EX-4.3






Exhibit 4.3




PALL CORPORATION MANAGEMENT STOCK PURCHASE PLAN




1. PURPOSE.




     This document sets forth the Pall Corporation Management Stock Purchase Plan as amended and
restated effective as of January 1, 2009.



     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 members of a controlled group of corporations of which the
Corporation is a member. For purposes hereof, a “controlled group of corporations” means a
controlled group of corporations as defined in section 1563(a) of the Internal Revenue Code,
determined without regard to Section 1563(b)(2)(C).



     “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.



     “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 under 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.



     “CAUSE” shall have the meaning set forth in the Participant’s employment agreement, or, if
there is no definition therein, shall arise in the event that the Participant (i) fails or refuses
to substantially perform the duties of the Participant’s employment or otherwise violates this Plan
or any employment agreement with the Corporation, (ii) fails to comply with the written rules and
policies of the Corporation, (iii) engages in willful and serious misconduct in connection with the
Participant’s employment that has caused or would reasonably be expected to result in material
injury to the Corporation, (iv) engages in dishonesty or fraudulent conduct or (v) is convicted of,
or pleads nolo contendere to, a crime that constitutes a felony.



     “CEO” shall mean the Chief Executive Officer of the Corporation.



     “CHANGE IN CONTROL” means the occurrence of any of the following:




	 	(a)	 	the “Distribution Date” as defined in Section 3 of the Rights
Agreement dated as of November 17, 1989 between the Corporation and United
States Trust Company of New York, as Rights Agent as amended by Amendment No. 1
dated as of April 20, 1999 and as the same may have been further amended or
extended to the time in question or in any successor agreement (the “Rights
Agreement”); or
	 
	 	(b)	 	any event described in Section 11(a)(ii)(B) of the Rights
Agreement; or
	 
	 	(c)	 	any event described in Section 13 of the Rights Agreement; or
	 
	 	(d)	 	the date on which the number of duly elected and qualified
directors of the Corporation who were not either elected by the Board of
Directors or nominated by the Board of Directors or its Nominating Committee
for election by the shareholders shall equal or exceed one-third of the total
number of directors of the Corporation as fixed by its by-laws;




provided, however, that no Change in Control shall be deemed to have occurred, and no rights
arising upon a Change in Control as provided in Section 6 shall exist, to the extent that the Board
of Directors so determines by resolution adopted prior to the Change in Control.




     “CLOSING PRICE” shall mean, as of any date, the closing price of a share of Common Stock as
reported in the New York Stock Exchange Consolidated Transactions for such date.



     “CODE” shall mean the Internal Revenue Code of 1986, as amended.



     “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.



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     “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 Initial Award Restricted Unit Subaccount,
Purchased 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.



     “DELAYED PAYMENT DATE” shall mean the date on which payment with respect to a Participant’s
Post-2004 Bonus and Base Salary Units is to be made pursuant to Section 7(f)(i) or Section
7(f)(ii), or the date on which payment with respect to a Participant’s Deferred Vested Units is to
be made pursuant to Section 7(f)(iii).



     “DISABLED” shall mean, with respect to any Participant on or after January 1, 2005, that the
Participant (i) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months; or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under any accident and health plan
maintained by the Corporation or any of its Affiliated Companies for its employees.



     “DIVIDEND EQUIVALENT UNITS” shall mean additional Restricted Units or additional Deferred
Vested Units credited to a Participant’s Account pursuant to Section 5(f), Section 7(d)(vi) or
Section 7(f)(vi).



     “DIVIDEND PAYMENT DATE” shall mean each date on which the Corporation pays a cash 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 a Participant’s Termination of Employment initiated by
the Corporation, or by any of its Affiliated Companies, for any reason other than for becoming
Disabled or for Cause.



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     “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).



     “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.



     “POST-2004 BONUS AND BASE SALARY UNITS” shall mean, with respect to any Participant, (i) all
Restricted Units credited to the Participant after January 31, 2005 pursuant to elections made by
the Participant under Section 5(b), (ii) all Restricted Units credited to the Participant after
January 31, 2005 pursuant to elections made by the Participant under Section 5(c), and (iii) all
Dividend Equivalent Units credited to the Participant with respect to the Restricted Units
described in clauses (i) and (ii) of this paragraph.



     “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 a Participant’s Termination of Employment for any reason prior to the
Participant becoming Disabled (other than death or for Cause) 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 the Pall Corporation Cash Balance Pension Plan, as defined therein, 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.



     “SECTION 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, and any successor legislation or regulations.



     “TERMINATION OF EMPLOYMENT” shall mean (i) the cessation of a Participant’s employment with
the Corporation and all of its Affiliated Companies irrespective of the reason therefor and
irrespective of whether initiated by the Corporation, an Affiliated Company, the Participant or
otherwise, and (ii) for employees subject to taxation in the United States, a “separation from
service,” as defined in Section 409A.



     “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.




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     “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 under the Plan for the period
commencing January 24, 1999, 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 3,000,000 shares of Common Stock. If any Restricted Units initially
credited to a Participant 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 prior to Termination of
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, provided that any elections made by the
Participant under Section 5 or 7 of the Plan prior to such termination of eligibility shall remain
in effect.



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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. To the extent that the Compensation Committee in its sole discretion
so determines, any Employee who is designated as an Eligible Employee for the first time shall be
credited, as of the date specified by the Compensation Committee in such determination, with such
number of Restricted Units as the Compensation Committee may determine for such Employee, or the
Compensation Committee may determine not to grant any Initial Award Units to such Eligible
Employee.



     (b) BONUS UNITS. Each Eligible Employee 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 as of 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, as of the next
following day that is a Trading Day. In the event that an Eligible Employee’s Bonus is payable in
a unit of currency other than U.S. dollars, the portion of the bonus which the Eligible Employee
has elected to have paid in the form of Restricted Units shall be converted to U.S. dollars as of
the Crediting Date (the first Bonus Payment Date during the Plan Year in which such Bonus is
payable) at a rate equal to the exchange rate of such currency and U.S. dollars on such Crediting
Date as reported in The Wall Street Journal in its issue following the Crediting Date.



     (c) BASE SALARY UNITS. Each Eligible Employee 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 as of January
31 and 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 as of January 31, or from January 31, in the case of the Restricted Units to be credited
as of July 31, by (ii) the Closing Price of a share of Common Stock as of the applicable Crediting
Date or, if such date is not a Trading Day, as of the next following day that is a Trading Day. In
the event that an Eligible Employee’s base salary is payable in a unit of currency other than U.S.
dollars, the aggregate amount withheld shall be converted to U.S. dollars as of the January 31 or
July 31 Crediting Date, as the case may be, at a rate equal to the exchange rate of such currency
and U.S. dollars on such Crediting Date as reported in The Wall Street Journal in its issue
following the Crediting Date.



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     (d) CASH PAYMENT UNITS. Prior to January 1, 2009, for any Plan Year each Eligible Employee
may make a direct cash payment to the Corporation at least seven days prior to (i) the first Bonus
Payment Date during such Plan Year and/or (ii) January 31 of such Plan Year, and the Crediting
Dates with respect to such direct cash payments shall be (x) the first Bonus Payment Date of the
Plan Year with respect to cash payments made at least seven days prior to such Bonus Payment Date
and (y) January 31 with respect to cash payments made at least seven days prior to that date. On
and after January 31, 2009, for any Plan Year each Eligible Employee may make a direct cash payment
to the Corporation within seven days following (a) the first Bonus Payment Date during such Plan
Year and/or (b) January 31 of such Plan Year, and the Crediting Dates with respect to such direct
cash payments shall be (1) the eighth day following the first Bonus Payment Date of the Plan Year
with respect to cash payments made within the seven days following such Bonus Payment Date and (2)
the eighth day following January 31 with respect to cash payments made within the seven days
following that date. In the event that an Eligible Employee’s direct cash payment is made in a
unit of currency other than U.S. dollars, the amount of such payment shall be converted to U.S.
dollars as of the relevant Crediting Date, at a rate equal to the exchange rate of such currency
and U.S. dollars on such Crediting Date as reported in The Wall Street Journal in its issue
following the Crediting Date.



     The aggregate amount of the direct cash payments that an Eligible Employee may make under this
Section 5(d) during any Plan Year (the “Cash Purchase Year”) shall not exceed the sum of (I) the
amount by which 50% of the Eligible Employee’s base salary for the Plan Year immediately preceding
the Cash Purchase Year exceeds the portion thereof which the Eligible Employee has elected under
Section 5(c) to have paid in the form of Restricted Units, plus (II) the amount by which the Bonus
payable to the Eligible Employee during the Cash Purchase Year (based on results of operations for
the immediately preceding 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 100% of the number of Restricted Units of all kinds (other than Dividend
Equivalent Units).



     (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 Initial Award Restricted
Unit Subaccount, for each Purchased 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 as
of 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.



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     (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 any Plan Year shall be made no less than one year before the beginning of
such Plan Year (e.g., an election with respect to the Bonus payable during the Plan Year
beginning August 1, 2008 (based on the application of the bonus formula to the fiscal year
ending July 31, 2008), must be made by the last Business Day of July 2007).




     (iii) An election under Section 5(c) with respect to base salary payable to 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, except as otherwise provided under subparagraph (iv) or (v)
below.




     (iv) In the case of any Eligible Employee who, in the absence of any election under
Section 5(c) with respect thereto, would be required to include in his or her gross income
for U.S. federal income tax purposes the base salary payable to the Eligible Employee during
any Plan Year, any such election with respect to base salary payable to the Eligible
Employee during the period from August 1 through December 31 of such Plan Year shall be made
on or prior to the close of the calendar year immediately preceding the start of such Plan
Year, and any such election with respect to base salary payable to the Eligible Employee
during the period from January 1 through July 31 of such Plan Year shall be made on or prior
to the last Business Day preceding the start of such Plan Year.




     (v) 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.




     (vi) 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



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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.




     (vii) 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 has a Termination of
Employment 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
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 be paid in such form
subject to the terms of his or her applicable election.




     (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 has a Termination
of Employment 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, Restricted Units shall be so credited on such date subject to the terms of
his or her election.




     (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 401(k) 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 Initial Award Restricted
Unit Subaccount, Purchased 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 as of the earliest to occur of the following dates:




     (i) the fourth anniversary of the Crediting Date for any such Subaccount,




     (ii) the date of the Participant’s death,




     (iii) the date on which the Participant becomes Disabled,



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     (iv) the date on which a Change in Control occurs.



     (b) If a Participant’s Termination of Employment occurs as a result of Retirement or
Involuntary Termination prior to the fourth anniversary of a Crediting Date and prior to (1) the
Participant’s death, (2) the Participant becoming Disabled, or (3) the occurrence of a Change in
Control, then for any Initial Award Restricted Unit Subaccount, Purchased Restricted Unit
Subaccount or Matching Restricted Unit Subaccount maintained for the Participant under Section 8 as
of the date of the Participant’s Termination of Employment:




     (i) all Units in any such Purchased Restricted Unit Subaccount (including all such
Units that are Dividend Equivalent Units), shall become vested;




     (ii) the Earned Portion (as defined below) of all Units in any such Initial Award
Restricted Unit Subaccount and 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 Initial Award
Restricted Unit Subaccount and 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 Initial Award
Restricted Unit Subaccount and in any Matching Restricted Unit Subaccount maintained for a
Participant shall mean the percentage of such Units determined by dividing by 48 the number of
months in the period beginning as of the Crediting Date for such Subaccount and ending as of 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 Termination of Employment occurs for any reason other than Retirement
or Involuntary Termination prior to the fourth anniversary of a Crediting Date and prior to the
Participant’s death, the Participant becoming Disabled, or the occurrence of a Change in Control,
then for any Initial Award Restricted Unit Subaccount, Purchased Restricted Unit Subaccount or
Matching Restricted Unit Subaccount maintained for the Participant under Section 8 as of the date
of the Participant’s Termination of Employment:




     (i) all Units in any such Initial Award Restricted Unit Subaccount and 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 Purchased Restricted Unit Subaccount (including all such
Units that are Dividend Equivalent Units) shall become vested.



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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, within 30
days after the Vesting Date for such Units, except as otherwise provided in paragraph (d), (f)(i)
or (f)(ii) below.



     (b) FORM AND AMOUNT OF PAYMENT. Except as provided in paragraph (c) below, payment to be made
with respect to any of a Participant’s Vested Units at the time specified in paragraph (a) above,
or at the time specified in paragraph (f)(i) below, 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
Vested Units payment for which is to be made at such time (including, in the case of any Vested
Units payment for which is to be made under paragraph (f)(i), all Dividend Equivalent Units
credited with respect to such Vested Units pursuant to paragraph (f)(vi) below), and (ii) a cash
payment for any fractional part of a Unit payment for which is to be made at such time. The amount
of such cash payment shall be determined by multiplying such fractional part by the Closing Price
of a share of Common Stock as of the first Trading Day preceding the date of payment. Any amount
of such cash payment determined to be less than $5 shall be forfeited and the Participant shall
have no further rights with respect thereto.



     (c) PAYMENT ON ACCOUNT OF CERTAIN TERMINATIONS. Payment to be made at the time specified in
paragraph (a) above, or at the time specified in paragraph (f)(ii) below, with respect to a
Participant’s Units that become vested pursuant to Section 6(c)(ii) shall be made, in either case,
in the form of a single lump sum payment of shares of Common Stock by the issuance of a number of
shares of Common Stock determined by dividing the lesser of (x) the aggregate value of the number
of such Units payment for which is to be made at such time, determined by multiplying such number
of Units by the Closing Price of a share of Common Stock as of the date or dates on which such
Units were credited to the Participant’s Account, or (y) the aggregate value of the number of such
Units payment for which is to be made at such time, determined by multiplying such number of Units
by the Closing Price of a share of Common Stock as of the Vesting Date for such Units, by (z) the
Closing Price of a share of Common Stock on such Vesting Date or, if such Vesting Date was not a
Trading Day, the Closing Price of a share of Common Stock as of the first Trading Day preceding
such Vesting Date. If payment for any of such Units is to be made at the time specified in
paragraph (f)(ii) below, such lump sum payment with respect to such Units shall consist of the
number of shares of Common Stock determined in accordance with the preceding sentence, plus the
number of Dividend Equivalent Units credited with respect to such Units pursuant to paragraph
(f)(vi) below. If the total number of shares of Common Stock determined in accordance with the
provisions of either of the two preceding sentences 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 as of the first Trading Day
preceding the date of payment, at the same time as the shares of Common Stock are
issued. Any amount of such cash payment determined to be less than $5 shall be forfeited and
the Participant shall have no further rights with respect thereto.



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     (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”).




     (iii) The Participant may select, as the Payment Date for such Units,




     (A) the first Business Day of any calendar year or month after the fifth
anniversary of the Vesting Date for such Units;




     (B) the later of (x) the first Business Day of the calendar year following the
date on which the Participant’s Termination of Employment occurs for any reason or
(y) the first Business Day of the calendar month following the fifth anniversary of
the Vesting Date for such Units; or




     (C) the earlier of (A) or (B).




     (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 as of the 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



Page 12 of 19









 







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 or, if applicable, on the Delayed Payment Date for such
Units provided in paragraph (f)(iii) below. Payment with respect to the Deferred Vested
Units payable on any Payment Date or Delayed Payment Date shall be made in a single lump sum
(A) by the issuance of one share of Common Stock for each whole Deferred Vested Unit payable
on such Payment Date or Delayed Payment Date, and (B) by a cash payment for any fractional
part of a Deferred Vested Unit payable on such Payment Date or Delayed 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. Any amount of such cash payment determined to be less than $5 shall be forfeited
and the Participant shall have no further rights with respect thereto.




     (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 or her deferral election for such Units if (A) the
Participant requests such early payment and (B) the Committee, in its sole discretion,
determines that such early payment is necessary to help the Participant meet an
“unforeseeable emergency” within the meaning of Section 409A of the Code. The amount that
may be so paid may not exceed the amount permitted to be paid under Section 409A of the
Code.



     (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 prior to such election becoming irrevocable, 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) 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 401(k) Plan.




     (iii) 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.



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     (f) DELAY IN TIME FOR PAYMENT. To the extent provided in subparagraph (i), (ii) or (iii)
below, payment otherwise required to be made with respect to any of a Participant’s Vested Units at
the time specified in paragraph (a) above, and payment otherwise required to be made with respect
to any of Participant’s Deferred Vested Units on the Payment Date for such Units determined under
clause (B) or (C) of paragraph (d)(iii) above, shall not be made at such times but shall be made,
instead, at the times provided in subparagraph (i), (ii) or (iii) below.




     (i) Payment with respect to any of a Participant’s Post-2004 Bonus and Base Salary
Units that become vested pursuant to Section 6(a)(iv) by reason of the occurrence of a
Change in Control shall be made within 30 days after (A) the earliest date on which such
Units otherwise would become vested under Section 6(a) in the absence of the occurrence of a
Change in Control, or (B) if earlier, the date of the Participant’s Termination of
Employment for any reason prior to the Participant’s death or the Participant’s having
become Disabled; provided, however, that if the Participant was a Key Employee (as defined
in subparagraph (iv) below) immediately prior to such Termination of Employment, payment
pursuant to this clause (B) shall be made on the day that is 6 months after the date of such
Termination of Employment or, if the Participant dies before that day, shall be deemed paid
into a constructive trust for the benefit of the Beneficiary upon the Participant’s death,
and distributed from such trust to such Beneficiary within 7 days after the Corporation
receives written notice of the Participant’s death.




     (ii) In the case of a Participant whose Termination of Employment occurs for any reason
prior to the Participant’s death or the Participant having become Disabled, and who was a
Key Employee immediately prior to his or her Termination of Employment, payment with respect
to any of the Participant’s Post-2004 Bonus and Base Salary Units that become vested
pursuant to Section 6(b) or (c) by reason of the Participant’s Termination of Employment
shall be made on the day which is 6 months after the date of the Participant’s Termination
of Employment or, if the Participant dies before such day, shall be deemed paid into a
constructive trust for the benefit of the Beneficiary upon the Participant’s death, and
distributed from such trust to such Beneficiary within 7 days after the Corporation receives
written notice of the Participant’s death.




     (iii) In any case where (A) any of a Participant’s Deferred Vested Units that became
vested on or after January 1, 2005 have a Payment Date determined by reference to the date
of the Participant’s Termination of Employment pursuant to clause (B) or (C) under paragraph
(d)(iii) above, (B) the Payment Date for such Units, as so determined, is earlier than 6
months after the date of the Participant’s Termination of Employment, (C) the Participant’s
Termination of Employment occurs for any reason prior to the Participant’s death or the
Participant having becoming Disabled, and (D) the Participant is a Key Employee immediately
prior to the Participant’s Termination of Employment, payment with respect to such Deferred
Vested Units shall be made on the day which is 6 months after the date of the Participant’s
Termination of Employment or, if the Participant dies before such day, shall be deemed paid
into a constructive trust for the benefit of the Beneficiary upon the Participant’s death,
and distributed from such trust to such Beneficiary within 7 days after the Corporation
receives written notice of the Participant’s death.



Page 14 of 19









 







     (iv) For purposes of this paragraph (f), the term “Key Employee” shall mean a
Participant who, as of any date of reference, is a “specified employee” within the meaning
of Section 409A.




     (v) The provisions of subparagraph (i) and (ii) above shall not apply to the payment
required to be made under this Section 7 with respect to a Participant’s Units that become
vested upon the occurrence of a Change in Control, or to the payment required to be made
under this Section 7 with respect to a Participant’s Units that become vested upon the
Participant’s Termination of Employment, if in either case the Participant would not be
required to include such payment in his or her gross income for federal income tax purposes
if such payment were made to the Participant at the time specified in paragraph (a) above.
The provisions of subparagraph (iii) above shall not apply to the payment required to be
made under this Section 7 with respect to any of a Participant’s Deferred Vested Units if
the Participant would not be required to include such payment in his or her gross income for
federal income tax purposes if such payment were made to the Participant on the Payment Date
for such Units determined under paragraph (d)(iii) above.




     (vi) If payment with respect to any of a Participant’s Post-2004 Bonus and Base Salary
Units is delayed pursuant to subparagraph (i) or subparagraph (ii) above, Dividend
Equivalent Units shall be credited to the Participant’s Account with respect to such Units,
in the same manner as provided in paragraph (d)(vi) above, on each Dividend Payment Date
occurring during the period from the Vesting Date for such Units to the Delayed Payment Date
for such Units.



     (g) 409A COMPLIANCE. This Plan is intended to comply with the requirements of Section 409A
and shall in all respects be administered and interpreted in accordance with Section 409A. Where
amounts are payable to the Participant under the Plan within a fixed period, in no event may a
Participant, directly or indirectly, designate the calendar year of any payment to be made under
this Plan. In no event shall the Company be required to pay a Participant any gross-up or other
payment with respect to any taxes or penalties imposed under Section 409A with respect to any
amounts paid or payable to the Participant hereunder.



8. ACCOUNTS.




     There shall be established on the books and records of the Corporation, for bookkeeping
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: an “Initial Award 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); a “Purchased Restricted Unit Subaccount” to reflect all Restricted Units to be
credited to the Participant’s account on any Crediting Date pursuant to Section 5(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 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).




Page 15 of 19









 






     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 Initial Award Restricted Unit Subaccount, Purchased 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 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 Compensation 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.





Page 16 of 19









 








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. The payment of an amount
shall not result in an actual or potential reduction of, or current or future offset to, an amount
of deferred compensation, and the Participant shall receive no loan the repayment of which is
secured by or may be accomplished through an offset of or a reduction in an amount deferred under
the Plan.



     (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.



Page 17 of 19









 






     (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 July 15, 2003 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 (a) no amendment,
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 and (b) no amendment which constitutes a “material revision” of the Plan, as the term
material revision is defined in the applicable rules of the New York Stock Exchange, shall be
effective unless approved by the shareholders in the manner required by such rules and by
applicable law, and (c) no amendment, suspension, or termination may change the time and form of
payment of any outstanding Units except in accordance with Section 409A.



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.



Page 18 of 19









 






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, and approved 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.
Amendments approved by the Board of Directors on October 16, 2008 are effective as of January 1,
2008, with respect to all outstanding Units as of that date and any outstanding Units granted
thereafter, other than any Units that were outstanding and vested prior to January 1, 2005 and not
materially modified thereafter.




Page 19 of 19