EXHIBIT 10.5
AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated July 20, 2005,
between PALL CORPORATION, a New York corporation (the "Company"), and
ERIC KRASNOFF ("Executive").
WHEREAS, the parties hereto are parties to an Amended and
Restated Employment Agreement dated January 21, 2004, (the "Existing
Agreement"), and
WHEREAS, the parties hereto wish to amend the Existing
Agreement to comply with the requirements of section 409A of the
Internal Revenue Code of 1986, as amended (the "Code") and to make
certain other changes in the Existing Agreement,
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements hereinafter set forth, the parties hereto agree that
the Existing Agreement is hereby amended and restated to read in its
entirety as follows:
ss.1. Employment and Term.
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The Company hereby employs Executive, and Executive hereby
agrees to serve, as an executive employee of the Company, with the
duties set forth in ss.2, for a term (hereinafteR called the "Term of
Employment") which began August 1, 2003 (the "Term Commencement Date")
and ending, unless sooner terminated under ss.2 or ss.4, on the
effective date specified in a notice OF termination given by either
party to the other except that such effective date shall not be earlier
than the second anniversary of the date on which such notice is given.
ss.2. Duties.
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(a) As used herein, the term "chief executive officer" means
the person who has the title of chief executive officer of the Company
and also has such authority and duties as are customarily possessed by
and assigned to a chief executive officer. If at any time during the
Term of Employment--
(i) the Board of Directors shall fail to elect Executive
to, or shall remove him from, the office which, in accordance with the
by-laws as then in effect or any resolution or resolutions of the Board
of Directors, carries with it the title, authority and duties of chief
executive officer, or
(ii) the by-laws are amended in such a way that, or the
Board of Directors takes any action the effect of which is that,
Executive no longer has the title of and the authority and duties which
are customarily possessed by and assigned to a chief executive officer,
then in either such event Executive shall have the right at his option
to terminate the Term of Employment by not less than 30 days' notice to
the Secretary of the Company given at any time thereafter. During any
period of time when Executive has the right to terminate under this
paragraph but elects not to do so, he shall hold such office or offices
in the Company, and perform such duties and assignments relating to the
business of the Company, as the Board of Directors and/or the chief
executive officer shall direct except that Executive shall not be
required to hold any office or perform any duties or assignment
inconsistent with his experience and qualifications or not customarily
performed by a senior executive corporate officer. So long as Executive
is performing or stands ready to perform duties and assignments in
accordance with the preceding sentence, the Term of Employment shall
continue until it thereafter terminates or is terminated pursuant to
any applicable provision hereof (including but not limited to
termination at Executive's option under this paragraph).
(b) 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 and Benefits During Term of Employment.
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(a) Base Salary. With respect to the period beginning on the
Term Commencement Date and ending on July 31, 2004, the Company shall
pay to Executive a Base Salary (in addition to the compensation
provided for elsewhere in this Agreement) at the rate of $760,000 per
annum (hereinafter called the "Original Base Salary"). With respect to
each Contract Year beginning with the Contract Year which starts August
1, 2004, the Company shall pay Executive a Base Salary at such rate as
the Board of Directors may determine but not less than the Original
Base Salary adjusted as follows: The term "Contract Year" as used
herein means the period from August 1 of each year through July 31 of
the following year. For each Contract Year during the Term of
Employment beginning with the Contract Year which starts August 1,
2004, the minimum compensation payable to Executive under this ss.3(a)
(hereinafter called the "Minimum Base Salary") shall be determined by
increasing (or decreasing) the Original Base Salary by the percentage
increase (or decrease) of the Consumer Price Index (as hereinafter
defined) for the month of June immediately preceding the start of the
Contract Year in question over (or below) the Consumer Price Index for
June 2003. The term "Consumer Price Index" as used herein means the
"Consumer Price Index for all Urban Consumers" compiled and published
by the Bureau of Labor Statistics of the United States Department of
Labor for "New York - Northern N. J. - Long Island, NY-NJ-CT-PA". To
illustrate the operation of the foregoing provisions of this ss.3(a):
Executive's Base Salary for the Contract Year August 1, 2004 through
July 31, 2005 shall be not less than the Original Base Salary 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 June
2003 as the base except as provided in the immediately following
paragraph hereof and (ii) applying the percentage increase (or
decrease) in the Consumer Price Index since said base month to the
Original Base Salary to determine the Minimum Base Salary. The Base
Salary shall be paid in such periodic installments as the Company may
determine but not less often than monthly.
If with respect to any Contract Year (including the Contract
Year beginning August 1, 2004) the Board of Directors fixes the Base
Salary at an amount higher than the Minimum Base Salary, then (unless a
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resolution adopted simultaneously with the resolution fixing such
higher Base Salary for such Contract Year provides otherwise), for the
purpose of determining the Minimum Base Salary for subsequent Contract
Years: (i) the amount of the higher Base Salary so fixed shall be
deemed substituted for the Original Base Salary wherever the Original
Base Salary is referred to in the immediately preceding paragraph
hereof, and (ii) the base month for determining the Consumer Price
Index adjustment shall be June of the calendar year in which the
Contract Year to which such higher Base Salary is applicable begins
(e.g., if the Board fixes a Base Salary for the Contract Year beginning
August 1, 2004 which is higher than the Minimum Base Salary, then June
2004 would become the base month for the purposes of making the CPI
adjustment to determine the Minimum Base Salary for subsequent Contract
Years).
(b) Bonus Compensation. 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 July 31, 2004, Executive shall be
eligible to receive a Bonus (in addition to his Base Salary) in
accordance with the terms of the Pall Corporation 2004 Executive
Incentive Bonus Plan adopted by the Compensation Committee of the Board
of Directors of the Company on October 16, 2003, approved by
shareholders at the annual meeting of shareholders on November 19,
2003, and amended by the Board of Directors, acting by its Compensation
Committee, on July 19, 2005, a copy of which is annexed hereto and
incorporated herein by reference (the "Bonus Plan"). Words and terms
used herein with initial capital letters and not defined herein are
used herein as defined in the Bonus Plan. For purposes of determining
the amount of the Bonus payable to Executive for any Fiscal Year under
the Bonus Plan (the "Plan Bonus"), Executive's Target Bonus Percentage
shall be 150% of his Base Salary for such Fiscal Year.
(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.
Executive shall also be entitled to receive or participate in all
"fringe benefits" and employee benefit plans provided or made available
by the Company to its executives or management personnel generally,
such as, but not limited to, group hospitalization, medical, life and
disability insurance, and pension, retirement, profit-sharing and stock
option or purchase plans.
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(d) Vacation. 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.
(e) Relocation Expenses. If at any time during the Term of
Employment Executive changes the location of his principal office,
either at the request of the Company or because it is in the best
interests of the Company for him to do so, to a location more than one
hour's commuting time from the present principal office of the Company
in East Hills, Long Island, New York, the Company shall reimburse
Executive for all costs and expenses reasonably related to or arising
from such relocation, including but not limited to the cost of suitable
housing at the new location, the cost of continuing to maintain his
residence at the old location if he so elects, moving expenses, and the
amounts necessary to equalize Executive's taxes and cost of living
between the old and new locations so that Executive will not have
suffered any financial disadvantage from having relocated.
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, has been
incapable of performing his principal duties hereunder for an aggregate
of 130 working days out of any period of 12 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 12-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, (i) Executive's Base Salary to the end of
the month in which such death or termination for disability occurs 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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(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.
(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.
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(c) Change in Control. In event of a Change in Control (as
defined in the Bonus Plan), Executive shall have the right to terminate
the Term of Employment, by notice to the Company given at any time
after such Change in Control, effective on the date specified in such
notice, which date shall not be more than (but can be less than) one
year after the giving of such notice.
ss.5. Severance.
In the event that the Term of Employment is terminated by the
Company under ss.1 hereof or by Executive under ss.2 or ss.4(c) hereof,
Executive shall be entitled to receive from the Company, as severance
pay, a single lump sum cash payment in an amount equal to the present
value, determined as of the date on which the Term of Employment ends
by reason of such termination, of (i) the Base Salary that would have
been paid to Executive during or with respect to the 24-month period
following the end of the Term of Employment if Base Salary had
continued to be payable to Executive during or with respect to such
period at the same annual rate at which Executive's Base Salary was
payable immediately prior to the end of the Term of Employment (the
"Base Salary Severance Component") and (ii) an amount equal to 150% of
the Base Salary Severance Component (representing the maximum Bonus
payable to Executive under the Bonus Plan). In determining such present
value, it shall be assumed (i) that the Base Salary Severance Component
is payable in equal periodic installments, at the same times that
Executive's Base Salary would have been payable if the Term of
Employment had not ended and (ii) that the 150%-of-Base-Salary bonus
component of the severance pay, provided for in clause "(ii)" of the
preceding sentence, is payable in two equal installments, at the end of
the 12th month and the 24th month of such 24-month period. In
determining such present value, the discount rate to be used shall be
equal to the yield to maturity on the issue of two-year U.S. Treasury
Notes most recently offered by the U.S. Treasury Department for sale to
the public prior to the date on which the Term of Employment ends. The
severance payment provided for herein shall be made within 20 days
after the end of the Term of Employment.
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ss.6. Annual Contract Pension and Medical Coverage After Term
of Employment.
(a) For a period of 120 consecutive months beginning with the
month following the end of the Term of Employment, the Company shall
pay
(i) to Executive during his lifetime, and
(ii) if Executive is not living at the time any such
payment is due, then to such payee or payees (including a trust or
trusts) as Executive may at any time (whether during or after the Term
of Employment) designate by written notice to the Company or in his
last will and testament or, if no such designation is made, then to the
legal representatives of Executive's estate (any such designated payee
or estate being hereinafter called "Executive's Successor")
an "Annual Contract Pension" computed as follows: The term "Final Pay"
as used herein means one-third of the aggregate of Executive's total
cash compensation (i.e., Base Salary plus incentive compensation and
any other bonus payments) for those three full fiscal years out of the
last five full fiscal years of the Term of Employment with respect to
which three fiscal years Executive received the highest total cash
compensation. The Annual Contract Pension payable to Executive for each
"Retirement Year" (as hereinafter defined) shall be an amount
determined by (I) adjusting Executive's Final Pay for changes in the
Consumer Price Index in the manner set forth in ss.3(a) except that for
purposes of the adjustment under this ss.6, the base month, instead of
being June 2003, shall be the month preceding the month in which
payment of the Annual Contract Pension commences and the comparison
month shall be the same month in each succeeding year and (II)
multiplying the Final Pay as so adjusted by 60% and subtracting
therefrom the amount which, as of the last day of the Term of
Employment (i.e., the effective date of termination of the Term of
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Employment under any of the provisions of ss.ss. 1, 2 or 4 hereof), is
the maximum annual benefit payable, in accordance with ss.415(b)(1)(A)
of the Internal Revenue Code (or successor section), as adjusted by the
Secretary of the Treasury to such last day under ss. 415(d) of the Code
(or successor section), under a pension plan which qualifies under ss.
401(a) of the Code (or successor section). Such maximum annual benefit
is hereinafter called the "Maximum Qualified Plan Pension". Each
12-month period beginning on the first day of the month in which the
Annual Contract Pension first becomes payable hereunder and on the
first day of the same month during each of the succeeding years in
which the Annual Contract Pension is payable hereunder is herein called
a "Retirement Year." There shall be no adjustment of the Final Pay
based on the Consumer Price Index for the purpose of determining the
Annual Contract Pension for the first Retirement Year so that during
such first Retirement Year the Annual Contract Pension shall be 60% of
Final Pay minus the Maximum Qualified Plan Pension; there shall be such
adjustment of Final Pay for the purpose of determining the Annual
Contract Pension for the second and each succeeding Retirement Year.
(b) The Company hereby represents to and agrees with
Executive, in order to induce Executive to enter into this Employment
Agreement, as follows: For purposes of the Company's Supplementary
Pension Plan, the amount of the offset pursuant to ss. 3.1(b)(i)
thereof shall be the amount of the pension in fact payable to Executive
under the Pall Corporation Cash Balance Pension Plan, after giving
effect to any distribution theretofore made under said Plan pursuant to
a qualified domestic relations order. The immediately preceding
sentence shall not, however, be deemed to modify the penultimate
sentence of said ss. 3.1, which reads and provides as follows:
"For purposes of this Section, the amount of the pension
payable to the Member under any Other Retirement Program shall
be deemed to be the amount payable thereunder to the Member in
the form of a single life annuity for the Member's life,
whether or not the Member receives payment of such pension in
such form; provided, however, that the amount of such pension
shall be taken into account under (b)(i) above only on and
after the date on which payment of the Member's pension under
such Other Retirement Program commences or is paid."
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(c) The Annual Contract Pension shall be paid in equal monthly
installments on the last business day of each month during the period
with respect to which the Annual Contract Pension is payable.
(d) So long as Executive is living it shall be a condition of
the payment of the Annual Contract Pension that, to the extent
permitted by Executive's health, he shall be available for advisory
services requested by the Board of Directors of the Company, the
Executive Committee of said Board or the chief executive officer of the
Company, provided that such advisory services shall not require more
than 15 hours in any month. The Company shall reimburse Executive for
all travel and other expenses which he incurs in connection with such
advisory services.
(e) At the option of the Board of Directors of the Company,
payment of the Annual Contract Pension shall cease and the right of
Executive and Executive's Successor to all future such payments shall
be forfeited if Executive shall, without the written consent of the
chief executive officer of the Company, render services to any
corporation or other entity engaged in any activity, or himself engage
in any activity, which is competitive to any material extent with the
business in which the Company or any of its subsidiaries shall be
engaged at the end of the Term of Employment and in which the Company
or any such subsidiary shall still be engaged at the date such services
or activity is rendered or engaged in by Executive, provided, however,
that if the Company terminates under ss.1 following a Change in Control
(as defined in the Bonus Plan), the provisions of this ss.6(e) shall be
deemed deleted from this Agreement and shall have no force or effect.
(f) Beginning at the end of the Term of Employment, the
Company at its sole expense shall provide, in accordance with the
provisions set forth below, medical coverage for Executive and his
Dependents (as hereinafter defined) during his lifetime and following
Executive's death, for Executive's surviving Dependents during their
respective lifetimes. As used herein, the term "Dependents" shall mean
Executive's spouse and each child or stepchild of Executive.
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(i) Subject to (ii) and (iii) below, the medical coverage
to be provided hereunder shall consist of the same coverages
and benefits as provided under the terms of the
hospitalization, medical and dental plans maintained by the
Company for its U.S. employees who are not covered by a
collective bargaining agreement (the "Company's Medical
Plans"), as in effect immediately prior to the end of the Term
of Employment.
(ii) If prior to the end of the Term of Employment any of
the Company's Medical Plans is amended following the
occurrence of a Change in Control (as defined in the Bonus
Plan) to eliminate any coverage or benefit previously provided
under such Plan, or to make any coverage or benefit so
provided available on terms less favorable to Executive than
those in effect prior to such amendment, such coverage or
benefit, as provided under the terms of the Plan in effect
immediately prior to such amendment, shall be included in the
medical coverage to be provided under this Section 6 (f).
(iii) If at any time after the end of the Term of
Employment any of the Company's Medical Plans is amended to
add any coverage or benefit that was not provided under such
Plan immediately prior to the end of the Term of Employment,
or to provide any coverage or benefit on terms more favorable
than those applicable to Executive, or to any of his surviving
Dependents, under the Plan as in effect immediately prior to
the end of the Term of Employment, the coverage or benefit so
added or so modified shall be included in the medical coverage
to be provided under this Section 6 (f), commencing as of the
effective date of such amendment. As soon as practicable after
any amendment is made to any of the Company's Medical Plans
after the end of the Term of Employment, the Company shall
furnish to Executive (or, in the case of any such amendment
that is made after the Executive's death, to each of his
surviving Dependents), a revised Summary Plan Description for
such Plan and copies of any other written notices that the
Company furnishes to its employees explaining the changes made
to the Plan pursuant to such amendment.
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(iv) The coverages and benefits to be provided hereunder
shall be provided upon the same terms and conditions
(including required deductibles, co-payments and annual and
lifetime maximum benefits) as would have applied to Executive,
or to his surviving Dependents, if such coverages and benefits
had been provided under the Company's Medical Plans as in
effect on the date or dates applicable hereunder, other than
any provision therein requiring an employee or his spouse or
other dependents to make payments to the Company, by payroll
deduction or otherwise, towards the cost of their coverage
under such Plan.
(v) At the Company's option, the coverages and benefits to
be provided hereunder may be provided through insurance, or by
the Company directly paying, or reimbursing Executive or any
of his Dependents for his or her payment of, expenses covered
under this Section 6 (f).
(vi) The Company's obligation to provide any coverage or
benefit otherwise required under this Section 6(f) shall be
reduced to the extent that such coverage or benefit has been
or will be provided under (A) any policy of insurance
maintained by Executive or any of his Dependents, (B) any
plan, program or insurance policy maintained by a subsequent
employer of Executive or by an employer of any of Executive's
Dependents, or (C) the provisions of any federal or state law.
However, neither Executive nor any of his Dependents shall be
required to obtain any hospitalization, medical or dental
coverage from any source referred to in clause (A), (B) or (C)
of the preceding sentence as a condition for eligibility for
the medical coverage to be provided under this Section 6(f).
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(vii) Notwithstanding any other provision herein, medical
coverage provided pursuant to this Section 6 (f) for any
Dependent who is a child of Executive shall cease (A) as of
the end of the calendar year in which such child attains age
18, or (B), if such child is a "student", as defined in
section 151(c)(4) of the Internal Revenue Code of 1986, as
amended (or any successor provision thereto) during the
calendar year referred to in clause (A), as of the end of the
earlier of (x) the calendar year in which such child attains
age 23, or (y) the calendar year in which such child ceases to
be a "student", as so defined.
ss.7. Code Sections 409A and 4999.
(a) Delay in Payment. Notwithstanding any provision in this
Agreement to the contrary, any payment otherwise required to be made
hereunder to Executive at any date as a result of the termination of
the Term of Employment shall be delayed for such period of time as may
be necessary to meet the requirements of section 409A(a)(2)(B)(i) of
the Code. On the earliest date on which such payments can be made
without violating the requirements of section 409A(a)(2)(B)(i) of the
Code (the "Delayed Payment Date"), there shall be paid to Executive (or
if Executive has died, to "Executive's Successor") (as the quoted term
is defined in Section 6 (a) hereof), in a single cash lump sum, an
amount equal to the aggregate amount of all payments delayed pursuant
to the preceding sentence, plus interest thereon at the Delayed Payment
Interest Rate (as defined below) computed from the date on which each
such delayed payment otherwise would have been made to Executive until
the Delayed Payment Date. For purposes of the foregoing, the "Delayed
Payment Interest Rate" shall mean the national average annual rate of
interest payable on jumbo six month bank certificates of deposit, as
quoted in the business section of the most recently published Sunday
edition of the New York Times preceding the date on which the Term of
Employment ends.
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(b) Section 4999 Excise Tax. If any payments to Executive,
whether under this Agreement or otherwise, would be subject to excise
tax under section 4999 of the Code, then payments hereunder shall be
reduced or deferred to the extent required (and only to the extent
required) to avoid the application of section 4999; provided, however,
that no such reduction or deferral shall be made unless as a result
thereof Executive's after-tax economic position (taking into account
not only payments under this Agreement and the taxes thereon, but also
the taxes that would otherwise be imposed on any payments to which
Executive is otherwise entitled) would be improved. In making the
determination whether Executive's after-tax economic position would be
so improved, the judgment of a certified public accountant or attorney
chosen by Executive shall be final. In the event of a reduction or
deferral of payments pursuant to this paragraph, Executive shall be
entitled to specify which payments shall be reduced or deferred.
ss.8. Acceleration of Stock Options.
On the date which is 30 days before the date on which the Term
of Employment will end by reason of a notice of termination given by
either party hereto under any of the provisions hereof, all employee
stock options held by Executive shall become exercisable in full (i.e.,
to the extent that any such option or portion thereof is not yet
exercisable, the right to exercise the same in full shall be
accelerated) and such option shall thereafter be fully vested and
exercisable in full (to the extent not theretofore exercised) until it
expires by its terms.
ss.9. Covenant Not to Compete.
For a period of 18 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, ss.2 or ss.4 hereof, or for a
period of 12 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 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.10. Company's Right to Injunctive Relief.
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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.
ss.11. 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.12. Trade Secrets and Confidential Information.
Executive shall not, either directly or indirectly, except as
required in the course of his employment by the Company, disclose or
use at any time, whether during or subsequent to the Term of
Employment, any information of a proprietary nature owned by the
Company, including but not limited to records, data, formulae,
documents, specifications, inventions, processes, methods and
intangible rights which are acquired by him in the performance of his
duties for the Company and which are of a confidential information or
trade-secret nature. All records, files, drawings, documents, equipment
and the like, relating to the Company's business, which Executive shall
prepare, use, construct or observe, shall be and remain the Company's
sole property. Upon the termination of his employment or at any time
prior thereto upon request by the Company, Executive shall return to
the possession of the Company any materials or copies thereof involving
any confidential information or trade secrets and shall not take any
material or copies thereof from the possession of the Company.
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ss.13. Mergers and Consolidations; Assignability.
In the event that the Company, or any entity resulting from
any merger or consolidation referred to in this ss.13 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.13, 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.
ss.14. 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.15. 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.16. Entire Contract.
This Agreement contains the entire agreement of the parties on
the subject matter hereof except that the rights of the Company
hereunder shall be deemed to be in addition to and not in substitution
for its rights under the Company's standard printed form of "Employee's
Secrecy and Invention Agreement" or "Employee Agreement" if heretofore
or hereafter entered into between the parties hereto so that the making
of this Agreement shall not be construed as depriving the Company of
any of its rights or remedies under any such Secrecy and Invention
Agreement or Employee Agreement. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension or
discharge is sought.
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ss.17. 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 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 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 received by the overnight
delivery service or, if delivered personally, on the date so delivered.
IN WITNESS WHEREOF, the parties hereto have executed this
Amended and Restated Employment Agreement as of the day and year first
above written.
PALL CORPORATION
By: ________________________________
Marcus Wilson,
President
EXECUTIVE
____________________________________
Eric Krasnoff
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[ATTACHMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
DATED JULY 20, 2005 BETWEEN
PALL CORPORATION AND ERIC KRASNOFF]
PALL CORPORATION
2004 EXECUTIVE INCENTIVE BONUS PLAN
_____
1. PURPOSE
This document sets forth the Pall Corporation 2004 Executive Incentive
Bonus Plan as adopted by the Compensation Committee of the Board of Directors on
October 16, 2003 effective for the fiscal year beginning August 3, 2003 and
subsequent fiscal years, approved by shareholders at the Annual Meeting on
November 19, 2003 and amended by the Board of Directors, acting by its
Compensation Committee, on July 19, 2005.
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, 1989 between the
Corporation and United States 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
July 31, 2004, and each subsequent fiscal year of the Corporation.
"MAXIMUM R.O.E. 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 ss.162(m) of the Code.
"MINIMUM R.O.E. 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 ss.162(m) of the Code.
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"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.
"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) (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 the following provisions:
(i) If the Return on Equity equals or exceeds the Maximum R.O.E.
Target for the year, the Performance Percentage for the year shall be
100%.
(ii) If the Return on Equity equals or is less than the Minimum
R.O.E. Target for the year, the Performance Percentage for the year
shall be zero, and no Bonus shall be payable under the Plan for such
year to any Executive.
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(iii) Except as other provided in (iv) below, if the Return on
Equity is less than the Maximum R.O.E. Target for the year but exceeds
the Minimum R.O.E. 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 R.O.E.
Target for the year, by (B) the excess of the Maximum R.O.E. Target for
the year over the Minimum R.O.E. Target for the year.
(iv) At the time it establishes the Minimum and Maximum R.O.E.
Targets for any Fiscal Year beginning on or after August 3, 2003, the
Committee may also (A) establish one or more R.O.E. targets (each, an
"Intermediate R.O.E. Target") for such year that are greater than the
Minimum R.O.E. Target but less than the Maximum R.O.E. Target for such
year, and (B) determine the Performance Percentage that will apply if
the Return on Equity exceeds the Minimum R.O.E. Target, or equals any
of the Intermediate R.O.E. Targets established for such year. If one or
more Intermediate R.O.E. Targets are established for any such Fiscal
Year and the Return on Equity for such year exceeds the Minimum R.O.E
Target or any Intermediate R.O.E Target established for the year (the
"Achieved Target") but is less than the next highest Intermediate R.O.E
Target established for the year (the "Next Highest Target"), the
Performance Percentage for such year shall be equal to the Performance
Percentage that would apply if the Return on Equity were equal to the
Achieved Target, plus the percentage resulting from multiplying (1) the
excess of the Performance Percentage that would apply if the Return on
Equity were equal to the Next Highest Target, over the Performance
Percentage that would apply if the Return on Equity were equal to the
Achieved Target, by (2) the percentage resulting from dividing (x) the
excess of the Return on Equity over the Achieved Target, by (y) the
excess of the Next Highest Target over the Achieved Target. If the
Return on Equity for the year exceeds the highest Intermediate R.O.E.
Target for the year but is less than the Maximum R.O.E. Target for the
year, the Performance Percentage for the year shall be determined in
the manner described in the preceding sentence but for this purpose,
the Maximum R.O.E. Target for the year shall be treated as the Next
Highest Target for the year.
(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
beginning on or after August 3, 2003, shall not exceed the lesser of (i) $2.0
million and (ii) 150% of the Executive's Base Salary for such 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, not
less than 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 any remaining amount of the
Executive's Bonus shall be paid to the Executive by no later than
January 15 next following the close of such year;
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(ii) if the Executive is a Covered Executive for such year, not
less than 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 any remaining amount
of the Executive's Bonus shall be paid to the Executive by no later
than January 15 next following the close of such year;
(iii) each amount payable to an Executive under (i) and (ii) above,
reduced by the amount of all federal, state and local taxes required by
law to be withheld therefrom, shall be paid to the Executive in the
form of a single lump sum cash payment.
(b) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Management Stock Purchase Plan (the "MSPP")
to have any part of the Bonus payable to the Executive for any Fiscal Year paid
in the form of Restricted Units to be credited to the Executive's account under
the MSPP, no cash payments shall be made to the Executive pursuant to (a) above
with respect to the part of the Executive Bonus that is subject to such
election, and the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged upon the
crediting of Restricted Units to the Executive's account under the MSPP in
accordance with the applicable provisions of such Plan.
(c) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Profit-Sharing Plan (the "Profit-Sharing
Plan") to have any part of the Bonus payable to the Executive for any Fiscal
Year reduced, and to have an amount equal to such part of the Executive's Bonus
contributed to the Profit-Sharing Plan as a 401(k) Contribution on the
Executive's behalf, an amount equal to such part of the Executive's Bonus shall
be contributed to the Profit-Sharing Plan on behalf of the Executive, and
thereupon, the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged.
However, no such contribution shall be made to the extent it would cause any
limitation applicable under the 401(k) Plan to be exceeded.
6. CHANGE IN CONTROL
Notwithstanding any other provision in the Plan to the contrary (but
subject to the "provided, however" clause contained in the definition of "Change
in Control" in Section 2), upon the occurrence of a Change in Control, the
following provisions shall apply:
(a) The amount of the Bonus payable to any Executive for the Fiscal
Year in which a Change in Control occurs shall be at least equal to the Target
Bonus Percentage of the Executive's Base Salary for such year or, in the case of
any Executive whose Term of Employment commences after the start of such year or
ends prior to the close of such year, a pro rata portion thereof determined on
the basis of the number of days of such Fiscal Year that fall within the
Executive's Term of Employment.
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(b) Each Executive whose Term of Employment has not ended prior to the
occurrence of a Change in Control shall be entitled to receive a Bonus for each
Contract Year (as defined in the Executive's Employment Agreement) that falls in
whole or in part within the Executive's Term of Employment and that ends after
the Fiscal Year in which the Change in Control occurs. The amount of the Bonus
payable to the Executive for each such Contract Year shall be at least equal to
the Target Bonus Percentage of the Executive's Base Salary for such Contract
Year or, in the case of any Executive whose Term of Employment ends after the
start of such Contract Year but prior to the close of such year, a pro rata
portion thereof determined on the basis of the number of days of such Contract
Year that fall within the Executive's Term of Employment.
(c) The entire amount of the Bonus payable to an Executive for any
Fiscal Year or Contract Year pursuant to (a) or (b) above, reduced by the amount
of all federal, state and local taxes required to be withheld therefrom, shall
be paid to the Executive in a single cash lump sum as soon as practicable after
the close of such Fiscal Year or Contract Year, but in no event later than 2 1/2
months after the close of such Fiscal Year or Contract Year.
7. RIGHTS OF EXECUTIVES
An Executive's rights and interests under the Plan shall be subject to
the following provisions:
(a) An Executive's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Executive.
(b) Neither the Plan nor any action taken hereunder shall be construed
as giving any Executive any right to be retained in the employment of the
Corporation or any of its subsidiaries.
8. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan.
The Committee may delegate any ministerial or nondiscretionary function
pertaining to the administration of the Plan to any one or more officers of the
Corporation.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties. Notwithstanding
the foregoing, any determination made by the Committee after the occurrence of a
Change in Control that denies in whole or in part any claim made by any
individual for benefits under the Plan shall be subject to judicial review,
under a "de novo", rather than a deferential standard.
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9. AMENDMENT OR TERMINATION
The Board of Directors may, (acting by the Committee if the by-laws of
the Corporation so provide), with prospective or retroactive effect, amend,
suspend or terminate the Plan or any portion thereof at any time; provided,
however, that (a) no amendment, suspension or termination of the Plan shall
adversely affect the rights of any Executive with respect to any Bonus that has
become payable to the Executive under the Plan, without his or her written
consent, and (b) following a Change in Control, no amendment to Section 6, and
no termination of the Plan, shall be effective if such amendment or termination
adversely affects the rights of any Executive under the Plan.
10. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Executives' rights under the Plan
in any agreement or plan which it may enter into or adopt to effect any such
merger, consolidation, reorganization or transfer of assets.
11. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of New York.
12. EFFECTIVE DATE
The Plan was adopted by the Committee, on October 16, 2003 effective
for the Fiscal Year beginning August 3, 2003, subject, however, to approval by
the shareholders of the Corporation at the 2003 annual meeting of the
shareholders, including any adjournment thereof.
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