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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
P A L L C O R P O R A T I O N
(Exact name of registrant as specified in its charter)
NEW YORK 11-1541330
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2200 NORTHERN BOULEVARD
EAST HILLS, NEW YORK 11548
(Address of Principal Executive Offices)
PALL CORPORATION
MANAGEMENT STOCK PURCHASE PLAN
(Full title of the plan)
MARY ANN BARTLETT, SECRETARY
PALL CORPORATION
2200 NORTHERN BOULEVARD
EAST HILLS, NEW YORK 11548
(Name and address of agent for service)
(516) 484-5400
(Telephone number, including area code, of agent for service)
Copy to:
CARTER, LEDYARD & MILBURN
2 WALL STREET
NEW YORK, NEW YORK 10005-2072
ATTENTION: HEYWOOD SHELLEY, ESQ.
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE FEE
- ---------------------------- ------------------------- --------------------------- ------------------------------- ----------------
<S> <C> <C> <C> <C>
Restricted Stock
Units 1,000,000 units $21.66(1) $21,656,250(1) $ 6,020.44
Common Stock,
$.10 par value 1,000,000 shs. -- (2) -- (2) None
Common Share
Purchase Rights 1,000,000 rights -- (3) -- (3) None
- ---------------------------- ------------------------- --------------------------- ------------------------------- ----------------
</TABLE>
(1) Calculated pursuant to Rule 457(c) and (h) upon the basis of the
average of the high and low prices ($21-1/8 and $22-3/16) of a share of
the Common Stock as reported for New York Stock Exchange composite
transactions on June 30, 1999. The number of restricted stock units
purchased and awarded under the Plan will be determined by dividing a
dollar amount by the closing price of a share of Common Stock as
reported for New York Stock Exchange composite transactions on the date
of award or purchase.
(2) Pursuant to Rule 457(i), no registration fee is payable for the Common
Stock. Each restricted stock unit issued under the Plan is convertible,
without the payment of additional consideration, into one share of the
Common Stock being registered hereby.
(3) Included in the offering price of the Common Stock being registered
hereby. Until the Distribution Date, as defined in the Rights Agreement
providing for the Common Share Purchase Rights, such Rights will be
transferable only with the Common Stock and will be evidenced by the
certificates evidencing the Common Stock.
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON
FILING AS PROVIDED IN RULE 462 UNDER THE SECURITIES ACT OF 1933.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant hereby incorporates by reference into this
Registration Statement the following documents filed by it with the Commission
(Commission File No. 1-4311):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended August 1, 1998;
(b) The Registrant's Quarterly Reports on Form 10-Q for the
quarterly periods ended October 31, 1998, January 30, 1999, and May 1,
1999; and
(c) The descriptions of the Common Stock and the Common Share
Purchase Rights of the Registrant contained in the Amendments No. 1,
both dated April 20, 1999, to the Registrant's Registration Statements
on Form 8-A, both dated September 10, 1992, for the registration of the
Common Stock and the Common Share Purchase Rights pursuant to Section
12(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), and
any updates of such descriptions contained in any registration
statement, report or amendment thereto of the Registrant hereafter
filed under the Exchange Act.
In addition, all documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment to this Registration Statement which
indicates that all securities offered hereby have been sold, or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in and made a part of this Registration Statement from
the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not required for the Common Stock and the Common Share
Purchase Rights, both of which are registered under Section 12 of the Exchange
Act.
Each Restricted Stock Unit being registered hereby will, after
a vesting period of three years, entitle the holder to receive one share of the
Registrant's Common Stock, subject to certain forfeiture provisions set forth in
the Registrant's Management Stock Purchase Plan adopted June 29, 1999 (the
"Plan"). Restricted Stock Units will vest automatically in accordance with and
subject to the provisions of the Plan. An owner of a Restricted Stock Unit will
not have any of the rights of a holder of Common Stock until such Restricted
Stock Unit has vested and the owner has received a share of Common Stock in
respect thereof.
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Owners of Restricted Stock Units will be entitled to receive dividend
equivalent Restricted Stock Units as of each date that a dividend is paid on
Common Stock. The number of dividend equivalent Restricted Stock Units to be
credited to participants in the Plan on a divided payment date will be
determined by first multiplying (A) the number of Restricted Stock Units owned
by the participant on such date by (B) the per-share dollar amount of the
dividend paid on such date, and then dividing the resulting amount by the
closing price for New York Stock Exchange composite transactions of a share of
Common Stock on such dividend payment date.
In the event a "Change in Control" (defined below) of the Registrant
occurs, all Restricted Stock Units owned by participants in the Plan will vest
on the date a Change of Control occurs.
"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 Registrant and United States Trust
Company of New York, as Rights Agent, as the same may
have been amended or extended to the time in question
or in any successor agreement (the "Rights
Agreement") (see Exhibits 4(a) and 4(b) to this
Registration Statement); 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 Registrant 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 Registrant as fixed by its by-laws;
provided, however, that no Change in Control will be deemed to have occurred,
and no rights arising upon a Change in Control as provided in Section 8 of the
Plan will exist, to the extent that the Board of Directors so determines by
resolution adopted prior to the Change in Control.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Carter, Ledyard & Milburn, counsel for the Registrant, has
given the opinion being filed as Exhibit 5 to this Registration Statement as to
the legality of the securities being registered hereby. Heywood Shelley, counsel
to Carter, Ledyard & Milburn, is a director of the Registrant and the owner of
12,000 shares of the Registrant's Common Stock. In addition, Mr. Shelley has
been granted options by the Registrant to purchase an additional 20,000 shares
of Common Stock.
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Sections 721 through 725 of the Business
Corporation Law of the State of New York, the registrant's jurisdiction of
incorporation, which provides for indemnification of directors and officers
under certain circumstances.
Section 7.02 of the Registrant's Bylaws provides as follows:
"Indemnification. The Corporation shall indemnify any person
made or threatened to be made a party to any action or proceeding,
whether civil or criminal (and whether or not by or in the right of the
corporation or of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise), by reason of the fact that such person, his
testator or intestate, is or was a director or officer of the
corporation or served any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise in any capacity at the request of the
corporation, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and
necessarily incurred as a result of such action or proceeding, or any
appeal therein, provided that (i) no indemnification may be made to or
on behalf of any person if a judgment or other final adjudication
adverse to such person establishes that his acts were committed in bad
faith or were the result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or that he personally
gained in fact a financial profit or other advantage to which he was
not legally entitled; (ii) no indemnification shall be required in
connection with the settlement of any pending or threatened action or
proceeding, or any other disposition thereof except a final
adjudication, unless the corporation has consented to such settlement
or other disposition, and (iii) the corporation shall not be obligated
to indemnify any person by reason of the adoption of this Section 7.02
if and to the extent such person is entitled to be indemnified under a
policy of insurance as such policy would apply in the absence of the
adoption of this Section 7.02.
"Reasonable expenses, including attorneys' fees, incurred in
defending any action or proceeding, whether threatened or pending,
shall be paid or reimbursed by the corporation in advance of the final
disposition thereof upon receipt of an undertaking by or on behalf of
the person seeking indemnification to repay such amount to the
corporation to the extent, if any, such person is ultimately found not
to be entitled to indemnification.
"Notwithstanding any other provision hereof, no amendment or
repeal of this Section 7.02, or any other corporate action or agreement
which prohibits or otherwise limits the right of any person to
indemnification or advancement or reimbursement of expenses hereunder,
shall be effective as to any person until the 60th day following notice
to such person of such action, and no such amendment or repeal or other
corporate action or
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agreement shall deprive any person of any right hereunder arising out
of any alleged or actual act or omission occurring prior to such 60th
day.
"The corporation is hereby authorized, but shall not be
required, to enter into agreements with any of its directors, officers
or employees providing for rights to indemnification and advancement
and reimbursement of reasonable expenses, including attorneys' fees, to
the extent permitted by law, but the corporation's failure to do so
shall not in any manner affect or limit the rights provided for by this
Section 7.02 or otherwise.
"For purposes of this Section 7.02, the term 'the corporation'
shall include any legal successor to the corporation, including any
corporation which acquires all or substantially all of the assets of
the corporation in one or more transactions. For purposes of this
Section 7.02, the corporation shall be deemed to have requested a
person to serve an employee benefit plan where the performance by such
person of his duties to the corporation or any subsidiary thereof also
imposes duties on, or otherwise involves services by, such person to
the plan or participants or beneficiaries of the plan, and excise taxes
assessed on a person with respect to an employee benefit plan pursuant
to applicable law shall be considered fines.
"The rights granted pursuant to or provided by the foregoing
provisions of this Section 7.02 shall be in addition to and shall not
be exclusive of any other rights to indemnification and expenses to
which any such person may otherwise be entitled by law, contract or
otherwise."
The Registrant has policies insuring its officers and
directors against certain civil liabilities, including liabilities under the
Securities Act of 1933.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The index to exhibits appears on the page immediately
following the signature pages of this Registration Statement.
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ITEM 9. UNDERTAKINGS.
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3)
of the Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or 15(d) of
the Exchange Act and incorporated herein by reference;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the
most recent post-effective amendment hereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in this Registration Statement, unless the information required
to be included in such post-effective amendment is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or 15(d) of the Exchange Act and
incorporated herein by reference;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement.
(b) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(d) That, for the purposes of determining any liability under
the Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described in
Item 6 above, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy
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<PAGE> 8
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of East Hills, State of New York, on the 8th day of
July, 1999.
PALL CORPORATION
By: /s/Jeremy Hayward-Surry
Jeremy Hayward-Surry
President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes Eric
Krasnoff, Jeremy Hayward-Surry and Mary Ann Bartlett, and each of them singly,
his true and lawful attorneys-in-fact with full power to execute in the name of
such person, in the capacities stated below, and to file, such one or more
amendments to this Registration Statement as the Registrant deems appropriate,
and generally to do all such things in the name and on behalf of such person, in
the capacities stated below, to enable the Registrant to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission thereunder, and hereby ratifies and
confirms the signature of such person as it may be signed by said
attorneys-in-fact, or any one of them, to any and all amendments to this
Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and the above power of attorney have been signed on July
8, 1999, by the following persons in the capacities indicated.
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<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/Eric Krasnoff Chairman and Chief Executive
Eric Krasnoff Officer (Principal Executive
Officer) and Director
/s/John Adamovich Chief Financial Officer,
John Adamovich Group Vice President and Treasurer
(Principal Financial Officer)
/s/Viraj Patel Chief Corporate Accountant
Viraj Patel (Principal Accounting Officer)
/s/Abraham Appel Director
Abraham Appel
/s/John H.F. Haskell, Jr. Director
John H.F. Haskell, Jr.
/s/Ulric Haynes, Jr. Director
Ulric Haynes, Jr.
/s/Jeremy Hayward-Surry Director
Jeremy Hayward-Surry
</TABLE>
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<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/Edwin W. Martin, Jr.
Edwin W. Martin, Jr. Director
/s/Katharine L. Plourde Director
Katharine L. Plourde
/s/Chesterfield F. Seibert Director
Chesterfield F. Seibert
/s/Heywood Shelley Director
Heywood Shelley
Director
Alan B. Slifka
/s/James D. Watson Director
James D. Watson
</TABLE>
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EXHIBIT INDEX
Exhibit No.
- -----------
(4)(a)* Rights Agreement dated as of November 17, 1989,
between the Registrant and United States Trust Company
of New York, as Rights Agent, filed as Exhibit I to
the Registrant's Registration Statement on Form 8-A
(File No. 1-4311) dated September 10, 1992, for the
registration of the Common Share Purchase Rights
pursuant to Section 12(b) of the Securities Exchange
Act of 1934 (the "Form 8-A")
(4)(b)* Amendment No. 1, dated as of April 20, 1999, to the above listed
Rights Agreement, filed as Exhibit II to Amendment No. 1, dated
April 20, 1999, to the Form 8-A
(5) Opinion of Carter, Ledyard & Milburn
(23)(a) Consent of Carter, Ledyard & Milburn
(included in Exhibit 5)
(23)(b) Consent of KPMG LLP
(24) Powers of Attorney (included in the signature page of this
Registration Statement)
(99) Pall Corporation Management Stock Purchase Plan
* Incorporated herein by reference.
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E X H I B I T 5
CARTER, LEDYARD & MILBURN
Counsellors at Law
2 Wall Street
New York, New York 10005
---------
(212) 732-3200
Fax (212) 732-3232
July 8, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pall Corporation
Ladies and Gentlemen:
We have acted as counsel for Pall Corporation, a New York corporation
(the "Corporation"), in connection with the adoption of its Management Stock
Purchase Plan (the "Plan"). The Plan provides for the issuance, upon the
conversion of restricted stock units, of up to 1,000,000 shares (the "Shares")
of the Common Stock, $.10 par value per share, of the Corporation (the "Common
Stock") and up to an aggregate of 1,000,000 Common Share Purchase Rights (the
"Rights"). The Shares may be either authorized but unissued or reacquired
shares. Each Right will be issued in connection with the issuance of one of the
Shares and, prior to the Distribution Date (as defined in the Rights Agreement
providing for the Rights), will be transferable with and only with, and will be
evidenced by the certificate evidencing, such Share.
We have examined the originals, or copies certified or otherwise
identified to our satisfaction, of such corporate records and such other
documents as we have deemed relevant as a basis for our opinion hereinafter
expressed.
Based on the foregoing, we are of the opinion that up to 1,000,000
restricted stock units issuable under the Plan, and up to 1,000,000 previously
unissued Shares and Rights which may be issued upon conversion of such
restricted stock units, when issued in accordance with the terms of the Plan,
will be legally issued, and such Shares will be fully-paid and non-assessable.
<PAGE> 2
We hereby consent to the filing of this opinion as an exhibit to the
Corporation's Registration Statement on Form S-8 for the restricted units, the
Shares and the Rights.
Heywood Shelley, counsel to this Firm, is a director of the
Corporation.
Very truly yours,
/s/Carter, Ledyard & Milburn
HS:lrh
2
<PAGE> 1
E X H I B I T 23(b)
CONSENT OF INDEPENDENT AUDITORS
Board of Directors
Pall Corporation:
We consent to the incorporation by reference, in the Registration Statement on
Form S-8 of Pall Corporation relating to 1,000,000 restricted stock units,
1,000,000 shares of its common stock and 1,000,000 of its common share purchase
rights authorized for issuance under its Management Stock Purchase Plan adopted
June 29, 1999, of our reports dated September 2, 1998 with respect to the
consolidated balance sheets of Pall Corporation and its subsidiaries as of
August 1, 1998, and August 2, 1997, and the related consolidated statements of
earnings, stockholders' equity and cash flows and related schedule for each of
the years in the three-year period ended August 1, 1998, which reports are
incorporated by reference or appear in the Annual Report on Form 10-K of Pall
Corporation for the fiscal year ended August 1, 1998.
/s/KPMG LLP
KPMG LLP
Melville, New York
July 7, 1999
<PAGE> 1
E X H I B I T 99
PALL CORPORATION
MANAGEMENT STOCK PURCHASE PLAN
-----
1. PURPOSE
This document sets forth the Pall Corporation Management Stock Purchase
Plan as adopted effective as of June 29, 1999.
The purpose of the Plan is to encourage key employees of the
Corporation and its Affiliated Companies to increase their ownership of shares
of the Corporation's Common Stock by providing such employees with an
opportunity to elect to have portions of their total annual compensation paid in
the form of Restricted Units, and to have additional matching Restricted Units
credited with respect thereto.
The Plan also provides certain employees with an opportunity to elect
to defer payment with respect to the Restricted Units credited to them that
become vested. With respect to these provisions, the Plan is intended to
constitute an unfunded plan of deferred compensation for "a select group of
management or highly compensated employees" within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"ACCOUNT" and "SUBACCOUNT" shall mean, respectively, the account, and
each Subaccount within such Account, that is established for a Participant
pursuant to Section 8.
"AFFILIATED COMPANIES" shall mean each direct or indirect subsidiary of
the Corporation.
"BENEFICIARY" shall mean the person or persons designated by a
Participant in accordance with Section 12 to receive any payment that is
required to be made under the Plan upon the Participant's death.
<PAGE> 2
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
"BONUS" shall mean, with respect to any Eligible Employee for any Plan
Year, the Bonus payable to such Eligible Employee during such year under the
Corporation's Executive Incentive Bonus Plan, or, if applicable, under the terms
of the Eligible Employee's employment agreement with the Corporation, or under
any other plan, program or arrangement of annual incentive compensation
maintained by the Corporation or any of its Affiliated Companies.
"BONUS PAYMENT DATE" shall mean each date on which Bonus payments are
made under the Corporation's Executive Incentive Bonus Plan.
"BUSINESS DAY" shall mean any day on which the Corporation's principal
office in the U.S. is open for business.
"CEO" shall mean the Chief Executive Officer of the Corporation.
"CHANGE IN CONTROL" means the occurrence of any of the following:
(a) the "Distribution Date" as defined in Section 3 of the
Rights Agreement dated as of November 17, 1989 between the
Corporation and United States Trust Company of New York, as
Rights Agent as the same may have been amended or extended
to the time in question or in any successor agreement (the
"Rights Agreement"); or
(b) any event described in Section 11(a)(ii)(B) of the Rights
Agreement; or
(c) any event described in Section 13 of the Rights Agreement;
or
(d) the date on which the number of duly elected and qualified
directors of the Corporation who were not either elected by
the Board of Directors or nominated by the Board of
Directors or its Nominating Committee for election by the
shareholders shall equal or exceed one-third of the total
number of directors of the Corporation as fixed by its
by-laws;
provided, however, that no Change in Control shall be deemed to have occurred,
and no rights arising upon a Change in Control as provided in Section 6 shall
exist, to the extent that the Board of Directors so determines by resolution
adopted prior to the Change in Control.
"CLOSING PRICE" shall mean, as of any date, the closing price of a
share of Common Stock as reported on the New York Stock Exchange Composite Tape
for such date.
<PAGE> 3
"COMMITTEE" shall mean the CEO and such other officers of the
Corporation as the CEO in his discretion may appoint from time to time. The CEO
shall have the power to remove any other member of the Committee at any time.
"COMMON STOCK" shall mean the shares of common stock ($0.10 par value)
of the Corporation.
"COMPENSATION COMMITTEE" shall mean the Compensation Committee of the
Board of Directors.
"CORPORATION" shall mean Pall Corporation.
"CREDITING DATE" shall mean, with respect to any Restricted Unit
Subaccount or Matching Restricted Unit Subaccount maintained for a Participant
under Section 8, the date as of which Restricted Units, or Matching Restricted
Units, were first credited to such Subaccount pursuant to Section 5(a), (b),
(c), (d), or (e).
"DEFERRED VESTED UNITS" shall mean Vested Units with respect to which
the Participant has elected to defer payment in accordance with the provisions
of Section 7(d) hereof.
"DIVIDEND EQUIVALENT UNITS" shall mean additional Restricted Units or
additional Deferred Vested Units credited to a Participant's Account pursuant to
Section 5(f) or Section 7(d)(vi).
"DIVIDEND PAYMENT DATE" shall mean each date on which the Corporation
pays a dividend on its Common Stock.
"ELIGIBLE EMPLOYEE" shall mean, with respect to any Plan Year, any
Employee who has been designated under Section 4 as eligible to be credited with
Restricted Units for such Plan Year.
"EMPLOYEE" shall mean any person employed by the Corporation or any of
its Affiliated Companies.
"INVOLUNTARY TERMINATION" shall mean the termination of a Participant's
employment with the Corporation and all of its Affiliated Companies by the
Corporation, or by any of its Affiliated Companies, for any reason other than
for disability or for cause.
"MATCHING RESTRICTED UNITS" shall mean Restricted Units that are
credited to a Participant's Account pursuant to Section 5(e), to match
Restricted Units that are credited to the Participant's Account under Section
5(b), (c) or (d).
<PAGE> 4
"PARTICIPANT" shall mean any Employee for whom an Account has been
established, and is being maintained, pursuant to Section 8 hereof.
"PLAN" shall mean the Pall Corporation Management Stock Purchase Plan
as set forth herein and as amended from time to time.
"PLAN YEAR" shall mean the period beginning on August 1 of each
calendar year and ending on July 31 of the following calendar year.
"RESTRICTED UNIT" shall mean a Unit credited to a Participant pursuant
to Section 5 that has not yet become vested in accordance with the provisions of
Section 6.
"RETIREMENT" shall mean the termination of a Participant's employment
with the Corporation and all of its Affiliated Companies, if at the time of such
termination of employment the Participant has attained age 62 and is eligible to
receive (i) a Retirement Benefit under Section 3.1, 3.2 or 3.3 of the Pall
Corporation Pension Plan or (ii), in the case of any Participant who is not a
resident of the U.S., a similar type of benefit under any plan or program
maintained by the Corporation or any of its Affiliated Companies (or to which
the Corporation or any of its Affiliated Companies makes contributions) that
provides benefits to Employees upon their retirement.
"TRADING DAY" shall mean any day on which the New York Stock Exchange
is open for trading.
"UNIT" shall mean a unit of measurement equivalent to one share of
Common Stock, with none of the attendant rights of a shareholder of such share,
including, without limitation, the right to vote such share and the right to
receive dividends thereon, except to the extent otherwise specifically provided
herein.
"VESTED UNIT" shall mean a Unit credited to a Participant pursuant to
Section 5 that has become vested in accordance with the provisions of Section 6.
"VESTING DATE" shall mean, with respect to any Restricted Units
credited to a Participant's Account, the date on which such Restricted Units
become vested in accordance with the provisions of Section 6.
3. MAXIMUM NUMBER OF SHARES OF COMMON STOCK AVAILABLE
The number of shares of Common Stock that may be distributed with
respect to Restricted Units and Deferred Vested Units credited to Participants
under the Plan, (including Dividend Equivalent Units credited with respect to
such Units) shall be limited to 1,000,000 shares of Common Stock. If any
Restricted Units initially credited to a Participant
<PAGE> 5
shall be forfeited, the number of shares of Common Stock no longer payable with
respect to the Restricted Units so forfeited shall thereupon be released and
shall thereafter be available for the crediting of new Restricted Units under
the Plan. The limitation provided under this Section 3 shall be subject to
adjustment as provided in Section 9.
The shares of Common Stock distributed under the Plan may be authorized
and unissued shares, shares held in the treasury of the Corporation, or shares
purchased on the open market by the Corporation at such time or times and in
such manner as it may determine. The Corporation shall be under no obligations
to acquire shares of Common Stock for distribution to Participants before
payment in Common Stock is due.
4. ELIGIBILITY
An Employee shall be eligible to be credited with Restricted Units
under Section 5 during any Plan Year only if he or she has been designated by
the Compensation Committee as an Eligible Employee with respect to such year.
Upon the recommendation of the CEO, the Compensation Committee may
select as an Eligible Employee for any Plan Year any Employee who is expected to
make significant contributions during the course of such year to the success of
the Corporation and its Affiliated Companies and to the growth of their
businesses.
Any person who has been selected as an Eligible Employee for any Plan
Year shall continue to be an Eligible Employee in the Plan for each subsequent
Plan Year during the period of his or her employment, subject, however, to the
Compensation Committee's right to terminate such individual's eligibility
effective beginning as of the first base salary payment date or, if earlier, the
first Bonus Payment Date occurring after the date on which the Compensation
Committee makes its determination to terminate such individual's eligibility.
5. CREDITING OF RESTRICTED UNITS
For each Plan Year, Eligible Employees shall be credited with
Restricted Units in accordance with the following provisions:
(a) INITIAL AWARD UNITS. Each Employee who is an Eligible Employee for
the Plan Year that begins on August 1, 1999 shall be credited as of such date
with such number of Restricted Units as the Compensation Committee in its sole
discretion may determine for such Employee. To the extent that the Compensation
Committee in its sole discretion so determines, any Employee who is designated
as an Eligible Employee at any time after August 1, 1999 shall be credited, as
of the date specified by the Compensation Committee in
<PAGE> 6
such determination, with such number of Restricted Units as the Compensation
Committee may determine for such Employee.
(b) BONUS UNITS. Each Employee who is an Eligible Employee for any Plan
Year beginning on or after August 1, 1999 may elect to have any part or all of
any Bonus that may become payable to the Participant during such year paid in
the form of Restricted Units that will be credited to his or her Account
hereunder and distributed in accordance with the provisions of this Plan,
instead of being paid to the Eligible Employee in cash. If an Eligible Employee
has so elected, the Eligible Employee's Account shall be credited on the first
Bonus Payment Date during such year with a number of Restricted Units determined
by dividing (i) the total amount of the portion of the Eligible Employee's Bonus
payable during such year which the Eligible Employee elected to have paid in the
form of Restricted Units, by (ii) the Closing Price of a share of Common Stock
on such Bonus Payment Date or, if such date is not a Trading Day, on the next
following day that is a Trading Day.
(c) BASE SALARY UNITS. Each Employee who is an Eligible Employee for
any Plan Year beginning on or after August 1, 1999 may elect to have up to 50%
of the amount of the base salary otherwise payable to the Eligible Employee on
each payday during such year paid in the form of Restricted Units that will be
credited to his or her Account hereunder and distributed in accordance with the
provisions of this Plan, instead of being paid to the Eligible Employee in cash.
If an Eligible Employee has so elected, the amount specified in such election
shall be withheld from the payment of base salary otherwise required to be made
to the Eligible Employee on each payday during such year, and the Eligible
Employee's Account shall be credited on January 31 and on July 31 of such year,
with a number of Restricted Units determined by dividing (i) the aggregate
amount so withheld from the start of such year, in the case of the Restricted
Units to be credited on January 31, or from January 31, in the case of the
Restricted Units to be credited on July 31, by (ii) the Closing Price of a share
of Common Stock on the applicable crediting date or, if such date is not a
Trading Day, on the next following day that is a Trading Day.
(d) CASH PAYMENT UNITS. Each Employee who is an Eligible Employee for
any Plan Year beginning on or after August 1, 1999 may make a direct cash
payment to the Corporation at least seven days prior to any Bonus Payment Date
during such year and in consideration thereof, have his or her Account credited
on such Bonus Payment Date with a number of Restricted Units determined by
dividing (i) the amount of such cash payment by (ii) the Closing Price of a
share of Common Stock on such Bonus Payment Date or, if such date is not a
Trading Day, on the next following day that is a Trading Day.
The aggregate amount of the direct cash payments that an Eligible
Employee may make under this Section 5(d) during any Plan Year shall not exceed
the sum of (x) the amount by which 50% of the Eligible Employee's base salary
for such year exceeds the portion thereof which the Eligible Employee has
elected under Section 5(c) to have paid in
<PAGE> 7
the form of Restricted Units, plus (y) the amount by which the Bonus payable to
the Eligible Employee during such Plan Year exceeds the portion thereof which
the Eligible Employee elected under Section 5(b) to have paid in the form of
Restricted Units.
(e) MATCHING UNITS. On each date on which any Restricted Units are
credited to an Eligible Employee's Account pursuant to the provisions of
paragraphs (b), (c) or (d) of this Section 5, there shall also be credited to
the Eligible Employee's Account on that date a number of Matching Restricted
Units equal to (i) 50% of the number of Restricted Units credited on such date,
in the case of Restricted Units credited during the Plan Year beginning on
August 1, 1999, and (ii) 331/3% of the number of Restricted Units credited on
such date, in the case of Restricted Units credited during each Plan Year
beginning on or after August 1, 2000.
(f) DIVIDEND EQUIVALENTS. Until the Vesting Date for the Restricted
Units that have been credited to a Participant's Account pursuant to paragraphs
(a), (b), (c), (d) and (e) of this Section 5, additional Restricted Units shall
be credited to the Participant's Account, with respect to the Restricted Units
so credited, as of each Dividend Payment Date. The number of additional
Restricted Units to be so credited shall be determined separately for each
Restricted Unit Subaccount, and for each Matching Restricted Unit Subaccount,
maintained for a Participant pursuant to Section 8. The number of additional
Restricted Units to be credited to each such Subaccount shall be determined by
first multiplying (A) the total number of Restricted Units standing to the
Participant's credit in such Subaccount on the day immediately preceding such
Dividend Payment Date (including all Dividend Equivalent Units credited to such
Subaccount on all previous Dividend Payment Dates), by (B) the per-share dollar
amount of the dividend paid on such Dividend Payment Date and then, dividing the
resulting amount by the Closing Price of one share of Common Stock on such
Dividend Payment Date.
(g) ELECTION PROCEDURES. Any election made by an Eligible Employee
under paragraph (b) or (c) of this Section 5 shall be made in accordance with,
and shall be subject to, the provisions set forth below.
(i) any such election shall be made in writing, on a form
furnished to the Eligible Employee for such purpose by the
Committee and filed by the Eligible Employee with the Committee.
(ii) An election under Section 5(b) with respect to the
Bonus payable to an Eligible Employee during the Plan Year
beginning on August 1, 1999 shall be made by no later than July
23, 1999. An election under Section 5(b) with respect to the Bonus
payable to an Eligible Employee during any Plan Year beginning on
or after August 1, 2000 shall be made by no later than April 30 of
the immediately preceding Plan Year. An election under Section
5(c) with respect to the base salary payable to
<PAGE> 8
an Eligible Employee during any Plan Year shall be made on or
prior to the last Business Day preceding the start of such Plan
Year. Notwithstanding the foregoing, any Employee who is hired
after the start of a Plan Year but who is designated under Section
4 as an Eligible Employee for such year may make election under
Section 5(c) with respect to his or her base salary for such year
at any time during the 30-day period commencing on his or her date
of hire; provided, however, that any election so made shall be
effective only with respect to base salary payable to the Eligible
Employee for periods of service beginning after the date on which
he or she files such election with the Committee.
(iii) In his or her election form, the Eligible Employee
shall specify, by dollar amount (which shall be an even multiple
of $100) or by percentage (which shall be an even multiple of 1%),
the portion of his or her Bonus and/or base salary that the
Eligible Employee wishes to have paid in the form of Restricted
Units credited to his or her Account, instead of in cash. The
dollar amount or percentage so specified shall be at least equal
to any minimum amount or percentage which the Committee in its
discretion may have determined to be applicable to elections under
Section 5(b) and/or Section 5(c) for the Plan Year.
(iv) Any election made under Section 5(b) or (c) for any
Plan Year shall be irrevocable.
(h) OTHER ELECTION RULES. Elections made under Section 5(b) or (c)
shall be subject to the following rules:
(i) If an Eligible Employee who has made an election under
Section 5(b) with respect to the Bonus payable to the Eligible
Employee during any Plan Year terminates employment with the
Company and all of its Affiliated Companies for any reason prior
to any Bonus Payment Date for such Bonus but is nevertheless
entitled to receive a Bonus payment on such date, the portion of
such payment that is otherwise required to be paid by means of the
crediting of Restricted Units to the Eligible Employee's Account
pursuant to his or her election under Section 5(b) shall not be
paid in such form, but shall be paid instead in the form of a
single lump sum cash payment. Such payment shall be made as soon
as practicable after such Bonus Payment Date.
(ii) If an Eligible Employee who has made an election under
Section 5(c) with respect to the base salary payable to the
Eligible Employee during any Plan Year terminates employment with
the Company and all of its Affiliated Companies for any reason
prior to any date on which Restricted Units are to be credited to
his or her Account with respect to amounts withheld from his or
her base salary pursuant to such election, no Restricted Units
shall be so credited on such date but instead, the
<PAGE> 9
aggregate amount so withheld as of the date of the Eligible
Employee's termination of employment shall be paid to the Eligible
Employee, without interest thereon, in a single lump sum cash
payment. Payment shall be made on such termination date, or as
soon thereafter as is practicable.
(iii) Any election made by an Eligible Employee under
Section 5(b) or (c) shall not be given effect if, at any time
during the 12-month period ending on the date as of which any
Restricted Units are otherwise required to be credited to his or
her Account pursuant to such election, the Eligible Employee
received a hardship withdrawal under Section 7.2 of the Pall
Corporation Profit-Sharing Plan.
6. VESTING OF UNITS.
Restricted Units credited to a Participant's Account, and Dividend
Equivalent Units credited with respect thereto, shall become vested in
accordance with the provisions set forth below.
(a) All Restricted Units standing to a Participant's credit in any
Restricted Unit Subaccount or Matching Restricted Unit Subaccount maintained for
the Participant under Section 8 (including, in each case, all such Units that
are Dividend Equivalent Units) shall become vested on the earliest to occur of
the following dates:
(i) the third anniversary of the Crediting Date for such
Subaccount,
(ii) the date of the Participant's death,
(iii) the date as of which the Participant first incurs a
disability that entitles the Participant to a Social Security
certificate of disability award under the Federal Social Security
Act, or
(iv) the date on which a Change in Control occurs.
(b) If a Participant's employment with the Corporation and all of its
Affiliated Companies terminates as a result of Retirement or Involuntary
Termination prior to the third anniversary of the Crediting Date for any
Restricted Unit Subaccount or Matching Restricted Unit Subaccount and prior to
the occurrence of a Change in Control, as of the date of such termination of the
Participant's employment
(i) all Units in any such Restricted Unit Subaccount
(including all such Units that are Dividend Equivalent Units),
shall become vested;
<PAGE> 10
(ii) the Earned Portion (as defined below) of all Units in
any such Matching Restricted Unit Subaccount (including all such
Units that are Dividend Equivalent Units), shall become vested;
and
(iii) the Unearned Portion (as defined below) of all Units
in any such Matching Restricted Unit Subaccount (including all
such Units that are Dividend Equivalent Units) shall be forfeited,
and the Participant shall have no further rights with respect
thereto.
For purposes of the foregoing, the "Earned Portion" of the Units in any
Matching Restricted Unit Subaccount maintained for a Participant shall mean the
percentage of such Units determined by dividing by 36 the number of months in
the period beginning on the Crediting Date for such Subaccount and ending on the
date of the Participant's termination of employment, with any fraction of a
month included in such period treated as a full month; and the "Unearned
Portion" of the Units in any such Subaccount shall mean the percentage of such
Units determined by subtracting from 100% the Earned Portion of such Units, as
determined under the preceding clause.
(c) If a Participant's employment with the Corporation and all of its
Affiliated Companies terminates for any reason other than death, disability,
Retirement or Involuntary Termination prior to the third anniversary of the
Crediting Date for any Restricted Unit Subaccount or Matching Restricted Unit
Subaccount and prior to the occurrence of a Change in Control, upon such
termination of the Participant's employment
(i) all Units in any such Matching Restricted Unit
Subaccount (including all such Units that are Dividend Equivalent
Units), shall be forfeited, and the Participant shall have no
further rights with respect thereto; and
(ii) all Units in any such Restricted Unit Subaccount shall
become vested.
7. PAYMENT FOR VESTED UNITS.
Payment with respect to a Participant's Vested Units shall be made in
accordance with the provisions set forth below.
(a) TIME FOR PAYMENT. Payment with respect to a Participant's Vested
Units shall be made to the Participant or, in the event of the Participant's
death, to his or her Beneficiary, as soon as practicable after the Vesting Date
for such Units, except as otherwise provided in paragraph (d) below.
(b) FORM OF PAYMENT. Except as provided in paragraph (c) below, payment
to be made in accordance with paragraph (a) above with respect to all Restricted
Units that have
<PAGE> 11
become vested on any Vesting Date shall be made in the form of a single lump sum
payment consisting of (i) a number of shares of Common Stock equal to the total
number of whole Restricted Units that have become vested on such Vesting Date,
and (ii) a cash payment for any fractional part of a Restricted Unit that has
become vested on such Vesting Date. The amount of such cash payment shall be
determined by multiplying such fractional part by the Closing Price of a share
of Common Stock on the first Trading Day preceding the date of payment.
(c) PAYMENT ON TERMINATION. Payment to be made in accordance with
paragraph (a) above with respect to all Restricted Units that have become vested
pursuant to Section 6(c)(ii) on any Vesting Date shall be made by the issuance
of a number of shares of Common Stock determined by dividing the lesser of (x)
the aggregate value of such Units determined by multiplying the number of such
Units by the Closing Price of a share of Common Stock on the date or dates as of
which such Units were credited to the Participant's Account, or (y) the
aggregate value of such Units determined by multiplying the number of such Units
by the Closing Price of a share of Common Stock on such Vesting Date, by (z) the
Closing Price of a share of Common Stock on such Vesting Date. If such Vesting
Date was not a Trading Day, the Closing Price of a share of Common Stock on the
first Trading Day following such Vesting Date shall be used for purposes of the
preceding sentence. If the number of shares of Common Stock determined in
accordance with the provisions of the second preceding sentence includes a
fractional part of a share, payment with respect to such fractional part shall
be made in cash, in an amount determined by multiplying such fractional part by
the Closing Price of a share of Common Stock on the first Trading Day preceding
the date of payment.
(d) DEFERRED PAYMENT. Subject to the provisions of paragraph (e) below,
payment with respect to part or all of a Participant's Restricted Units that
become vested on any Vesting Date pursuant to Section 6(a)(i) shall be deferred,
and shall be made at the time and in the manner hereinafter set forth, if the
Participant so elects in accordance with the following provisions:
(i) An election by the Participant hereunder with respect
to any Restricted Units that become vested on any Vesting Date
shall be made in writing, on a form furnished to the Participant
for such purpose by the Committee. The form shall be filed with
the Committee at least one year prior to such Vesting Date.
(ii) In the Participant's election form, the Participant
shall specify the number of such Restricted Units with respect to
which the Participant wishes to defer payment, and the date on
which payment with respect to such Units shall be made (the
"Payment Date").
<PAGE> 12
(iii) The Participant may select, as the Payment Date for
such Units (A) the first Business Day of the calendar year
following the date of termination of his or her employment with
the Corporation or any of its Affiliated Companies for any reason,
or (B) the first Business Day of any earlier calendar month but no
earlier than the first Business Day of the third calendar year
following the calendar year in which the Vesting Date for such
Units occurs.
(iv) Any election made hereunder by the Participant shall
be irrevocable.
(v) As of the Vesting Date for any Restricted Units covered
by a deferral election made by a Participant hereunder, the number
of such Units shall be transferred from the Restricted Unit
Subaccount or Matching Restricted Unit Subaccount in which such
Units were recorded to the appropriate Deferred Vested Unit
Subaccount established for the Participant under Section 8.
(vi) Until payment has been made with respect to all of the
Units in any Deferred Vested Unit Subaccount maintained for the
Participant under Section 8, there shall be credited to each such
Subaccount, as of each Dividend Payment Date, a number of
additional Deferred Vested Units determined by first multiplying
(A) the total number of Deferred Vested Units standing to the
Participant's credit in such Subaccount on the day immediately
preceding such Dividend Payment Date (including all Dividend
Equivalent Units credited to such Subaccount on all previous
Dividend Payment Dates), by (B) the per-share dollar amount of the
dividend paid on such Dividend Payment Date and then, dividing the
resulting amount by the Closing Price of one share of Common Stock
on such Dividend Payment Date.
(vii) Except as provided in subparagraph (viii) below,
payment with respect to the Deferred Vested Units in any Deferred
Vested Unit Subaccount maintained for the Participant shall be
made on the Payment Date specified by the Participant in his or
her deferral election with respect to such Units. Payment with
respect to the Deferred Vested Units payable on any Payment Date
shall be made (A) by the issuance of one share of Common Stock for
each whole Deferred Vested Unit payable on such Payment Date, and
(B) by a cash payment for any fractional part of a Deferred Vested
Unit payable on such Payment Date. The amount of such cash payment
shall be determined by multiplying such fractional part by the
Closing Price of a share of Common Stock on the first Trading Day
preceding the date of payment.
(viii) Notwithstanding any other provision in this Section
7 to the contrary, payment with respect to any part or all of any
Deferred Vested Unit Subaccount maintained for a Participant may
be made to the Participant on any date earlier than the Payment
Date specified by the Participant in his deferral election for
such Units if (A) the Participant requests such early payment and
(B) the Committee, in its sole
<PAGE> 13
discretion, determines that such early payment is necessary to
help the Participant meet an "unforeseeable emergency" within the
meaning of Section 1.457-2(h)(4) of the federal income tax
regulations. The amount that may be so paid may not exceed the
amount necessary to meet such emergency.
(e) LIMITATIONS ON DEFERRALS. A deferral election otherwise permitted
to be made under paragraph (d) above shall be subject to the following
limitations:
(i) The Committee may deny any Participant the right to
make such election if it determines, in its sole discretion, that
such deferral election by the Participant might cause the Plan to
fail to be treated as a plan of deferred compensation "for a
select group of management or highly compensated employees" for
purposes of ERISA.
(ii) If a Change in Control should occur after the date on
which the Participant's election form is filed with the Committee
but before the date that otherwise would have been the Vesting
Date under Section 6(a)(i) for the Units designated in such form,
the Participant's deferral election shall not be given effect, and
payment with respect to such Units shall be made in accordance
with the other applicable provisions of this Section 7.
(iii) No deferral election shall be effective hereunder if,
at any time during the 12-month period ending on the Vesting Date,
the Participant received a hardship withdrawal under Section 7.2
of the Pall Corporation Profit-Sharing Plan.
(iv) No amount may be deferred with respect to the
Participant's Vested Units pursuant to a Participant's deferral
election hereunder to the extent that any tax is required to be
withheld with respect to such amount pursuant to applicable
federal, state or local law.
8. ACCOUNTS.
There shall be established on the books and records of the Corporation,
for book keeping purposes only, a separate Account for each Participant, to
reflect the Participant's interest under the Plan.
Within each Account so established for each Participant there shall be
established and maintained the following Subaccounts: a "Restricted Unit
Subaccount" to reflect all Restricted Units to be credited to the Participant's
Account on any Crediting Date pursuant to Section 5(a), (b), (c) or (d); a
"Matching Restricted Unit Subaccount" to reflect all Matching Restricted Units
to be credited to the Participant's Account on any Crediting Date pursuant to
Section 5(e); and a "Deferred Vested Unit Subaccount" to reflect all Vested
Units
<PAGE> 14
with respect to which a Participant has elected to defer payment, and for which
the Participant has selected the same Payment Date, pursuant to Section 7(d).
A Participant's Account and Subaccounts shall be adjusted from time to
time to reflect all Dividend Equivalent Units to be credited thereto pursuant to
Section 5(f) and Section 7(d)(vi), all payments made with respect to the Units
reflected therein pursuant to Section 7, and, in the case of any Restricted Unit
Subaccount or Matching Restricted Unit Subaccount maintained for a Participant,
any forfeitures of Units reflected therein pursuant to Section 6.
A Participant's interest in any Deferred Vested Unit Subaccount
maintained for the Participant shall be fully vested and nonforfeitable at all
times.
9. CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the shares of Common Stock by reason of
any stock dividend, stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares, or any rights
offering to purchase shares of Common Stock at a price substantially below fair
market value, or any similar change affecting the shares of Common Stock, the
number and kind of shares represented by Units credited to Participants'
Accounts shall be appropriately adjusted consistent with such change in such
manner as the Compensation Committee, in its sole discretion, may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, the Participants hereunder. The Committee shall give notice to
each Participant of any adjustment made pursuant to this Section and, upon such
notice, such adjustment shall be effective and binding for all purposes.
10. LISTING AND QUALIFICATION OF COMMON STOCK
The Corporation, in its discretion, may postpone the issuance,
delivery, or distribution of shares of Common Stock with respect to any Vested
Units until completion of such stock exchange listing or other qualification of
such shares under any state or federal law, rule or regulation as the
Corporation may consider appropriate, and may require any Participant or
Beneficiary to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
in compliance with applicable laws, rules and regulations.
11. TAXES
The Corporation or any of its Affiliated Companies may make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state and local taxes required by law to be withheld
with respect to any payments to be made
<PAGE> 15
under the Plan including, but not limited to (i) deducting the amount so
required to be withheld from any other amount then or thereafter payable to a
Participant or Beneficiary, and/or (ii) requiring a Participant or Beneficiary
to pay to the Corporation or any of its Affiliated Companies the amount so
required to be withheld as a condition of the issuance, delivery, or
distribution of any shares of Common Stock. With the approval of the Compen
sation Committee, the Committee may permit such amount to be paid in shares of
Common Stock previously owned by the Participant, or a portion of the shares of
Common Stock that otherwise would be distributed to such Participant in respect
to his or her Vested Units, or a combination of cash and shares of Common
Shares.
12. DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation of
one or more persons as the Beneficiary who shall be entitled to receive any
amount, or any shares of Common Stock, payable under the Plan upon his or her
death. A Participant may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any previously designated
Beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 12, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount, or any shares of Common Stock, payable under the Plan by
reason of the Participant's death, the Participant's estate shall be treated as
the Participant's Beneficiary for purposes of the Plan.
13. RIGHTS OF PARTICIPANTS
A Participant's rights and interests under the Plan shall be subject to
the following provisions:
(a) A Participant shall have the status of a general unsecured creditor
of the Corporation with respect to his or her right to receive any payment
under the Plan. The Plan shall constitute a mere promise by the Corporation or
the applicable Affiliated Company to make payments in the future of the benefits
provided for herein. It is intended that the arrangements reflected in the Plan
be treated as unfunded for tax purposes, as well as for purposes of any
applicable provisions of Title I of ERISA.
(b) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or his or her Beneficiary.
<PAGE> 16
(c) Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant any right to be retained in the employment of the
Corporation or any of its Affiliated Companies.
(d) No Participant shall have the right, by virtue of having been
selected as an Eligible Employee with respect to any Plan Year, to be
automatically treated as an Eligible Employee with respect to any subsequent
Plan Year.
(e) No Restricted Units credited to a Participant's Account, and no
payments made with respect to such Units upon or after they become vested, shall
be considered as compensation under any employee benefit plan of the Corporation
or any of its Affiliated Companies, except as specifically provided in any such
plan or as otherwise determined by the Board of Directors.
14. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan; provided, however, that any questions as to the
rights under the Plan of any person who is an Elected Officer under Section
4.01(a), of the By-Laws of the Corporation, as amended on June 29, 1999 or
thereafter, shall be determined by the Compensation Committee instead of by the
Committee.
The Committee may delegate any ministerial or nondiscretionary function
pertaining to the administration of the Plan to any one or more officers of the
Corporation.
All decisions, actions or interpretations of the Committee or the
Compensation Committee under the Plan shall be final, conclusive and binding
upon all parties. Notwithstanding the foregoing, any determination made by the
Committee or the Compensation Committee after the occurrence of a Change in
Control that denies in whole or in part any claim made by any individual for
benefits under the Plan shall be subject to judicial review, under a "de novo",
rather than a deferential standard.
15. AMENDMENT OR TERMINATION
The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that no amend-
<PAGE> 17
ment, suspension or termination of the Plan shall adversely affect the rights of
any Participant with respect to any Units previously credited to the
Participant's Account, without his or her written consent.
16. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
17. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of New York.
18. EFFECTIVE DATE
The Plan was adopted effective as of June 29, 1999 by the Board of
Directors, acting by the Compensation Committee, subject, however, to approval
by the shareholders of the Corporation by a majority of the votes cast in person
or by proxy at the 1999 annual meeting of the Corporation's shareholders.
Restricted Units may be credited to the Accounts of Eligible Employees as
provided herein prior to such shareholder approval, subject to such approval
being obtained at such meeting.
