
(1) the first Business Day of any calendar year or month selected by
the Participant which is a year or month permitted to be selected under
clause (A) of this sentence, or (2) the first Business Day of the
calendar year or month referred to in clause (B) of this sentence.
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(iv) Any election made hereunder by the Participant shall be
irrevocable.
(v) As of the Vesting Date for any Restricted Units covered by
a deferral election made by a Participant hereunder, the number of such
Units shall be transferred from the Restricted Unit Subaccount or
Matching Restricted Unit Subaccount in which such Units were recorded
to the appropriate Deferred Vested Unit Subaccount established for the
Participant under Section 8.
(vi) Until payment has been made with respect to all of the
Units in any Deferred Vested Unit Subaccount maintained for the
Participant under Section 8, there shall be credited to each such
Subaccount, as of each Dividend Payment Date, a number of additional
Deferred Vested Units determined by first multiplying (A) the total
number of Deferred Vested Units standing to the Participant's credit in
such Subaccount on the day immediately preceding such Dividend Payment
Date (including all Dividend Equivalent Units credited to such
Subaccount on all previous Dividend Payment Dates), by (B) the
per-share dollar amount of the dividend paid on such Dividend Payment
Date and then, dividing the resulting amount by the Closing Price of
one share of Common Stock on such Dividend Payment Date.
(vii) Except as provided in subparagraph (viii) below, payment
with respect to the Deferred Vested Units in any Deferred Vested Unit
Subaccount maintained for the Participant shall be made on the Payment
Date specified by the Participant in his or her deferral election with
respect to such Units or, if applicable, on the Delayed Payment Date
for such Units provided in paragraph (f)(iii) below. Payment with
respect to the Deferred Vested Units payable on any Payment Date or
Delayed Payment Date shall be made (A) by the issuance of one share of
Common Stock for each whole Deferred Vested Unit payable on such
Payment Date or Delayed Payment Date, and (B) by a cash payment for any
fractional part of a Deferred Vested Unit payable on such Payment Date
or Delayed Payment Date. The amount of such cash payment shall be
determined by multiplying such fractional part by the Closing Price of
a share of Common Stock on the first Trading Day preceding the date of
payment.
(viii) Notwithstanding any other provision in this Section 7
to the contrary, payment with respect to any part or all of any
Deferred Vested Unit Subaccount maintained for a Participant may be
made to the Participant on any date earlier than the Payment Date
specified by the Participant in his deferral election for such Units if
(A) the Participant requests such early payment and (B) the Committee,
in its sole discretion, determines that such early payment is necessary
to help the Participant meet an "unforeseeable emergency" within the
meaning of Section 1.457-6(c)(2) of the federal income tax regulations
or, in the case of any request for early payment made after January 1,
2005, within the meaning of section 409A(a)(2)(B)(ii)(I) of the Code.
The amount that may be so paid may not exceed the amount necessary to
meet such emergency or, for any early payment requested after January
1, 2005, the amount permitted to be paid under section
409A(a)(2)(B)(ii)(II) of the Code.
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(e) LIMITATIONS ON DEFERRALS. A deferral election otherwise permitted
to be made under paragraph (d) above shall be subject to the following
limitations:
(i) The Committee may deny any Participant the right to make
such election if it determines, in its sole discretion, that such
deferral election by the Participant might cause the Plan to fail to be
treated as a plan of deferred compensation "for a select group of
management or highly compensated employees" for purposes of ERISA.
(ii) If a Change in Control should occur after the date on
which the Participant's election form is filed with the Committee but
before the date that otherwise would have been the Vesting Date under
Section 6(a)(i) or (ii) for the Units designated in such form, the
Participant's deferral election shall not be given effect, and payment
with respect to such Units shall be made in accordance with the other
applicable provisions of this Section 7.
(iii) No deferral election shall be effective hereunder if, at
any time during the 12-month period ending on the Vesting Date, the
Participant received a hardship withdrawal under Section 7.2 of the
Pall Corporation Profit-Sharing Plan.
(iv) No amount may be deferred with respect to the
Participant's Vested Units pursuant to a Participant's deferral
election hereunder to the extent that any tax is required to be
withheld with respect to such amount pursuant to applicable federal,
state or local law.
(f) DELAY IN TIME FOR PAYMENT. To the extent provided in subparagraph
(i), (ii) or (iii) below, payment otherwise required to be made with respect to
any of a Participant's Vested Units at the time specified in paragraph (a)
above, and payment otherwise required to be made with respect to any of
Participant's Deferred Vested Units on the Payment Date for such Units
determined under clause (B)(2) or clauses (B)(2) and (C)(2) of paragraph
(d)(iii) above, shall not be made at such times but shall be made, instead, at
the times provided in subparagraph (i), (ii) or (iii) below.
(i) Payment with respect to any of a Participant's Post-2004
Bonus and Base Salary Units that become vested pursuant to Section
6(a)(v) by reason of the occurrence of a Change in Control shall be
made within 30 days after, (A) the earliest date on which such Units
otherwise would become vested under Section 6(a) in the absence of the
occurrence of a Change in Control, or (B), if earlier, the date of the
Participant's Termination of Employment for any reason other than death
or as a result of the Participant's having become Disabled; provided,
however, that if the Participant was a Key Employee (as defined in
subparagraph (iv) below) immediately prior to such Termination of
Employment, payment pursuant to this clause (B) shall be made on the
day that is 6 months after the date of such Termination of Employment
or, if the Participant dies before that day, by no later than 7
Business Days after the Corporation receives written notice of the
Participant's death.
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(ii) In the case of a Participant whose Termination of
Employment occurs after January 31, 2005 for any reason other than the
Participant's death or as a result of the Participant having become
Disabled, and who was a Key Employee immediately prior to his or her
Termination of Employment, payment with respect to any of the
Participant's Post-2004 Bonus and Base Salary Units that become vested
pursuant to Section 6(b) or (c) by reason of the Participant's
Termination of Employment shall be made at the times provided below:
(A) Payment with respect to any such Units that
become vested by reason of the Participant's Termination of
Employment at any time during calendar year 2005 shall be made
at the time specified in paragraph (a) above, provided that
such payment is made on or prior to December 31, 2005. Such
payment shall be treated as having been made to the
Participant upon his or her termination of participation in
the Plan, for purposes of Q & A 20 of IRS Notice 2005-1.
(B) Payment with respect to any such Units that
become vested by reason of the Participant's Termination of
Employment at any time after December 31, 2005 (or which
become vested by reason of the Participant's Termination of
Employment before that date but payment with respect to which
is not made to the Participant on or before that date) shall
be made on the day which is 6 months after the date of the
Participant's Termination of Employment or, if the Participant
dies before such day, by no later than 7 Business Days after
the Corporation receives written notice of the Participant's
death.
(iii) In any case where (A) any of a Participant's Deferred
Vested Units that became vested on or after January 31, 2006 have a
Payment Date determined by reference to the date of the Participant's
Termination of Employment pursuant to clause (B)(2) or clauses (B)(2)
and (C)(2) under paragraph (d)(iii) above, (B) the Payment Date for
such Units, as so determined, is earlier than 6 months after the date
of the Participant's Termination of Employment, (C) the Participant's
Termination of Employment occurs for any reason other than death or as
a result of the Participant having becoming Disabled, and (D) the
Participant is a Key Employee immediately prior to the Participant's
Termination of Employment, payment with respect to such Deferred Vested
Units shall be made on the day which is 6 months after the date of the
Participant's Termination of Employment or, if the Participant dies
before such day, by no later than 7 business days after the Corporation
receives written notice of the Participant's death.
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(iv) For purposes of this paragraph (f), the term "Key
Employee" shall mean a Participant who, as of any date of reference, is
a "specified employee" within the meaning of section 409A(a)(2)(B)(i)
of the Code.
(v) The provisions of subparagraph (i) and (ii) above shall
not apply to the payment required to be made under this Section 7 with
respect to a Participant's Units that become vested upon the occurrence
of a Change in Control, or to the payment required to be made under
this Section 7 with respect to a Participant's Units that become vested
upon the Participant's Termination of Employment, if in either case the
Participant would not be required to include such payment in his or her
gross income for federal income tax purposes if such payment were made
to the Participant at the time specified in paragraph (a) above. The
provisions of subparagraph (iii) above shall not apply to the payment
required to be made under this Section 7 with respect to any of a
Participant's Deferred Vested Units if the Participant would not be
required to include such payment in his or her gross income for federal
income tax purposes if such payment were made to the Participant on the
Payment Date for such Units determined under paragraph (d)(iii) above.
(vi) If payment with respect to any of a Participant's
Post-2004 Bonus and Base Salary Units is delayed pursuant to
subparagraph (i) or subparagraph (ii)(B) above, Dividend Equivalent
Units shall be credited to the Participant's Account with respect to
such Units, in the same manner as provided in paragraph (d)(vi) above,
on each Dividend Payment Date occurring during the period from the
Vesting Date for such Units to the Delayed Payment Date for such Units.
8. ACCOUNTS.
There shall be established on the books and records of the Corporation,
for bookkeeping purposes only, a separate Account for each Participant, to
reflect the Participant's interest under the Plan.
Within each Account so established for each Participant there shall be
established and maintained the following Subaccounts: an "Initial Award
Restricted Unit Subaccount" to reflect all Restricted Units to be credited to
the Participant's Account on any Crediting Date pursuant to Section 5(a); a
"Purchased Restricted Unit Subaccount" to reflect all Restricted Units to be
credited to the Participant's account on any Crediting Date pursuant to Section
5(b), (c) or (d); a "Matching Restricted Unit Subaccount" to reflect all
Matching Restricted Units to be credited to the Participant's Account on any
Crediting Date pursuant to Section 5(e); and a "Deferred Vested Unit Subaccount"
to reflect all Vested Units with respect to which a Participant has elected to
defer payment, and for which the Participant has selected the same Payment Date,
pursuant to Section 7(d).
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A Participant's Account and Subaccounts shall be adjusted from time to
time to reflect all Dividend Equivalent Units to be credited thereto pursuant to
Section 5(f) and Section 7(d)(vi), all payments made with respect to the Units
reflected therein pursuant to Section 7, and, in the case of any Initial Award
Restricted Unit Subaccount, Purchased Restricted Unit Subaccount or Matching
Restricted Unit Subaccount maintained for a Participant, any forfeitures of
Units reflected therein pursuant to Section 6.
A Participant's interest in any Deferred Vested Unit Subaccount
maintained for the Participant shall be fully vested and nonforfeitable at all
times.
9. CERTAIN ADJUSTMENTS TO PLAN SHARES.
In the event of any change in the shares of Common Stock by reason of
any stock dividend, stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares, or any rights
offering to purchase shares of Common Stock at a price substantially below fair
market value, or any similar change affecting the shares of Common Stock, the
number and kind of shares represented by Units credited to Participants'
Accounts shall be appropriately adjusted consistent with such change in such
manner as the Compensation Committee, in its sole discretion, may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, the Participants hereunder. The Committee shall give notice to
each Participant of any adjustment made pursuant to this Section and, upon such
notice, such adjustment shall be effective and binding for all purposes.
10. LISTING AND QUALIFICATION OF COMMON STOCK.
The Corporation, in its discretion, may postpone the issuance,
delivery, or distribution of shares of Common Stock with respect to any Vested
Units until completion of such stock exchange listing or other qualification of
such shares under any state or federal law, rule or regulation as the
Corporation may consider appropriate, and may require any Participant or
Beneficiary to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
in compliance with applicable laws, rules and regulations.
11. TAXES.
The Corporation or any of its Affiliated Companies may make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state and local taxes required by law to be withheld
with respect to any payments to be made under the Plan including, but not
limited to (i) deducting the amount so required to be withheld from any other
amount then or thereafter payable to a Participant or Beneficiary, and/or (ii)
requiring a Participant or Beneficiary to pay to the Corporation or any of its
Affiliated Companies the amount so required to be withheld as a condition of the
issuance, delivery, or distribution of any shares of Common Stock. With the
approval of the Compensation Committee, the Committee may permit such amount to
be paid in shares of Common Stock previously owned by the Participant, or a
portion of the shares of Common Stock that otherwise would be distributed to
such Participant in respect to his or her Vested Units, or a combination of cash
and shares of Common Shares.
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12. DESIGNATION AND CHANGE OF BENEFICIARY.
Each Participant shall file with the Committee a written designation of
one or more persons as the Beneficiary who shall be entitled to receive any
amount, or any shares of Common Stock, payable under the Plan upon his or her
death. A Participant may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any previously designated
Beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 12, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount, or any shares of Common Stock, payable under the Plan by
reason of the Participant's death, the Participant's estate shall be treated as
the Participant's Beneficiary for purposes of the Plan.
13. RIGHTS OF PARTICIPANTS.
A Participant's rights and interests under the Plan shall be subject to
the following provisions:
(a) A Participant shall have the status of a general unsecured creditor
of the Corporation with respect to his or her right to receive any payment under
the Plan. The Plan shall constitute a mere promise by the Corporation or the
applicable Affiliated Company to make payments in the future of the benefits
provided for herein. It is intended that the arrangements reflected in the Plan
be treated as unfunded for tax purposes, as well as for purposes of any
applicable provisions of Title I of ERISA.
(b) A Participant'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 Participant
or his or her Beneficiary.
(c) Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant any right to be retained in the employment of the
Corporation or any of its Affiliated Companies.
(d) No Participant shall have the right, by virtue of having been
selected as an Eligible Employee with respect to any Plan Year, to be
automatically treated as an Eligible Employee with respect to any subsequent
Plan Year.
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(e) No Restricted Units credited to a Participant's Account, and no
payments made with respect to such Units upon or after they become vested, shall
be considered as compensation under any employee benefit plan of the Corporation
or any of its Affiliated Companies, except as specifically provided in any such
plan or as otherwise determined by the Board of Directors.
14. 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; provided, however, that any questions as to the
rights under the Plan of any person who is an Elected Officer under Section
4.01(a) of the By-Laws of the Corporation, as amended on July 15, 2003 or
thereafter, shall be determined by the Compensation Committee instead of by the
Committee.
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 or the
Compensation Committee under the Plan shall be final, conclusive and binding
upon all parties. Notwithstanding the foregoing, any determination made by the
Committee or the Compensation 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.
15. 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 Participant with respect to any Units
previously credited to the Participant's Account, without his or her written
consent and (b) no amendment which constitutes a "material revision" of the
Plan, as the term material revision is defined in the applicable rules of the
New York Stock Exchange, shall be effective unless approved by the shareholders
in the manner required by such rules and by applicable law.
16. 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 Participants' 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.
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17. GOVERNING LAW.
The Plan shall be governed by and construed in accordance with the laws
of the State of New York.
18. EFFECTIVE DATE.
The Plan was adopted effective as of June 29, 1999 by the Board of
Directors, acting by the Compensation Committee, and approved by the
shareholders of the Corporation by a majority of the votes cast in person or by
proxy at the 1999 annual meeting of the Corporation's shareholders. The
effectiveness of the amendment to Section 5(e) made by the Compensation
Committee on September 10, 2004 was conditioned on approval of the Pall
Corporation 2005 Stock Compensation Plan by shareholders at the 2004 Annual
Meeting, which approval was granted at the Annual Meeting on November 17, 2004.
[As adopted by the Compensation Committee of the Board of Directors on June 29,
1999, amended by that Committee by Consent dated October 1, 1999, approved by
shareholders at the annual meeting on November 17, 1999 and further amended by
the Compensation Committee by Consents dated January 19, 2000 and March 28, 2001
and at a meeting held July 16, 2002, by the Executive Committee by Consent dated
January 30, 2003 and by the Compensation Committee at meeting held October 16,
2003, the last-mentioned amendment having been approved by shareholders at the
Annual Meeting on November 19, 2003, and further amended by the Compensation
Committee at meetings held January 21, 2004, September 10, 2004, January 19,
2005 and July 19, 2005.]
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