EXHIBIT 10.11
[Assistant Vice President
Single Bonus]
EMPLOYMENT AGREEMENT dated June 1, 2004 between PALL CORPORATION, a New
York corporation (the "Company"), and Lisa McDermott ("Executive").
In consideration of the mutual agreements hereinafter set forth, the
parties hereto agree as follows:
SECTION 1. EMPLOYMENT AND TERM
The Company hereby employs Executive, and Executive hereby agrees to
serve, as an executive employee of the Company with the duties set forth in
ss.2, for a term (hereinafter called the "Term of Employment") beginning June 1,
2004 (the "Term Commencement Date") and ending, unless sooner terminated under
ss.4, on the effective date specified in a notice of termination given by either
party to the other except that such effective date shall not be earlier than the
first anniversary of the date on which such notice is given.
SECTION 2. DUTIES
(a) Executive agrees that during the Term of Employment she will hold
such offices or positions with the Company, and perform such duties
and assignments relating to the business of the Company, as the
Chief Executive Officer of the Company shall direct except that
Executive shall not be required to hold any office or position or
to perform any duties or assignment inconsistent with her
experience and qualifications.
(b) If the Chief Executive Officer of the Company so directs, Executive
shall serve as an officer of one or more subsidiaries of the
Company (provided that the duties of such office are not
inconsistent with Executive's experience and qualifications) and
part or all of the compensation to which Executive is entitled
hereunder may be paid by such subsidiary or subsidiaries. However,
such employment and/or payment of Executive by a subsidiary or
subsidiaries shall not relieve the Company from any of its
obligations under this Agreement except to the extent of payments
actually made to Executive by a subsidiary.
(c) During the Term of Employment Executive shall, except during
customary vacation periods and periods of illness, devote
substantially all of her business time and attention to the
performance of her 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 she shall not,
either during or outside of such normal business hours, engage in
any activity inimical to such best interests.
SECTION 3. COMPENSATION DURING TERM OF EMPLOYMENT
(a) Base Salary. With respect to the period beginning on the Term
Commencement Date and ending on the 31st day of July next following
the Term Commencement Date, the Company shall pay Executive a Base
Salary (in addition to the compensation provided for elsewhere in
this Agreement) at the rate of $180,000 per annum (hereinafter
called the "Original Base Salary"). With respect to each Contract
Year beginning with the Contract Year which starts on the first day
of August next following the Term Commencement Date, the Company
shall pay Executive a Base Salary at such rate as the Chief
Executive Officer may determine but not less than the Original Base
Salary adjusted as follows: The term "Contract Year" as used herein
means the period from August 1 of each year through July 31 of the
following year. The term "Consumer Price Index" as herein used
means the "Consumer Price Index for all Urban Consumers" compiled
and published by the Bureau of Labor Statistics of the United
States Department of Labor for "New York - Northern N. J. - Long
Island, NY-NJ-CT-PA". For each Contract Year during the Term of
Employment beginning with the Contract Year which starts on the
first day of August next following the Term Commencement Date, the
minimum compensation payable to Executive under this ss.3(a)
(hereinafter called the "Minimum Base Salary") shall be determined
by
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increasing (or decreasing) the Original Base Salary by the
percentage increase (or decrease) of the Consumer Price Index for
the month of June immediately preceding the start of the Contract
Year in question over (or below) the Consumer Price Index for the
month of June next preceding the Term Commencement Date. [To
illustrate the operation of the foregoing provisions of this
paragraph: In an Employment Agreement as to which the Term
Commencement Date was August 1, 2004, the executive's base salary
for the Contract Year August 1, 2005 through July 31, 2006 would be
not less than the Original Base Salary under that Employment
Agreement adjusted by the percentage increase (or decrease) of the
Consumer Price Index for June 2005 over (or below) said Index for
June 2004.] Further adjustment in the Minimum Base Salary shall be
made for each ensuing Contract Year, in each case (i) using the
Consumer Price Index for the month of June next preceding the Term
Commencement Date as the base except as provided in the immediately
following paragraph hereof and (ii) applying the percentage
increase (or decrease) in the Consumer Price Index since said base
month to the Original Base Salary to determine the Minimum Base
Salary. The Base Salary shall be paid in such periodic installments
as the Company may determine but not less often than monthly.
If with respect to any Contract Year (including the Contract
Year beginning on the first day of August next following the Term
Commencement Date) the Chief Executive Officer fixes the Base
Salary at an amount higher than the Minimum Base Salary, then
(unless the order fixing such higher Base Salary provides
otherwise), for the purpose of determining the Minimum Base Salary
for subsequent Contract Years: (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. [To illustrate the operation of
the foregoing provisions of this paragraph: If the Chief Executive
Officer were to fix a Base Salary for a Contract Year beginning,
say, August 1, 2006 which is higher than
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the Minimum Base Salary for that Contract Year, then June 2006
would become the base month for the purposes of making the Consumer
Price Index adjustment to determine the Minimum Base Salary for
subsequent Contract Years unless and until the Chief Executive
Officer were to fix a Base Salary higher than the Minimum Base
Salary for a subsequent Contract Year.]
(b) Bonus Compensation.
(i) With respect to each Fiscal Year of the Company falling in
whole or in part within the Term of Employment beginning with the
Fiscal Year ending on the Saturday nearest to the 31st day of the
month of July next following the Term Commencement Date, Executive
shall be entitled to receive a Bonus pursuant to this Agreement in
an amount determined in accordance with, and subject to all of the
terms of, the Pall Corporation 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 effective for
the Fiscal Year beginning August 3, 2003, 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 82.5% of her
Base Salary for such Fiscal Year.
(ii) Executive's Bonus Compensation shall be paid in accordance
with ss.5 of the Bonus Plan. With respect to any Fiscal Year which
falls in part but not in whole within the Term of Employment, the
pro rata portion of the Bonus Compensation to which Executive is
entitled under this ss.3(b) shall be determined in accordance with
ss.3(c) of the Bonus Plan.
(c) Fringe Benefits and Perquisites. During the Term of Employment,
Executive shall enjoy the customary perquisites of office,
including, but not limited to, office space and furnishings,
secretarial services, expense reimbursements and
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any similar emoluments customarily afforded to senior executive
officers of the Company at the same level as Executive. Executive
shall also be entitled to receive or participate in all "fringe
benefits" and employee benefit plans provided or made available by
the Company to its executives or management personnel generally
(such as, but not limited to, group hospitalization, medical, life
and disability insurance, and pension, retirement, profit-sharing
and stock option or purchase plans), at such time and on such terms
and conditions as each such plan provides.
(d) Vacations. Executive shall be entitled to three weeks vacation
through December 6, 2004 and to four weeks vacation thereafter in
accordance with the policies of the Company as determined by the
Board or by an authorized senior officer of the Company from time
to time. The Company shall not pay Executive any additional
compensation for any vacation time not used by Executive.
SECTION 4. TERMINATION BY REASON OF DISABILITY, DEATH, RETIREMENT OR CHANGE
IN CONTROL
(a) Disability or Death. If, during the Term of Employment, Executive,
by reason of physical or mental disability, is incapable of
performing her principal duties hereunder for an aggregate of 130
working days out of any period of twelve consecutive months, the
Company at its option may terminate the Term of Employment
effective immediately by notice to Executive given within 90 days
after the end of such twelve-month period. If Executive shall die
during the Term of Employment or if the Company terminates the Term
of Employment pursuant to the immediately preceding sentence by
reason of Executive's disability, the Company shall pay to
Executive, or to Executive's legal representatives, or in
accordance with a direction given by Executive to the Company in
writing, the following: (i) Executive's Base Salary to the end of
the month in which such death or termination for disability occurs
and Executive's Bonus Compensation prorated to said last day of the
month and (ii) for each month in the period from the end of the
month in which such death or termination for disability occurs
until the earlier of (x) the first
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anniversary of the date of death or termination and (y) the date on
which the Term of Employment would have ended but for such death or
termination for disability, monthly payments of an amount equal to
1/12th of 91.25% of the annual rate of Base Salary in effect for
Executive immediately prior to the date on which Executive's death
or termination for disability occurs (such 91.25% being comprised
of one-half of such Base Salary and one-half of Executive's Target
Bonus Percentage set forth in ss.3(b) hereof).
(b) Retirement. (i) The Term of Employment shall end automatically,
without action by either party, on Executive's 65th birthday
unless, prior to such birthday, Executive and the Company have
agreed in writing that the Term of Employment shall continue past
such 65th birthday. In that event, unless the parties have agreed
otherwise, the Term of Employment shall be automatically renewed
and extended each year, as of Executive's birthday, for an
additional one-year term, unless either party has given a
Non-Renewal Notice. A Non-Renewal Notice shall be effective as of
Executive's ensuing birthday only if given not less than 60 days
before such birthday, and shall state that the party giving such
notice elects that this Agreement shall not automatically renew
itself further, with the result that the Term of Employment shall
end on Executive's ensuing birthday. (ii) If the Term of Employment
ends pursuant to this paragraph by reason of a notice given by
either party as herein permitted or automatically at age 65 or any
subsequent birthday, the Company shall pay to Executive, or to
another payee specified by Executive to the Company in writing,
Executive's Base Salary and Bonus Compensation prorated to the date
on which the Term of Employment ends. (iii) Anything hereinabove to
the contrary notwithstanding, if any provision of this paragraph
violates federal or applicable state law relating to discrimination
on account of age, such provision shall be deemed modified or
suspended to the extent necessary to eliminate such violation of
law. If at a later date, by reason of changed circumstances or
otherwise, the enforcement
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of such provision as set forth herein would no longer constitute a
violation of law, then it shall be enforced in accordance with its
terms as set forth herein.
(c) Change in Control. In event of a Change in Control (as defined
in the Bonus Plan), Executive shall have the right to terminate the
Term of Employment, by notice to the Company given at any time
after such Change in Control, effective on the date specified in
such notice, which date shall not be more than (but can be less
than) one year after the giving of such notice.
SECTION 5. COVENANT NOT TO COMPETE
For a period of eighteen months after the end of the Term of Employment
if the Term of Employment is terminated by notice to the Company given by
Executive under ss.1 or ss.4 hereof, or for a period of twelve months after the
end of the Term of Employment if the Term of Employment is terminated by notice
to Executive given by the Company under ss.1 or ss.4 hereof or terminates under
ss.4 by reason of Executive attaining the age of 65, Executive shall not render
services to any corporation, individual or other entity engaged in any activity,
or herself 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.
SECTION 6. COMPANY'S RIGHT TO INJUNCTIVE RELIEF
Executive acknowledges that her services to the Company are of a unique
character, which gives them a peculiar value to the Company, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law,
and that therefore, in addition to any other remedy which the Company may have
at law or in equity, the Company shall be entitled to injunctive relief for a
breach of this Agreement by Executive.
SECTION 7. INVENTIONS AND PATENTS
All inventions, ideas, concepts, processes, discoveries, improvements
and trademarks (hereinafter collectively referred to as intangible rights),
whether patentable or registrable or not, which are conceived, made, invented or
suggested either by Executive alone
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or by Executive in collaboration with others during the Term of Employment, and
whether or not during regular working hours, shall be disclosed to the Company
and shall be the sole and exclusive property of the Company. If the Company
deems that any of such intangible rights are patentable or otherwise registrable
under any federal, state or foreign law, Executive, at the expense of the
Company, shall execute all documents and do all things necessary or proper to
obtain patents and/or registrations and to vest the Company with full title
thereto.
SECTION 8. TRADE SECRETS AND CONFIDENTIAL INFORMATION
Executive shall not, either directly or indirectly, except as required
in the course of her 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 her in the performance of her 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 her
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.
SECTION 9. MERGERS AND CONSOLIDATIONS; ASSIGNABILITY
In the event that the Company, or any entity resulting from any merger
or consolidation referred to in this ss.9 or which shall be a purchaser or
transferee so referred to, shall at any time be merged or consolidated into or
with any other entity or entities, or in the event that substantially all of the
assets of the Company or any such entity shall be sold or otherwise transferred
to another entity, the provisions of this Agreement shall be binding upon and
shall inure to the benefit of the continuing entity in or the entity resulting
from such merger or consolidation or the entity to which such assets shall be
sold or transferred. Except as provided in the immediately preceding sentence of
this ss.9, this Agreement shall not be assignable by the Company or by any
entity referred to in such immediately preceding sentence. This Agreement
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shall not be assignable by Executive, but in the event of her death it shall be
binding upon and inure to the benefit of her legal representatives to the extent
required to effectuate the terms hereof.
SECTION 10. CAPTIONS
The captions in this Agreement are not part of the provisions hereof,
are merely for the purpose of reference and shall have no force or effect for
any purpose whatsoever, including the construction of the provisions of this
Agreement, and if any caption is inconsistent with any provisions of this
Agreement, said provisions shall govern.
SECTION 11. CHOICE OF LAW
This Agreement is made in, and shall be governed by and construed in
accordance with the laws of, the State of New York.
SECTION 12. ENTIRE CONTRACT
This instrument contains the entire agreement of the parties on the
subject matter hereof except that the rights of the Company hereunder shall be
deemed to be in addition to and not in substitution for its rights under the
Company's standard printed form of "Employee's Secrecy and Invention Agreement"
or "Employee Agreement" if heretofore or hereafter entered into between the
parties hereto so that the making of this Agreement shall not be construed as
depriving the Company of any of its rights or remedies under any such Secrecy
and Invention Agreement or Employee Agreement. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
SECTION 13. NOTICES
All notices given hereunder shall be in writing and shall be sent by
registered or certified mail or overnight courier service such as Federal
Express or UPS Air or delivered by hand, and, if intended for the Company, shall
be addressed to it (if sent by mail or overnight courier service) or delivered
to it (if delivered by hand) at its principal office for the attention of the
Corporate
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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
her personally or shall be addressed to her (if sent by mail or overnight
courier service) at her most recent residence address shown in the Company's
employment records or at such other address or to such designee of which
Executive shall have given notice to the Company in the manner herein provided.
Each such notice shall be deemed to be given on the date of mailing thereof or
delivery to the overnight courier service, or if delivered personally, on the
date so delivered.
SECTION 14. TERMINATION OF ANY EXISTING AGREEMENT
Any employment agreement between the parties hereto which is in effect
on the date hereof is hereby terminated and replaced and superseded by this
Agreement, effective on the Term Commencement Date. All payments, of Base Salary
or otherwise, made by the Company under any such existing agreement with respect
to any period commencing on or after the Term Commencement Date shall be
credited against the corresponding payment obligations of the Company under this
Agreement with respect to such period.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
PALL CORPORATION
By:____________________________
Name:
Title:
EXECUTIVE
_______________________________
Lisa McDermott
[Form prepared 2/03]
revised by MAB 6/04
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PALL CORPORATION
EXECUTIVE INCENTIVE BONUS PLAN
-----
1. PURPOSE
This document sets forth the Pall Corporation Executive Incentive Bonus
Plan as adopted by the Committee on and effective July 17, 2001, approved by
shareholders on November 14, 2001 and amended by the Committee on July 16, 2002
and November 1, 2002 effective for the Fiscal Year beginning August 4, 2002.
The purpose of the Plan is to encourage greater focus on performance
among the key executives of the Corporation by relating a significant portion of
their total compensation to the achievement of annual financial objectives.
2. CERTAIN DEFINITIONS
As used herein with initial capital letters, the following terms shall
have the following meanings:
"AVERAGE EQUITY" shall mean, for any Fiscal Year, the average of
stockholders' equity as shown on the fiscal year-end consolidated balance sheet
of the Corporation and its subsidiaries as of the end of such Fiscal Year and as
of the end of the immediately preceding Fiscal Year except that the amounts
shown on said balance sheets as "Accumulated other comprehensive" income or
loss, as the case may be, shall be disregarded.
"BASE SALARY" shall mean, with respect to any Executive and for any
Fiscal Year, the annual rate of base salary in effect for the Executive as of
the first day of such year or, if later, as of the first day of the Executive's
Term of Employment, as determined under the Executive's Employment Agreement.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
"BONUS" shall mean the bonus payable to an Executive under this Plan
for any Fiscal Year.
"CEO" shall mean the Chief Executive Officer of the Corporation.
"CHANGE IN CONTROL" means the occurrence of any of the following:
(a) the "Distribution Date" as defined in Section 3 of the Rights
Agreement dated as of November 17, 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
August 3, 2002, 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 section 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
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thereafter as may be permitted under the regulations issued under section 162(m)
of the Code.
"NET EARNINGS" shall mean, for any Fiscal Year, the after-tax
consolidated net earnings of the Corporation and its subsidiaries as certified
by the Corporation's independent accountants for inclusion in the annual report
to shareholders ("Annual Report"), adjusted so as to eliminate the effects of
any decreases in or charges to earnings for (a) the effect of foreign currency
exchange rates, (b) any acquisitions, divestitures, discontinuance of business
operations, restructuring or any other special charges, (c) the cumulative
effect of any accounting changes, and (d) any "extraordinary items" as
determined under generally accepted accounting principles, to the extent such
decreases or charges referred to in clauses (a) through (d) are separately
disclosed in the Corporation's Annual Report for the year.
"PLAN" shall mean the Pall Corporation Executive Incentive Bonus Plan,
as set forth herein and as amended from time to time.
"RETURN ON EQUITY" shall mean, for any Fiscal Year, the percentage
determined by dividing the Net Earnings for the year by the Average Equity for
the year.
"TARGET BONUS PERCENTAGE" shall mean, with respect to any Executive,
the target bonus percentage specified for such Executive in his or her
Employment Agreement.
3. DETERMINATION OF BONUS AMOUNTS
For each Fiscal Year falling in whole or in part within an Executive's
Term of Employment, as defined in his or her Employment Agreement, the Executive
shall be entitled to receive a Bonus in an amount determined in accordance with
the provisions of this Section 3, subject, however, to the provisions of Section
4.
(a) The amount of the Bonus payable to an Executive for each such
Fiscal Year shall be equal to (i) the Target Bonus Percentage of the Executive's
Base Salary for such year, multiplied by (ii) the Performance Percentage for
such year, as determined under (b) below.
(b) The Performance Percentage for any Fiscal Year shall be determined
in accordance with 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 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.
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(iii) 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.
(c) If an Executive's Term of Employment commences after the start of a
Fiscal Year, or ends prior to the close of a Fiscal Year, the amount of the
Bonus payable to the Executive for the Fiscal Year in which the Executive's Term
of Employment commences, or for the Fiscal Year in which the Executive's Term of
Employment ends, as determined in accordance with the other applicable
provisions of the Plan, shall be prorated on the basis of the number of days of
such Fiscal Year that fall within the Executive's Term of Employment; provided,
however, that (i) if an Executive's Term of Employment ends within 5 days prior
to the close of a Fiscal Year, there shall be no proration and the Executive
shall be entitled to receive the entire amount of the Bonus payable to the
Executive for such year, as determined in accordance with such other provisions,
and (ii) if the Executive's Term of Employment ends within 5 days following the
start of a Fiscal Year, the Executive shall not be entitled to receive any Bonus
with respect to such Fiscal Year.
4. ADJUSTMENT OF AND LIMITATION ON BONUS AMOUNTS
The amount of the Bonus otherwise payable to an Executive for any
Fiscal Year in accordance with Section 3 shall be subject to the following
adjustments and limitation:
(a) The Committee may, in its discretion, reduce the amount of the
Bonus otherwise payable to any Executive in accordance with Section 3, (i) to
reflect any decreases in or charges to earnings that were not taken into account
in determining Net Earnings for the year pursuant to clause (a), (b), (c) or (d)
contained in the definition of such term in Section 2, (ii) to reflect any
credits to earnings for extraordinary items of income or gain that were taken
into account in determining Net Earnings for the year, (iii) to reflect the
Committee's evaluation of the Executive's individual performance, or (iv) to
reflect any other events, circumstances or factors which the Committee believes
to be appropriate in determining the amount of the Bonus to be paid to the
Executive for the year.
(b) The Committee may, in its discretion, increase the amount of the
Bonus otherwise payable to any Executive who is not a Covered Executive, as
determined under Section 3, to reflect the Committee's evaluation of the
Executive's individual performance, or to reflect such other circumstances or
factors as the Committee believes to be appropriate in determining the amount of
the Bonus to be paid to the Executive for the year. The Committee shall not have
any discretion to increase the amount of the Bonus payable to any Covered
Executive for the year, as determined under Section 3.
(c) Notwithstanding any other provision herein to the contrary, the
amount of the Bonus otherwise payable to any Executive for any Fiscal Year shall
not exceed the lesser of (i) $1.0 million and (ii) 100% of the Executive's Base
Salary for the Fiscal Year ending August 3, 2002 and 150% of the Executive's
Base Salary for each subsequent Fiscal Year.
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5. PAYMENT OF BONUSES
The Bonus payable to an Executive for any Fiscal Year shall be paid in
accordance with the following provisions:
(a) Except as otherwise provided in (b) or (c) below,
(i) if the Executive is not a Covered Executive for such year,
50% of the estimated amount of the Executive's Bonus shall be paid to
the Executive on such date in September next following the close of
such year as the Committee in its discretion shall determine (the first
"Bonus Payment Date"), and the remaining amount of the Executive's
Bonus shall be paid to the Executive by no later than January 15 next
following the close of such year;
(ii) if the Executive is a Covered Executive for such year,
50% of the amount of the Executive's Bonus shall be paid to the
Executive as soon as practicable after the Committee has certified in
writing that all conditions for the payment of such Bonus to the
Executive for such year have been satisfied, and the remaining amount
of the Executive's Bonus shall be paid to the Executive by no later
than January 15 next following the close of such year;
(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.
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6. CHANGE IN CONTROL
Notwithstanding any other provision in the Plan to the contrary (but
subject to the "provided, however" clause contained in the definition of "Change
in Control" in Section 2), upon the occurrence of a Change in Control, the
following provisions shall apply.
(a) The amount of the Bonus payable to any Executive for the Fiscal
Year in which a Change in Control occurs shall be at least equal to the Target
Bonus Percentage of the Executive's Base Salary for such year or, in the case of
any Executive whose Term of Employment commences after the start of such year or
ends prior to the close of such year, a pro rata portion thereof determined on
the basis of the number of days of such Fiscal Year that fall within the
Executive's Term of Employment.
(b) Each Executive whose Term of Employment has not ended prior to the
occurrence of a Change in Control shall be entitled to receive a Bonus for each
Contract Year (as defined in the Executive's Employment Agreement) that falls in
whole or in part within the Executive's Term of Employment and that ends after
the Fiscal Year in which the Change in Control occurs. The amount of the Bonus
payable to the Executive for each such Contract Year shall be at least equal to
the Target Bonus Percentage of the Executive's Base Salary for such Contract
Year or, in the case of any Executive whose Term of Employment ends after the
start of such Contract Year but prior to the close of such year, a pro rata
portion thereof determined on the basis of the number of days of such Contract
Year that fall within the Executive's Term of Employment.
(c) The entire amount of the Bonus payable to an Executive for any
Fiscal Year or Contract Year pursuant to (a) or (b) above, reduced by the amount
of all federal, state and local taxes required to be withheld therefrom, shall
be paid to the Executive in a single cash lump sum as soon as practicable after
the close of such Fiscal Year or Contract Year.
7. RIGHTS OF EXECUTIVES
An Executive's rights and interests under the Plan shall be subject to
the following provisions:
(a) An Executive's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Executive.
(b) Neither the Plan nor any action taken hereunder shall be construed
as giving any Executive any right to be retained in the employment of the
Corporation or any of its subsidiaries.
8. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a
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telephone meeting, by action of a majority of the members present, or without a
meeting by unanimous written consent. In addition to the responsibilities and
powers assigned to the Committee elsewhere in the Plan, the Committee shall have
the authority, in its discretion, to establish from time to time guidelines or
regulations for the administration of the Plan, interpret the Plan, and make all
determinations considered necessary or advisable for the administration of the
Plan.
The Committee may delegate any ministerial or nondiscretionary function
pertaining to the administration of the Plan to any one or more officers of the
Corporation.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties. Notwithstanding
the foregoing, any determination made by the Committee after the occurrence of a
Change in Control that denies in whole or in part any claim made by any
individual for benefits under the Plan shall be subject to judicial review,
under a "de novo", rather than a deferential standard.
9. AMENDMENT OR TERMINATION
The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that (a) no amendment, suspension or termination of the Plan
shall adversely affect the rights of any Executive with respect to any Bonus
that has become payable to the Executive under the Plan, without his or her
written consent, and (b) following a Change in Control, no amendment to Section
6, and no termination of the Plan, shall be effective if such amendment or
termination adversely affects the rights of any Executive under the Plan.
10. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Executives' rights under the Plan
in any agreement or plan which it may enter into or adopt to effect any such
merger, consolidation, reorganization or transfer of assets.
11. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of New York.
12. EFFECTIVE DATE
The Plan was adopted effective as of July 17, 2001 by the Board of
Directors, acting by the Committee, subject, however, to approval by the
shareholders of the Corporation by a majority of the votes cast in person or by
proxy at the 2001 annual meeting of the
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Corporation's shareholders, including any adjournment thereof. The Plan was
approved by shareholders on November 14, 2001 and amended by the Committee on
July 16, 2002 and November 1, 2002 effective for the Fiscal Year beginning
August 4, 2002.
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