E X H I B I T 99
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PALL CORPORATION
1998 EMPLOYEE STOCK OPTION PLAN
Pall Corporation (the "Company"), in order to retain and attract personnel
for positions of responsibility with the Company and its subsidiaries and to
provide additional incentive to such personnel by offering them an opportunity
to obtain a proprietary interest in the Company, hereby authorizes options to be
granted to "executive officers" and "eligible employees" (as those terms are
hereinafter defined) of the Company and its subsidiaries to purchase shares of
Common Stock of the Company ("shares") upon the terms and conditions described
below in this Pall Corporation 1998 Employee Stock Option Plan (the "Plan").
1. Administration of the Plan. The Plan shall be administered, and the
options under the Plan shall be granted, by the Compensation Committee of the
Company as from time to time constituted (the "Committee"). The Committee shall
consist of not less than three members of the Board of Directors who are
appointed by the Board and are (i) "Non-Employee Directors" as defined in Rule
16b-3 of the Securities and Exchange Commission (the "Commission") under the
Securities Exchange Act of 1934 (the "Exchange Act") or any successor
regulation, and (ii) "outside directors" as defined in the regulations of the
Internal Revenue Service under Section 162(m) of the Internal Revenue Code of
1986 as amended (the "Code"). The members of the Committee shall serve, without
compensation, at the pleasure of the Board. Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan and the options
granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of the
options described in Section 4 hereof, and to make all other decisions necessary
or advisable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option in the manner and to the extent the Committee deems desirable to
carry it into effect. Any decision of the Committee in the administration of the
Plan, as described herein, shall be final and conclusive. The Committee may act
only by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or any officer of the Company to
execute and deliver documents on behalf of the Committee. No member of the
Committee shall be liable for anything done or omitted to be done by him or her
or by any other member of the Committee in connection with the Plan, except for
his or her own willful misconduct or as expressly provided by statute.
2. Number of Shares Subject to Option. The aggregate number of shares which
may be issued under the Plan is eight million (8,000,000) shares of Common Stock
of the Company. Such shares may be either authorized but unissued or reacquired
shares. If after July 7, 1998 the Company effects one or more stock splits,
stock dividends, combinations, exchanges of shares or similar capital
adjustments, the number and kind of shares with respect to which options may be
granted under the Plan, the number of shares which may be granted to any
individual as limited by Section 3 hereof, the number and kind of shares subject
to each outstanding option and the option price per share under each such option
shall be proportionately and appropriately adjusted by the
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Committee. If any option granted under the Plan, or any portion thereof, shall
expire or terminate for any reason without having been exercised in full, the
shares with respect to which it has not been exercised shall be available for
further options under the Plan.
With respect to incentive stock options granted under this Plan and under
all stock option plans of the Company and its parent and subsidiary
corporations, the aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which such incentive stock options are
exercisable for the first time by the optionee during any calendar year shall
not exceed $100,000.
3. Eligible Optionees. Options may be granted only (a) to executive
officers of the Company as that term is defined in Rule 405 of the Securities
and Exchange Commission under the Securities Act of 1933 as amended (the
"Securities Act") or successor regulation ("executive officers"), and (b) to
other employees (including officers) of the Company and of such other
corporations as are subsidiary corporations of the Company at the time of grant
who, in the judgment of the Committee, are in a position to contribute
significantly to the Company's success ("eligible employees"). The Committee is
hereby given the authority to select the particular executive officers and
eligible employees to whom options under the Plan are to be granted, to
determine the number of shares to be optioned to each such executive officer and
eligible employee (except that options may not be granted under this Plan to any
individual during any period of 24 consecutive months on more than an aggregate
of 300,000 shares, subject to adjustment in accordance with the third sentence
of Section 2 hereof) and to grant one or more options under the Plan to any such
executive officer or eligible employee from time to time, irrespective of
whether one or more options have been granted to such individual under previous
stock option plans of the Company. In exercising its authority under the
foregoing provisions of this paragraph, each member of the Committee, as
authorized by ss.717(a) of the New York Business Corporation Law, shall be
entitled to rely on information, opinions, reports and statements prepared or
presented by (i) one or more officers of the Company or any subsidiary of the
Company whom the member believes to be reliable and competent in the matters
presented or (ii) counsel, public accountants or other persons as to matters
which the member believes to be within such person's professional or expert
competence. Nothing in the Plan or in any option granted under the Plan shall
confer any rights on any officer or other employee to continue in the employ of
the Company or any of its subsidiary corporations or shall interfere in any way
with the right of the Company or any of its subsidiary corporations, as the case
may be, to terminate his or her employment at any time.
4. Terms of Options. Options granted under the Plan may be "incentive stock
options" meeting the requirements for such options prescribed by Section 422 of
the Code, or may be options not so qualifying as incentive stock options
("nonqualified options"). The determination as to whether or not an option
granted under the Plan is intended to be an incentive stock option shall be made
by the Committee.
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Each option granted under the Plan shall comply with the following terms
and conditions:
(a) The option price shall be the fair market value of the shares
subject to the option at the time the option is granted. Fair market value
shall be as determined in good faith by the Committee. In no event shall
the option price be less than the par value of the shares.
(b) The option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be
exercisable during his or her lifetime only by him or her except that, at
the discretion of the Committee, a nonqualified option may provide that the
option is transferable to any "family member" of the optionee, as the term
"family member" is defined in the General Instructions to Form S-8
promulgated by the Commission under the Securities Act.
(c) An option shall not be exercisable
(i) after the expiration of ten years from the date it is
granted (the "date of grant"); and
(ii) unless counsel for the Company shall be satisfied that the
issuance of shares upon exercise will be in compliance with
the Securities Act and applicable state laws; and
(iii)unless written notice of exercise, in form satisfactory to
the Commit tee, is given to the Company; and
(iv) unless the optionee has been, at all times during the period
beginning with the date of grant of an option and ending on
the date of exercise thereof, an employee of the Company or
of one of its subsidiary corporations, or of a corporation
or a parent or subsidiary of a corporation assuming the
option in a transaction to which Section 424(a) of the Code
applies, except that
(A) if the optionee shall cease to be an employee by reason
of his or her disability or by reason of his or her
retirement under an approved retirement program of the
Company or a subsidiary thereof while holding an option
which has not expired and has not been fully exercised,
the option shall remain in full force and effect and
may be exercised in accordance with its terms until it
expires by its terms by the passage of time or is
canceled or terminated in accordance with its terms (it
being understood, however, that incentive stock option
federal
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income tax treatment will not be accorded with respect
to an option exercise made more than three months after
the optionee ceased to be an employee by reason of such
retirement or one year after he ceased to be an
employee by reason of disability within the meaning of
Section 22(e)(3) of the Code or successor section); and
(B) if any person to whom an option has been granted shall
die holding an option which has not been fully
exercised, his or her estate or any person who acquired
the right to exercise the option by bequest or
inheritance or by reason of the death of such person
may, at any time within one year after the date of such
death (but in no event after the option has expired by
its terms by the passage of time or has been canceled
or terminated in accordance with its terms) exercise
the option with respect to any shares as to which the
decedent could have exercised the option at the time of
his or her death; and
(v) unless the person exercising the option makes payment to the
Company in full in United States dollars by cash or check of
such amount as is sufficient to satisfy the Company's
obligation, if any, to withhold federal, state and local
taxes by reason of such exercise or makes such other
arrangement satisfactory to the Committee as will enable the
Company to satisfy such obligation.
(d) Each option granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time
in accordance with the Plan and all applicable laws and regulations and
shall be subject to such terms and conditions relating to the time at which
the option may first be exercised and the number of shares with respect to
which it may thereafter be exercised from time to time (for example, in
cumulative annual or other periodic installments), and to such additional
terms and conditions not inconsistent with the Plan or applicable laws and
regulations, as the Committee may in its discretion determine. Each
nonqualified option granted under the Plan shall state that it is not to be
treated as an incentive stock option. Each option granted under the Plan
shall require that the person exercising the option shall, at the time
notice of exercise is given pursuant to Section 4(c)(iii) hereof, make full
payment in United States dollars by cash or check of the option exercise
price of the shares being acquired except that, at the election of the
Committee, an option may provide that, at the time notice of exercise is
given pursuant to Section 4(c)(iii) hereof, the person exercising the
option, at his or her election, shall either make full payment in United
States dollars by cash or check of the option exercise price of the shares
being acquired (sometimes hereafter called the "purchase price") or agree
to pay such purchase price on an installment payment basis on the following
terms and conditions:
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(i) The installments payable shall be the minimum amounts
required to be paid by Section 221.4(b) of Regulation U of
the Board of Governors of the Federal Reserve System as in
effect as of the date of exercise of the option (hereinafter
"Regulation U") or such greater installment payments as the
Committee may prescribe.
(ii) The person exercising the option shall not be required to
pay interest to the Company on the unpaid balance of the
purchase price.
(iii)The unpaid balance of the purchase price shall be
immediately payable in full upon demand made by the Company
to the optionee (or to the successor owner of the stock if
the optionee has died).
(iv) The shares for which the option is exercised shall be issued
to and registered in the name of the person exercising the
option but shall be endorsed by the person exercising the
option in blank (either on the certificate or on a separate
stock power) and held by the Company as collateral security
for the unpaid balance of the purchase price. The person
exercising the option shall not be permitted to sell,
withdraw, pledge or otherwise dispose of all or any part of
such collateral except at a time when such sale, withdrawal,
pledge or other disposition is permitted by Regulation U.
Subject to compliance with the immediately preceding
sentence, the person exercising the option shall have the
right at any time and from time to time to withdraw part or
all of the shares from the collateral so held by the Company
upon payment of the unpaid balance of the purchase price of
the shares withdrawn. For purposes of determining such
unpaid balance, each payment made otherwise than to obtain
withdrawal of shares under the immediately preceding
sentence shall be applied pro rata to all shares which at
the time of such payment are held by the Company as
collateral for the payment of the purchase price by the
person exercising the option. Upon default by the person
exercising the option in the making of any payment due under
the foregoing provisions of this subparagraph (d), the
Company shall have with respect to the collateral all of the
rights of a secured party under the Uniform Commercial Code
as in effect in the State of New York.
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(E) The person exercising an option shall be entitled, from
the date of exercise of such option, to all of the
rights of a shareholder, including the right to vote
the shares and to receive and retain all dividends paid
thereon.
(e) The Committee is authorized in its discretion and with the consent
of the optionee to make amendments, not in conflict with the Plan or any
applicable law or regulation, in the terms of any option granted under the
Plan.
(f) In addition to the methods of payment of the option exercise price
authorized by subparagraph (d) next above, the option may provide that the
person exercising the option, at his or her election, shall have the right
to make payment at the time of exercise by delivering to the Company shares
of Common Stock of the Company having a total fair market value equal to
the option exercise price, or a combination of cash and such shares having
a total fair market value equal to the option exercise price, provided,
however, that all shares so delivered must have been beneficially owned by
the person exercising the option for at least six months prior to the
option exercise date and, upon request, the Company shall be given
satisfactory proof of such beneficial ownership. For the purposes of the
preceding sentence, the fair market value of a share of Common Stock shall
be the mean between the high and low sale prices of the Common Stock on the
trading day preceding the option exercise date as such prices are reported
by and for the New York Stock Exchange, Inc. Composite Transactions.
Certificates representing shares delivered to the Company pursuant to this
paragraph shall be duly endorsed or accompanied by appropriate stock
powers, in either case with signature guaranteed if so required by the
Company.
5. Change in Control.
(a) In the event of a "Change in Control" of the Company (as defined
in paragraph (b) below), options outstanding under the Plan on the day
preceding the date on which the Change in Control occurs (x) shall become
exercisable in full on the date of the Change in Control (i.e., to the
extent that any such option or portion thereof is not yet exercisable, the
right to exercise such option in full shall be accelerated) and (y) shall
remain fully exercisable, irrespective of whether the optionee ceases to be
an employee of the Company or a subsidiary, until the date on which the
option would otherwise expire by its terms by the passage of time.
(b) A "Change in Control" for purposes of the Plan shall mean the
occurrence of any of the following:
(i) the "Distribution Date" as defined in Section 3 of the
Rights Agreement dated as of November 17, 1989 between the
Company and United States Trust Company of New York, as
Rights Agent as
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the same may have been amended or extended to the time in
question or in any successor agreement (the "Rights
Agreement"); or
(ii) any event described in Section 11(a)(ii)(B) of the Rights
Agreement; or
(iii)any event described in Section 13 of the Rights Agreement,
or
(iv) the date on which the number of duly elected and qualified
directors of the Company who were not either elected by the
Company's 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 Company 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 pursuant to
paragraph (a) of this Section 5 shall exist, to the extent that the Board
of Directors of the Company so determines by resolution adopted prior to
the Change in Control. Any such resolution may be rescinded or
countermanded by the Board at any time. If the Board so determines by such
resolution, and such resolution has not been rescinded or countermanded as
permitted by the preceding sentence, the Board shall have the right to
authorize (I) the cancellation and termination of all options then
outstanding as of a date to be fixed by the Board, provided, however, that
not less than 30 days written notice of the date so fixed shall be given to
each optionee, and each optionee shall have the right during such period
(irrespective of whether the optionee ceases to be an employee of the
Company or a subsidiary during such period) to exercise his or her option
as to all or any part of the shares covered thereby, including any shares
as to which the option has not yet become exercisable, or (II) the
substitution for each outstanding option of a new option meeting the
requirements of Section 424(a) of the Code.
6. Interpretation. The words "employee", "own", "outstanding" and
"disposition", the term "subsidiary corporation" and any other words or terms
used in the Plan or in the options granted under the Plan which are defined or
used in Section 422 or 424 of the Code shall, unless the context clearly
requires otherwise, have the meanings assigned to them therein, irrespective of
whether or not such options are incentive stock options.
7. Reports and Returns. The appropriate officers of the Company shall cause
to be filed, or furnished to all employees to whom options have been granted,
any reports, returns or other information regarding the options granted
hereunder or any shares issued pursuant to the exercise thereof as may be
required by the Code, the Securities Act, the Exchange Act, the Employee
Retirement Income Security Act of 1974, Regulation U or any other applicable
statute, rule or regulation, as any such statute, rule or regulation has been
amended to the time in question.
8. Amendment. The Plan may be amended at any time and from time to time by
the Board of Directors of the Company, but no amendment increasing the aggregate
number of shares
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which may be issued under options granted pursuant to the Plan or affecting this
sentence shall be effective unless the same be approved by the shareholders of
the Company not later than the date 12 months after the Board adopts the
amendment. No amendment of the Plan shall alter or impair any of the rights or
obligations of any person, without his or her consent, under any option
theretofore granted under the Plan.
9. Termination. The Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) upon the adoption of a resolution of the Board of Directors of the
Company terminating the Plan; or
(b) July 6, 2008.
No termination of the Plan shall alter or impair any of the rights or
obligations of any person, without his or her consent, under any option
theretofore granted under the Plan.
10. Shareholder Approval. The Plan shall be submitted to the shareholders
of the Company for their approval before July 7, 1999. No option granted
hereunder shall be exercisable until such approval has been obtained. If the
shareholders do not approve the Plan before July 7, 1999, the Plan shall
terminate and any options theretofore granted hereunder shall thereupon be void
without further action of the Company. The shareholders shall be deemed to have
approved the Plan only if it is approved at a meeting of the shareholders duly
held before July 7, 1999, by vote taken in the manner required by the laws of
the State of New York.
[Note: This Plan was adopted by the Board of Directors on
July 7, 1998, approved by shareholders at the annual meeting
on November 19, 1998 and amended by the Board of Directors
on July 12, 2000 subject to shareholder approval; the
amendment was approved by shareholders at the annual meeting
held on November 15, 2000.]
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