EX-10.3






Exhibit 10.3




AMENDMENT DATED DECEMBER 31, 2008 TO EMPLOYMENT AGREEMENT




          The AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated June 1, 2004 between PALL CORPORATION, a
New York Corporation (the “Company”) and Lisa McDermott (“Executive”) as amended by amendments
dated May 3, 2006, and July 18, 2006 (said Amended and Restated Employment Agreement as so amended
being hereinafter called the “Agreement”) is hereby further amended as follows:





	 	1.	 	Section 4(c) is amended by the addition of the following at the end of Section 4(c):
	 
	 	 	 	In addition, any of Executive’s restricted stock units not yet vested under the 2005 Stock
Compensation Plan, as amended (the “Stock Plan”), outstanding on the date on which a Change
in Control (as defined in the Stock Plan) occurs will vest on such date.






	 	2.	 	Section 4 is amended to add paragraphs (d) and (e) as follows:






(d) Payments Upon Notice. If, in connection with any notice given under Section 1
or 4(c), upon written consent of the Company, the Executive no longer performs any services
for the Company under Section 2 of this Agreement or otherwise and Executive experiences a
“separation from service” as determined under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and the rules and regulations issued thereunder (“Section
409A”) (“separation from service”) then subject to Executive’s compliance with Section 16
below (where applicable) and with Executive’s other continuing obligations under Section 5
below, Executive will receive the following compensation and benefits under this Agreement
in lieu of any compensation or benefits to which he might otherwise be entitled under
Section 3 of this Agreement or any benefit plans referenced therein:




	 	(i)	 	Any Plan Bonus or pro rata portion thereof (based on actual Company performance
for the full fiscal year as certified by the Compensation Committee and taking into
account any negative discretion the Compensation Committee has the right to exercise)
that Executive may be entitled to receive under the Bonus Plan with respect to the year
in which Executive’s separation from service takes place, less any amount Executive
elected to defer under the Management Stock Purchase Plan, paid in accordance with the
terms of the Bonus Plan..
	 
	 	(ii)	 	Each month for a period of 12 consecutive months, beginning with the month
following the month in which Executive’s separation from service occurs, the Company
shall make a payment in an amount equal to (X) the sum of (1) Base Salary at the annual
rate at which Executive’s Base Salary was payable immediately prior to Executive’s
separation from service and (2) the amount determined under clause (X)(1) multiplied by
70% of the Target Bonus Percentage, divided by (Y) 12; provided that on any August
1st occurring after Executive’s separation from service, the annual rate of
Base Salary set forth in




 









 












(X)(1) shall be adjusted for changes in the Consumer Price Index in the manner set
forth in Section 3(d) hereof). Each installment will be paid on the first business
day of the applicable month.




	 	(iii)	 	During the period beginning on the date of Executive’s separation from service
and ending on the one-year anniversary thereof, any of Executive’s restricted stock
units not yet vested under the 2005 Stock Compensation Plan, as amended (the “Stock
Plan”), outstanding on the date of Executive’s separation from service will not be
cancelled, but will continue to vest and be settled in the manner and at the times set
forth in their grant agreements and the Stock Plan as though Executive had not
experienced a separation from service until such one-year anniversary. For the sake of
clarity, if by their terms Executive’s restricted stock units vest upon a Change in
Control (as defined in the Stock Plan), such vested units will be settled in accordance
with the terms of their grant agreements and the Stock Plan as though Executive had not
experienced a separation from service until the one-year anniversary of Executive’s
separation from service.
	 
	 	(iv)	 	(A) During the period beginning on the date of Executive’s separation from
service and ending on the one-year anniversary thereof, any of Executive’s units not
yet vested under the Management Stock Purchase Plan, as amended (the “MSPP”), as of the
date of Executive’s separation from service will not be cancelled, but will continue to
be settled in the manner and at the times set forth under the MSPP as though Executive
had not experienced a separation from service until such one-year anniversary.






(B) Any vested units Executive had previously deferred under the MSPP, to the extent
payable upon a Termination of Employment (as defined in the MSPP), will be paid on
the one-year anniversary of Executive’s separation from service.




	 	(v)	 	Any monthly pension to which Executive is entitled under the Pall Corporation
Supplementary Pension Plan (the “SPP”) will be calculated at the time of the one-year
anniversary of Executive’s separation from service and will commence payment on the
later of the first day of the month after Executive has attained her Early Retirement
Date (as defined in the SPP) and the one-year anniversary of Executive’s separation
from service. Upon separation from service, Executive shall be credited with one year
of age and one year of service for purposes of eligibility and vesting under the SPP.
	 
	 	(vi)	 	During the period beginning on the date of Executive’s separation from service
and ending on the one-year anniversary thereof, Executive shall continue to participate
in the Company’s Comprehensive Welfare Benefits Plan, to the extent permitted by such
Plan; provided all expenses are incurred, and in-kind benefits provided, prior to such
one-year anniversary and all expenses are reimbursed within 12 months following such
one-year anniversary.
	 
	 	(vii)	 	In the event that Executive gives notice under Section 4(c):




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(A) for purposes of Section 4(d)(ii), Executive will cease to receive such monthly
payments on the date specified in the notice given by the Executive (and not on the
one-year anniversary of separation from service) and




(B) for purposes of Section 4(d)(iv)(A), the period of such continued vesting and,
for purposes of Sections 4(d)(iii) and (iv)(A), the period of such continued
settlement shall end on the date specified in the notice given by Executive (and not
on the one-year anniversary of separation from service), provided, however, that any
units the settlement date for which under Sections 4(d)(iii) and (iv)(A) would have
been the one-year anniversary of separation from service shall continue to be
settled on such one-year anniversary.




(e) Supplementary Pension Plan. In no event will any monthly pension to which
Executive is entitled under the SPP commence payment prior to the one-year anniversary of
Executive’s separation from service, except that on or after the date executive attains 65
years of age, upon a separation from service for any reason, the monthly pension shall be
payable at the time and in the form set forth under the terms of the SPP.




	 	3.	 	Section 5 is renamed “Restrictive Covenants”, the paragraph that currently
comprises Section 5 is designated “(a) Covenant Not to Compete.”, and the following is
added at the end of Section 5:






(b) Non-Disparagement. While employed by the Company, and for a period of 18 months after
the end of the Term of Employment if the Term of Employment is terminated by notice to the
Company given by Executive under Sections 1 or 4 hereof, or for a period of 12 months after
the end of the Term of Employment if the Term of Employment is terminated by notice to
Executive given by the Company under Section 1 or Section 4 hereof or terminated under
Section 4 by reason of Executive’s attaining the age of 65 (the “Non-Disparagement Period”),
Executive shall not make any disparaging or untruthful remarks concerning the Company or any
of its subsidiaries, or their officers, directors, employees or agents, whether acting in
their individual or representative capacities. Executive shall not be deemed to have
breached Executive’s obligations under the foregoing sentence if during Executive’s
employment with the Company Executive criticizes the job performance of employees who report
to Executive, as part of such employees’ performance reviews and evaluations, provided such
remarks are made in the ordinary course of business, not malicious or unfounded, are not
publicly made or widely disseminated and are not in violation of Executive’s obligations to
comply with laws, regulations and Company policies and procedures. Additionally, in the
event that Executive is requested or required (by oral questions, interrogatories, requests
for information or documents, subpoena or similar process) to disclose during the
Non-Disparagement Period any information that may be disparaging, Executive shall comply
with such requests, provided that Executive shall give the Company prompt notice of any such
request so that the Company may seek an appropriate protective order, and provided that
Executive shall comply with the terms of any protective order so obtained. Similarly,
during the Non-Disparagement Period, the Company shall not make any disparaging or
untruthful remarks concerning the Executive, except that the Company shall not be deemed to
have breached its obligations hereunder: (i) if during the



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Executive’s employment with the Company, any Company director, employee, agent or
representative criticizes the Executive’s job performance as part of performance reviews and
evaluations or in response to questions from members of management, the board of directors
or Company advisors, provided such remarks are made in the ordinary course of business, not
malicious or unfounded, are not publicly made or widely disseminated and are not in
violation of laws, regulations and Company policies and procedures, or (ii) in the event
that the Company is requested or required (by oral questions, interrogatories, requests for
information or documents, subpoena or similar process) to disclose during the
Non-Disparagement Period any information that may be disparaging, the Company complies with
such requests, provided that the Company shall give the Executive prompt notice of any such
request so that the Executive may seek an appropriate protective order, and provided that
the Company shall comply with the terms of any protective order so obtained.




(c) Non-Solicitation of Employees or Customers. While employed by the Company, and during
the Non-Disparagement Period, Executive will not (i) indirectly or directly solicit,
encourage, induce, or recruit any person who is then an employee of the Company or any of
its subsidiaries to seek or accept employment with any other employer, or (ii) indirectly or
directly solicit, encourage, or induce any customer of the Company to become the customer of
any business that 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 Section 1
following a Change in Control (as defined in the Bonus Plan), the foregoing non-solicitation
covenant shall not apply.




	 	4.	 	Section 6 of the Agreement is amended by adding the following at the end of such
Section:
	 
	 	 	 	The parties also acknowledge and agree that, if, in any judicial proceeding, a court shall
deem any of the restrictive covenants in Section 5(a) or 5(c), invalid, illegal or
unenforceable because its scope is considered excessive, such restrictive covenant shall be
modified so that the scope of the restrictive covenant is reduced only to the minimum extent
necessary to render the modified covenant valid, legal and enforceable, and if any such
restrictive covenant (or portion thereof) is deemed invalid, illegal or unenforceable in any
jurisdiction, as to that jurisdiction such restrictive covenant (or portion thereof) shall
be ineffective to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining restrictive covenants (or portion thereof) in such
jurisdiction or rendering that or any other restrictive covenant (or portion thereof)
invalid, illegal, or unenforceable in any other jurisdiction. The parties hereto intend
that the validity and enforceability of any provision of this Agreement shall not affect or
render invalid any other provision of this Agreement.
	 
	 	5.	 	Section 15 of the Agreement is renamed “Section 409A”, the paragraph that currently
comprises Section 15 is designated “(a) Delay in Payment”, and the following is added to
the end of Section 15:






(b) Section 409A Compliance. This Agreement is intended to comply with the
requirements of Section 409A or an exemption and shall in all respects be administered



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and interpreted in accordance with Section 409A. Notwithstanding anything in the Agreement
to the contrary, distributions upon termination of employment may only be made upon a
“separation from service” as determined under Section 409A and each installment of any
payments and benefits provided to the Executive under this Agreement that would be
considered to be deferred compensation (within the meaning of Treasury Regulation Section
1.409A-1(b)(1)) will be treated as a separate “payment” for purposes of Section 409A. In
the event the parties determine that the terms of this Agreement do not comply with Section
409A, they will negotiate reasonably and in good faith to amend the terms of this Agreement
such that it complies (in a manner that attempts to minimize the economic impact of such
amendment on Executive and the Company) within the time period permitted by Section 409A.
In no event shall the Company be required to pay Executive any gross-up or other payment
with respect to any taxes or penalties imposed under Section 409A with respect to any
benefit paid to Executive hereunder.




	 	6.	 	New Section 16 is hereby appended to the Agreement, and reads in its entirety as
follows:
	 
	 	 	 	Release.
	 
	 	 	 	The payments and benefits under Section 4(d)(ii), (iii), (iv), (vi) and (vii) are subject to
the condition that Executive has delivered to the Company an executed copy of a release
substantially in the form attached hereto as Exhibit A (with such changes as may be required
under applicable law) and such release has become irrevocable within 30 days after the date
of Executive’s separation from service. In that event, payment that otherwise would have
been made within such 30-day period shall be paid at the expiration of such 30-day period;
provided that any payments or benefits payable by reason of the death of Executive shall not
be subject to the condition set forth in this Section 16.




IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first
above written.




PALL CORPORATION




	 	 	 	 	 
	By: 

Name:

	 	/s/ ERIC KRASNOFF
 

Eric Krasnoff
	 	 
	Title:

	 	Chairman and Chief Executive Officer	 	 






EXECUTIVE




	 	 	 
	/s/ LISA MCDERMOTT
 


	 	 






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Exhibit A




GENERAL RELEASE




          1. Release of Claims and Waiver of Rights.




          (a) In consideration of any payments and benefits being provided to me under Section 4(d)(ii),
(iii), (iv), (vi) and (vii) of the amended and restated employment agreement (the “Employment
Agreement”) dated June 1, 2004, as it may have been amended to the date hereof, between me and Pall
Corporation (the “Company”), those payments and benefits being good and valuable consideration, the
adequacy and sufficiency of which are acknowledged by me (the “Payments”), I, Lisa McDermott,
hereby release, remise and acquit Company, its present and past parents, subsidiaries and
affiliates, their successors, assigns, benefit plans and/or committees, and their respective
present or past officers, directors, managers, supervisors, employees, shareholders, attorneys,
advisors, agents and representatives in their individual and corporate capacity, and their
successors and assigns (the “Releasees”), from, and hold them harmless against, any and all claims,
obligations, or liabilities (including attorneys, fees and expenses), asserted or unasserted, known
or unknown, that I, my heirs, successors or assigns have or might have, which have arisen by reason
of any matter, cause or thing whatsoever on or prior to the date on which this General Release is
signed.




          (b) The terms “claims, obligations, or liabilities” (whether denominated claims, demands,
causes of action, obligations, damages or liabilities) include, but are not limited to, any and all
claims under any contract with the Company, claims of age, disability, race, religion, national
origin, sex, retaliation, and/or other forms of employment discrimination, breach of express or
implied contract, breach of employee handbook, practices or procedures, libel, slander, intentional
tort or wrongful dismissal, claims for reinstatement or reemployment, arising under any federal,
state, or local common or statutory law; claims for unpaid salary, commission or fringe benefits;
or any other statutory claim before any state or federal court, tribunal or administrative agency,
arising out of or in any way related to my employment relationship with the Company and its
affiliates and the termination of that relationship. I will not file or permit to be filed on my
behalf any such claim.




          (c) This General Release constitutes, among other things, a waiver of all rights and claims I
may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. 621, et seq.) (“ADEA”),
the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of
the United States Civil Rights Act of 1964, all as amended including the amendment set forth in 42
U.S.C. § 1981 concerning damages in cases of intentional discrimination in employment, the New York
State Human Rights Law, including N.Y. Exec. Law § 296, the New York City Human Rights Law,
including § 8-107 of the Administration Code and Charter of New York City, and the New York Labor
Law, and any other comparable national or state laws, all as amended.




          (d) Notwithstanding the preceding paragraph (c) or any other provision of this Agreement, this
General Release is not intended to interfere with my right to file a charge with the Equal
Employment Opportunity Commission (the “EEOC”) in connection with any claim I believe I may have
against the Company or its affiliates. However, by executing this General



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Release, I hereby waive the right to recover in any proceeding I may bring before the EEOC or
any state human rights commission or in any proceeding brought by the EEOC or any state human
rights commission on my behalf. In addition, this General Release is not intended to interfere with
my right to challenge that my waiver of any and all ADEA claims pursuant to this General Release is
a knowing and voluntary waiver, notwithstanding my specific representation that I have entered into
this General Release knowingly and voluntarily.




          (e) This General Release is for any relief, no matter how denominated, including, but not
limited to, injunctive relief, wages, back pay, front pay, compensatory damages, or punitive
damages.




          (f) This General Release shall not apply to any rights in the nature of indemnification which
I may have with respect to claims against me relating to or arising out of my employment with the
Company and its affiliates or my service on their respective boards of directors, or any vested
benefit to which I am entitled under any tax qualified pension plan of the Company or its
affiliates, COBRA continuation coverage benefits or any other similar benefits required to be
provided by statute. Notwithstanding anything to the contrary contained in this Section 1, I do not
release any of the Releasees from the Company’s obligation to timely provide me with all payments
and benefits to which I am entitled pursuant to the terms of the Employment Agreement, or any other
obligations of the Company under the Employment Agreement.




     2. Continued Cooperation. In consideration of the Payments, I also agree to fully
cooperate with the Company with respect to any reasonable assistance the Company may request from
me upon reasonable notice to me, including but not limited to in connection with any legal claims,
demands, or causes of action against the Company which relate to or are based on events that arose
during the period of my employment with the Company. The Company shall pay me for such
cooperation, at an hourly rate, calculated on the basis of my regular salary (not including bonus
or any benefits) immediately prior to the termination of my employment with the Company, for each
hour of assistance that I provide to the Company at its request, and shall reimburse me for all
expenses I reasonably incur in connection with such cooperation, provided I deliver to the Company
an invoice(s) in respect of such amounts, which invoice details with reasonable sufficiency the
assistance provided and the number of hours spent providing such assistance. Notwithstanding the
foregoing, in no case shall the Company require me to provide such assistance on more than 20 days
in any year, nor shall the Company require me to travel outside the United States to provide such
assistance. A condition for me providing any such assistance is that the Company shall agree to
indemnify me for any and all liability I may incur in connection with providing such assistance to
the same extent as if I was still an executive officer of the Company.



     3. Representations and Covenants. I hereby represent and agree to all of the following:



          (a) I have carefully read this General Release.




          (b) I understand it fully.




          (c) I am freely, voluntarily and knowingly releasing the Releasees in accordance with the
terms contained above.




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          (d) Before executing this General Release, I had twenty-one (21) days to consider my rights
and obligations under this General Release.




          (e) The period of time I had to consider my rights and obligations under this General Release
was reasonable.




          (f) Before signing this General Release, I was advised to consult with an attorney and given a
reasonable period of time to do so and in executing this General Release have not relied on any
representation or statement not set forth herein.




          (g) Execution of this General Release and the General Release becoming enforceable (in
accordance with paragraph (h) below) within 30 days from the date of my “separation from service”
(as determined under Section 409A of the Internal Revenue Code of 1986, as amended, and the rules
and regulations issued thereunder) is a condition to the Payments, which payments and benefits are
in addition to anything of value to which I am already entitled to receive from the Company and its
affiliates.




          (h) For a period of seven (7) days following the date on which I sign this General Release, I
may revoke it. Any such revocation must be made in writing and received by the Corporate Secretary
of the Company, by the seventh day following the date on which I sign this General Release. The
Company’s obligation to pay the consideration as set forth in Section 1 above shall not become
effective or enforceable until this seven (7) day revocation period has expired without my having
exercised my right to revoke.




          (i) I have reported to the Company any and all work-related injuries incurred by me during my
employment by the Company.




          (j) There are no pending lawsuits, charges, employee dispute resolution proceedings,
administrative proceedings or other claims of any nature whatsoever, that I have brought (and which
are pending) against any Releasee, in any state or federal court, before any agency or other
administrative body or in any other forum.




          (k) I am not aware of any material violation of any laws or Company policies or procedures by
a Company employee or officer that has not been reported to Company officials.




          (l) My obligations under the Employee Agreement (attached hereto) including my obligations
under the sections entitled Covenant Not to Compete, Non-Disparagement, Non-Solicitation,
Inventions and Patents, Trade Secrets and Confidential Information, are reasonable, are necessary
to protect legitimate interests of the Company, and continue beyond the termination of my
employment and the execution of this General Release. If I violate my obligations under the
Employee Agreement and such violation causes material harm to the Company, I understand that, in
addition to other relief to which the Company may be entitled, the Company shall be entitled to
cease providing the Payments and benefits provided to me pursuant to Section 1 above unless such
violation is cured (if capable of being cured) within 30 days of notification by the Company to me
of such violation (and, following such cure, all suspended payments shall be made in a single lump
sum), and this General Release will remain in full force and effect.




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          (m) If I should hereafter make any claim or demand or commence or threaten to commence any
action, claim or proceeding against the Releasees with respect to any matter, cause or thing which
is the subject of the release under Section 1 of this General Release, this General Release may be
raised as a complete bar to any such action, claim or proceeding, and the applicable Releasee may
recover from me all costs incurred in connection with such action, claim or proceeding, including
attorneys’ fees.




          (n) If any provision of this General Release is declared illegal, invalid, or unenforceable by
any court of competent jurisdiction and cannot be modified to be enforceable, such provisions will
immediately become null and void, leaving the remainder of this General Release in full force and
effect, provided, however, that if the general release of all claims given by me herein is declared
illegal, invalid, or unenforceable, this General Release will become null and void and, to the
fullest extent permitted by law, any Payments (which are being provided to me as a result of my
execution of this General Release) which have not yet been made by the Company to me shall no
longer be required to be made.




          (o) Except as necessary to enforce my rights under this General Release or except as required
to comply with requirements of applicable law or an order or subpoena of a court of competent
jurisdiction (as to which I will notify the Company reasonably in advance of disclosure) or except
to the extent such information has become public knowledge, I shall keep confidential and not
disclose to any person, other than my spouse or attorneys, accountants and/or tax advisors who
shall be obligated to and agree to keep confidential, the existence, nature and terms of this
General Release, the amount and fact of any payment to me, any and all discussions, communications,
and correspondence leading to this General Release and any and all events, conduct, statements
and/or communications giving rise to or relating in any way to any and all claims, obligations or
liabilities, I have or may have. This General Release shall not be construed as an admission by the
Company or any other Releasee of any liability whatsoever for any damages, injuries or other
claims, obligations or liabilities alleged or which may be alleged by me.




          (p) This General Release shall be governed by and construed in accordance with the laws of the
State of New York, without regard to conflicts of laws principles.




          4. Declaration. I declare under penalty of perjury under the laws of the State of New York
that the foregoing is true and correct.




	 	 	 
	 

	 	Date:                                         
	 


	 	 
	Lisa McDermott
	 	 






Acknowledged before me this                                         




                                        , NOTARY PUBLIC





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