Document:

OPTION AGREEMENT

THIS OPTION AGREEMENT, entered into effective this 3rd of January, 2000, by
and between Generex Biotechnology Corporation (the "Company"), a Delaware
corporation, and Wolfe Axelrod Associates ("Wolfe"), a New York corporation with
a principal place of business located at 420 Lexington Avenue, New York, NY
10170.

     1. In consideration of Wolfe's past services as financial communications
and investor relations counsel and as an incentive to Wolfe to perform such
services in the future to the best of its ability, the Company hereby grants to
Wolfe the option (hereinafter, the "Option") to purchase from the Company, at
any time from the date hereof through and including the Expiration Date set
forth below (the "Exercise Period"), ONE HUNDRED TWENTY FIVE THOUSAND (125,000)
fully paid and nonassessable shares (the "Shares") of the Company's Common
Stock, $.001 par value per share (the "Common Stock"), at a price of EIGHT
($8.00) DOLLARS per Share (the "Exercise Price"), subject to the limitations,
terms and conditions set forth herein. Wolfe's rights hereunder may be assigned
only to principals and employees of Wolfe, and only in accordance with and
subject to the terms, conditions and other provisions of this Agreement. The
term "Optionee", as used herein, shall include Wolfe and only such persons to
whom rights to acquire shares of the Company's Common Stock have been assigned
by Wolfe in strict conformity with the terms and conditions set forth or
incorporated by reference herein.

     2. The Option shall expire on June 15, 2004 , subject to early termination
pursuant to paragraph 15 below in the event of a Change of Control.

     3. The Option be exercised during the Exercise Period as to the whole or
any lesser number of whole Shares by delivery of written notice of exercise (the
"Notice of Exercise") to the Company, marked to the attention of its President,
33 Harbor Square, Suite 202, Toronto, Ontario, Canada M5J 2G2, or such other
place as is designated in writing and delivered to Optionee by the Company,
accompanied by a certified or bank cashier's check payable to the order of the
Company in an amount equal to the Exercise Price multiplied by the number of
Shares covered by such exercise (the "Shares Purchase Price").

     4. Any exercise of the Option shall be deemed to have been effected as of
the close of the business day on which the Company has received the last of the
Notice of Exercise and the Shares Purchase Price. Upon each exercise of the
Option, the Optionee shall be deemed to be the holder of record of the Shares
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed. As soon as practicable after each such
exercise, the Company shall issue and deliver to the Optionee a certificate or
certificates for the Shares issuable upon such exercise, registered in the name
of the Optionee.

     5. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the Option, such number of Shares as shall, from time to time,
be sufficient therefor.

     6. The Exercise Price shall be subject to adjustment from time to time as
follows:

        (a) In case the Company shall (i) declare a dividend or make a
distribution on outstanding shares of its Common Stock in shares of Common
Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify the
outstanding shares of Common Stock into a lesser number of shares, the
Exercise Price in effect at the time of the record date for such dividend or
distribution on the effective date of such subdivision, combination or
reclassification shall be adjusted so that it shall equal the price
determined by multiplying the Exercise Price then in effect by a fraction,
the denominator of which shall be the number of shares of Common Stock
outstanding immediately after giving effect to such action, and of which the
numerator shall be the number of shares of

<PAGE>

Common Stock outstanding immediately prior to such action. Such adjustment
shall be made successively whenever any event specified above shall occur.

        (b) Whenever the Exercise Price is adjusted pursuant to subparagraph (a)
above, the number of Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of Shares initially
issuable upon exercise of this Warrant by the initial Exercise Price in
effect on the date hereof and dividing the product so obtained by the
Exercise Price, as adjusted.

        (c) All calculations under this Section 6 shall be made to the nearest
one-hundredth of a cent and to the nearest whole Share.

     7. Subject to the provisions of paragraph 15 below:

        (a) In case of any consolidation with or merger of the Company with or
into another corporation (other than a merger of consolidation in which the
Company is the continuing or surviving corporation), or in case of any sale,
lease or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, appropriate provisions shall be
made so that the Optionee shall have the right thereafter to receive upon
exercise of the Option solely the kind and amount of shares of stock and
other securities, property, cash or any combination thereof receivable upon
such consolidation, merger, sale, lease or conveyance by a holder of the
number of Shares of Common Stock for which the Option might have been
exercised immediately prior to such consolidation, merger, sale, lease or
conveyance, and for adjustments which shall be as nearly equivalent as
practicable to the adjustments in this Section 6.

        (b) In case of any reclassification or change in the Shares of Common
Stock (other than a change in par value, or from par value to no par value,
or as a result of a subdivision or combination, but including any change in
the Shares into two or more classes or series of shares) or in case of any
consolidation or merger of another corporation into the Company in which the
Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive cash
or other property) in the Company's Common Stock (other than a change in par
value, or from par value to no par value, or as a result of a subdivision or
combination, but including any change in the Shares into two or more classes
or series of Shares), the Optionee shall have the right thereafter to receive
upon exercise of the Option solely the kind and amount of shares of stock and
other securities, property, cash or any combination thereof receivable by the
holder of the number of Shares for which this Warrant might have been
exercised immediately prior to such reclassification, change, consolidation
or merger. Thereafter, appropriate provision (as reasonably determined by the
Board of Directors) shall be made for adjustment which shall be as nearly
equivalent as practicable to the adjustments in Section 6.

        (c) The above provisions of this Section 7 shall similarly apply to
successive reclassification and changes in Shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.

     8. The issue of any stock or other certificate upon the exercise of the
Option shall be made without charge to the Optionee for any tax in respect of
the issue of such certificate. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of any certificate in a name other than that of the
Optionee and the Company shall not be required to issue or deliver any such
certificates unless and until the person or persons requesting the issue
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

     9. Notwithstanding any other term herein, none of the rights of Optionee
hereunder shall be assigned except (a) to a principal or employee of Wolfe
who is an "accredited investor", as that term is defined in Rule 501,
Regulation D, or (b) with the approval of the Company.

                                     -2-
<PAGE>

     10. Unless registered under the Securities Act of 1933, Shares or other
securities issued upon the exercise of the Option shall be subject to a
stop-transfer order and the certificate or certificates evidencing any such
Shares or securities shall bear the following legend and any other legend
which counsel for the Company may deem necessary or advisable:

     THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
     TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS SO REGISTERED OR UNLESS IN
     THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, AN
     EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

     11. No Optionee shall have, solely on account of such status, any rights
of a shareholder of the Company, either at law or in equity, or to any notice
of meetings of shareholders or of any other proceedings of the Company.

     12. (a) The Company shall use its best efforts to prepare, file and
process to effectiveness a Registration Statement ("Registration Statement")
under the Act with respect to the Shares, provided that the Company shall
have no obligation to file a Registration Statement prior to December 31,
2001. The Company shall give prompt written notice of such filing and of the
effectiveness of such Registration Statement to Optionee, and shall use its
best efforts to keep such Registration Statement in effect for a period of at
least ninety (90) days from its effective date (one hundred eighty [180] days
if the Registration Statement is on Form S-3).

        (b) In addition to its obligations pursuant to Section 13(a) above, if,
after December 31, 2001, but prior to the effectiveness of a Registration
Statement, or following the effectiveness of a Registration Statement if the
Company fails to maintain the effectiveness of the Registration Statement for
at least ninety (90) days, the Company proposes to file a Registration
Statement under the Securities Act (other than in connection with an exchange
offer, a "rights" offering to shareholders, a Registration Statement on Form
S-8 or Form S-4 or any successor forms relating to employee benefit plans, an
acquisition of another entity or in connection with a dividend reinvestment
plan, an employee benefit plan, the conversion of any convertible securities,
or a stand-by underwriting with respect to the call of a warrant, option,
right or convertible security for redemption) with respect to shares of
Common Stock (a "Piggy Back Registration Statement"), the Company shall give
written notice of such proposed filing to Optionee at least thirty (30)
calendar days before the anticipated filing date of such Registration
Statement or, in the event that the Company has not formulated its intent to
file such Registration Statement at least thirty (30) calendar days before
the anticipated filing date of such Registration Statement, as soon as
practicable upon the formation by the Company of such intent. The notice
shall specify the information required to be provided to the Company by
Optionee pursuant to paragraph 12(d) below and shall offer to Optionee the
opportunity to include in the Piggy Back Registration Statement such number
of Shares as Optionee may request. The Company shall not be required to honor
any such request (i) if, in the opinion of counsel to the Company reasonably
acceptable to Optionee, registration under the Act is not required for the
transfer of the Shares in the manner proposed by Optionee; or (ii) to
register in the aggregate fewer than 10,000 Shares. The Company shall permit,
or, in the case of an offering made through an underwriter or group of
underwriters on a "firm commitment" basis (an "Underwritten Offering"), shall
use its best efforts to cause the managing underwriter of the proposed
offering to permit, such Shares to be included in the proposed offering on
the same terms and conditions as applicable to the shares of Common Stock
Offered by the Company and for the account of any person other than the
Company, as the case may be.

                                     -3-
<PAGE>

        (c) Notwithstanding the foregoing, if the managing underwriter of an
underwritten offering shall advise the Company in writing that, in its
opinion, the distribution of all or a portion of the Shares requested by
Optionee to be included in the Piggy Back Registration Statement concurrently
with the shares of Common Stock being registered by the Company would
materially adversely affect the distribution of such securities by the
Company for its own account, or for the account of any person or persons that
have asserted demand registration rights under any other agreement with
respect to such registration, then such requested Shares shall not be
included in the Registration. If the managing underwriter elects to include
less than all Shares, then the number of Shares shall be pro rata with (i)
other securities properly requested to be included in the Piggy Back
Registration Statement by other holders pursuant to piggy back or incidental
registration rights under any other agreement or (ii) shares included in the
Piggy Back Registration Statement for the account of any corporate officer or
director of the Company and any of their respective family members, whichever
results in the registration of the greater number of Shares for Optionee's
account. The Company shall not be required to maintain in effect the Piggy
Back Registration Statement as it relates to Shares beyond the period
necessary to comply with the Securities Act (otherwise than pursuant to Rule
415 or any similar regulation permitting "shelf registration") with respect
to the distribution of the Shares included therein.

        (d) In connection with any registration of Shares pursuant to paragraphs
13 (a), (b) or (c) above, and as a condition to the Company's obligation to
register the Shares, Optionee shall promptly furnish to the Company such
information regarding Optionee, the proposed distribution of the Shares by
Optionee and such other matters as the Company may reasonably request in
writing.

        (e) All expenses incident to the Company's performance of or compliance
with the provisions set forth herein (other than underwriting discounts and
commissions relating to the sale of the Shares, and the fees and
disbursements of Optionee's counsel or other persons, if any, engaged by
Optionee) will be borne by the Company. In addition, the Company shall,
without charge to Optionee, provide Optionee with reasonable quantities of
preliminary prospectuses, final prospectuses and other material required to
effect sales of the Shares to the public, and will take appropriate action to
enable the Shares to be sold in the State of New York and such other states
as the Company may elect.

     13. Without limiting any indemnification rights of the Company or
Optionee arising under any other agreement or law, in any registration of
Shares pursuant hereto:

        (a) the Company will indemnify and hold harmless Optionee against any
losses, claims, damages or liabilities (which shall include, but not be
limited to, all costs of defense and investigation and all attorneys' fees)
to which Optionee may become subject under the Act, the Securities Exchange
Act of 1934 or otherwise in connection with sale of any Shares insofar as
such losses, claims, damages or liability (or actions in respect thereof)
arise out of or are based upon any untrue statement of any material fact
contained, during the effective period thereof, in any Registration
Statement, any preliminary or final prospectus furnished by the Company, or
any amendment or supplement thereto, or arise out of or are based upon the
omission to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that (i) the Company shall
have no obligation to Optionee in respect of any such loss, claim, damage or
liability arising out of or based upon an untrue statement or liability
arising out of or based upon an untrue statement or omission made in a
Registration Statement, preliminary prospectus, prospectus, or amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished by Optionee specifically for use in the preparation
thereof; and (ii) the Company shall not be liable for any loss, liability or
damage incurred by Optionee to the extent that the aggregate net proceeds
realized by Optionee upon sale of such Shares after deduction of such loss,
liability or damage exceeds the aggregate Exercise Price paid by Optionee in
respect of such Shares.

                                     -4-
<PAGE>

        (b) Optionee will indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of Section 20 of
the Exchange Act against any losses, claims, damages or liabilities (which
shall include, but not be limited to, all costs of defense and investigation
and all attorneys' fees) to which the indemnified party may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liability (or actions in respect thereof) arise out of or are
based upon (i) an untrue statement or omission made in a Registration
Statement, preliminary prospectus, prospectus, preliminary offering circular
or offering circular, or any amendment or supplement, in reliance upon and in
conformity with written information furnished by Optionee for use by the
Company in the preparation thereof, or (ii) actions or omissions by Optionee
or persons acting on his behalf in the sale of the Shares which are unrelated
to the content of the Registration Statement but which violate the Act, the
Exchange Act or regulations thereunder.

     14 (a) Notwithstanding any other term of this Warrant, unless the
Company shall have prepared, filed and processed to effectiveness a
Registration Statement under the Act with respect to all of the Shares on or
before December 31, 2001, and such Registration Statement has remained
effective for a period of at least ninety (90) days prior to the Expiration
Date (one hundred eighty [180] days if the Registration Statement is on Form
S-3), the Optionee shall have the right at any time after December 31, 2000,
to convert this Warrant into that number of Shares (hereinafter referred to
as the "Conversion Shares") which shall equal the product obtained by
multiplying all Shares then issuable upon exercise of the Warrant pursuant to
paragraph 2 above by a fraction, the denominator of which is the Market Price
of the Company's Common Stock, as defined below, and the numerator of which
is the difference between the Market Price and the Exercise price. Where the
number of Conversion Shares equals "CS", the number of Shares equals "S", the
Exercise Price equals "EP" and the Market Price equals "MP", the following
formula shall determine the number of Conversion Shares at any time issuable
upon conversion of this Warrant to Common Stock pursuant to this paragraph
15(a):

                             CS = S (MP - EP)
                                  -----------
                                       MP

        (b) For purposes of paragraph 15(a) above, the term "Market Price" of
the Company's Common Stock shall mean: (i) if the Common Stock is listed on a
national securities exchange, the average closing prices for the Common Stock
reported on such exchange for the five (5) trading days immediately preceding
the date of exercise of the rights of conversion set forth in paragraph 15(a)
(the "Conversion Rights"); or (ii) if the Common Stock is not listed on a
national securities exchange but is quoted on the Nasdaq Stock Market (Small
Cap or National Market System), the average closing prices for the Common
Stock on the Nasdaq Stock Market for the five (5) trading days immediately
preceding the date of exercise of Conversion Rights; or (iii) if neither (i)
nor (ii) above applies, and "bid" and "asked" prices for the Common Stock are
quoted on the National Association of Securities Dealers, Inc. ("NASD") OTC
Bulletin Board and the average weekly trading volume for the Common Stock as
reported on the NASD Bulletin Board has averaged at least one (1%) percent of
the total number of shares of Common Stock outstanding during the four
calendar weeks immediately preceding the exercise of Conversion Rights, the
average of the mean between the closing "bid" and "asked" prices reported on
the OTC Bulletin Board for the five (5) trading days immediately preceding
the date of exercise of Conversion Rights; or (iv), if none of subsections
(i), (ii) or (iii) apply, as determined by the Board of Directors of the
Company.

        (c) The Conversion Rights shall be exercised in the same manner as
provided in paragraph 2 above, except that payment of the Shares Purchase
Price shall not be tendered.

     15. Notwithstanding any other term of this Option Agreement, in the
event of a Change in Control (as defined below), the Company may take
whatever action with respect to the Option it deems necessary or desirable,
including, without limitation, accelerating the vesting, expiration or
termination dates to a date no earlier than forty-five (45) days after notice
of such action is given to Wolfe. A Change of Control shall be deemed to have
occurred upon the earliest to occur of the following events:

                                     -5-
<PAGE>

        (a) the date the stockholders of the Company (or the Board of Directors,
if stockholder action is not required) approve a plan or other arrangement
pursuant to which the Company will be dissolved or liquidated;

        (b) the date the stockholders of the Company (or the Board of Directors,
if stockholder action is not required) approve a definitive agreement to sell
or otherwise dispose of substantially all of the assets of the Company;

        (c) the date the stockholders of the Company (or the Board of Directors,
if stockholder action is not required) and the stockholders of the other
constituent corporation (or its board of directors if stockholder action is
not required) have approved a definitive agreement to merge or consolidate
the Company with or into such other corporation, other than, in either case,
a merger or consolidation of the Company in which holders of shares of the
Common Stock immediately prior to the merger or consolidation will hold at
least a majority of the ownership of common stock of the surviving
corporation (and, if one class of common stock is not the only class of
voting securities entitled to vote on the election of directors of the
surviving corporation, a majority of the voting power of the surviving
corporation's voting securities) immediately after the merger or
consolidation, which common stock (and, if applicable, voting securities) is
to be held in the same proportion as such holders' ownership of Common Stock
immediately before the merger or consolidation; or

        (d) the date any entity, person or group, (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended), other than (i) the Company or any of its subsidiaries or any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any of its subsidiaries or (ii) any person who, on the date the
Plan is effective, shall have been the beneficial owner of at least twenty
percent (20%) of the outstanding Common Stock, shall have become the
beneficial owner of, or shall have obtained voting control over, more than
fifty percent (50%) of the outstanding shares of the Common Stock.

     16. This Option Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

IN WITNESS WHEREOF, the parties have executed this Agreement the date first
above written.

                                           GENEREX BIOTECHNOLOGY CORPORATION
[SEAL]

                                           By: /s/ E. Mark Perri
                                               -----------------------------
                                                    E. Mark Perri, Chairman

                                           WOLFE AXELROD WEINBERGER ASSOCIATES

                                           By: /s/ Stephen D. Axelrod
                                               ----------------------------
                                               Stephen D. Axelrod
                                               Managing Partner<PAGE>
                                PALL CORPORATION

                         MANAGEMENT STOCK PURCHASE PLAN

                                      -----

1.       Purpose.

         This document sets forth the Pall Corporation Management Stock Purchase
Plan as adopted effective June 29, 1999 and amended effective October 1, 1999
and January 19, 2000.

         The purpose of the Plan is to encourage key employees of the
Corporation and its Affiliated Companies to increase their ownership of shares
of the Corporation's Common Stock by providing such employees with an
opportunity to elect to have portions of their total annual compensation paid in
the form of Restricted Units, and to have additional matching Restricted Units
credited with respect thereto.

         The Plan also provides certain employees with an opportunity to elect
to defer payment with respect to the Restricted Units credited to them that
become vested. With respect to these provisions, the Plan is intended to
constitute an unfunded plan of deferred compensation for "a select group of
management or highly compensated employees" within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").

2.       Definitions.

         As used herein, the following terms shall have the following meanings:

         "Account" and "Subaccount" shall mean, respectively, the account, and
each Subaccount within such Account, that is established for a Participant
pursuant to Section 8.

         "Affiliated Companies" shall mean each direct or indirect subsidiary of
the Corporation.

         "Beneficiary" shall mean the person or persons designated by a
Participant in accordance with Section 12 to receive any payment that is
required to be made under the Plan upon the Participant's death.

         "Board of Directors" shall mean the Board of Directors of the
Corporation.

<PAGE>
         "Bonus" shall mean, with respect to any Eligible Employee for any Plan
Year , the Bonus payable to such Eligible Employee during such year under the
Corporation's Executive Incentive Bonus Plan, or, if applicable, under the terms
of the Eligible Employee's employment agreement with the Corporation, or under
any other plan, program or arrangement of annual incentive compensation
maintained by the Corporation or any of its Affiliated Companies.

         "Bonus Payment Date" shall mean each date on which Bonus payments are
made under the Corporation's Executive Incentive Bonus Plan.

         "Business Day" shall mean any day on which the Corporation's principal
office in the U.S. is open for business.

         "CEO" shall mean the Chief Executive Officer of the Corporation.

         "Change in Control" means the occurrence of any of the following:

                  (a)      the "Distribution Date" as defined in Section 3 of
                           the Rights Agreement dated as of November 17, 1989
                           between the Corporation and United States Trust
                           Company of New York, as Rights Agent as the same may
                           have been amended or extended to the time in question
                           or in any successor agreement (the "Rights
                           Agreement"); or

                  (b)      any event described in Section 11(a)(ii)(B) of the
                           Rights Agreement; or

                  (c)      any event described in Section 13 of the Rights
                           Agreement; or

                  (d)      the date on which the number of duly elected and
                           qualified directors of the Corporation who were not
                           either elected by the Board of Directors or nominated
                           by the Board of Directors or its Nominating Committee
                           for election by the shareholders shall equal or
                           exceed one-third of the total number of directors of
                           the Corporation as fixed by its by-laws;

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

         "Closing Price" shall mean, as of any date, the closing price of a
share of Common Stock as reported on the New York Stock Exchange Composite Tape
for such date.

         "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.

<PAGE>

         "Common Stock" shall mean the shares of common stock ($0.10 par value)
of the Corporation.

         "Compensation Committee" shall mean the Compensation Committee of the
Board of Directors.

         "Corporation" shall mean Pall Corporation.

         "Crediting Date" shall mean, with respect to any 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.

         "Dividend Equivalent Units" shall mean additional Restricted Units or
additional Deferred Vested Units credited to a Participant's Account pursuant to
Section 5(f) or Section 7(d)(vi).

         "Dividend Payment Date" shall mean each date on which the Corporation
pays a dividend on its Common Stock.

         "Eligible Employee" shall mean, with respect to any Plan Year, any
Employee who has been designated under Section 4 as eligible to be credited with
Restricted Units for such Plan Year.

         "Employee" shall mean any person employed by the Corporation or any of
its Affiliated Companies.

         "Involuntary Termination" shall mean the termination of a Participant's
employment with the Corporation and all of its Affiliated Companies by the
Corporation, or by any of its Affiliated Companies, for any reason other than
for disability or for cause.

         "Matching Restricted Units" shall mean Restricted Units that are
credited to a Participant's Account pursuant to Section 5(e), to match
Restricted Units that are credited to the Participant's Account under Section
5(b), (c) or (d).

         "Participant" shall mean any Employee for whom an Account has been
established, and is being maintained, pursuant to Section 8 hereof.

<PAGE>

         "Plan" shall mean the Pall Corporation Management Stock Purchase Plan
as set forth herein and as amended from time to time.

         "Plan Year" shall mean the period beginning on August 1 of each
calendar year and ending on July 31 of the following calendar year.

         "Restricted Unit" shall mean a Unit credited to a Participant pursuant
to Section 5 that has not yet become vested in accordance with the provisions of
Section 6.

         "Retirement" shall mean the termination of a Participant's employment
with the Corporation and all of its Affiliated Companies, if at the time of such
termination of employment the Participant has attained age 62 and is eligible to
receive (i) a Retirement Benefit under Section 3.1, 3.2 or 3.3 of the Pall
Corporation Pension Plan or (ii), in the case of any Participant who is not a
resident of the U.S., a similar type of benefit under any plan or program
maintained by the Corporation or any of its Affiliated Companies (or to which
the Corporation or any of its Affiliated Companies makes contributions) that
provides benefits to Employees upon their retirement.

         "Trading Day" shall mean any day on which the New York Stock Exchange
is open for trading.

         "Unit" shall mean a unit of measurement equivalent to one share of
Common Stock, with none of the attendant rights of a shareholder of such share,
including, without limitation, the right to vote such share and the right to
receive dividends thereon, except to the extent otherwise specifically provided
herein.

         "Vested Unit" shall mean a Unit credited to a Participant pursuant to
Section 5 that has become vested in accordance with the provisions of Section 6.

         "Vesting Date" shall mean, with respect to any Restricted Units
credited to a Participant's Account, the date on which such Restricted Units
become vested in accordance with the provisions of Section 6.

3.       Maximum Number of Shares of Common Stock Available.

         The number of shares of Common Stock that may be distributed with
respect to Restricted Units and Deferred Vested Units credited to Participants
under the Plan, (including Dividend Equivalent Units credited with respect to
such Units) shall be limited to 1,000,000 shares of Common Stock. If any
Restricted Units initially credited to a Participant shall be forfeited, the
number of shares of Common Stock no longer payable with respect to the

<PAGE>

Restricted Units so forfeited shall thereupon be released and shall thereafter
be available for the crediting of new Restricted Units under the Plan. The
limitation provided under this Section 3 shall be subject to adjustment as
provided in Section 9.

         The shares of Common Stock distributed under the Plan may be authorized
and unissued shares, shares held in the treasury of the Corporation, or shares
purchased on the open market by the Corporation at such time or times and in
such manner as it may determine. The Corporation shall be under no obligations
to acquire shares of Common Stock for distribution to Participants before
payment in Common Stock is due.

4.       Eligibility.

         An Employee shall be eligible to be credited with Restricted Units
under Section 5 during any Plan Year only if he or she has been designated by
the Compensation Committee as an Eligible Employee with respect to such year.

         Upon the recommendation of the CEO, the Compensation Committee may
select as an Eligible Employee for any Plan Year any Employee who is expected to
make significant contributions during the course of such year to the success of
the Corporation and its Affiliated Companies and to the growth of their
businesses.

         Any person who has been selected as an Eligible Employee for any Plan
Year shall continue to be an Eligible Employee in the Plan for each subsequent
Plan Year during the period of his or her employment, subject, however, to the
Compensation Committee's right to terminate such individual's eligibility
effective beginning as of the first base salary payment date or, if earlier, the
first Bonus Payment Date occurring after the date on which the Compensation
Committee makes its determination to terminate such individual's eligibility.

5.       Crediting of Restricted Units.

         For each Plan Year, Eligible Employees shall be credited with
Restricted Units in accordance with the following provisions:

         (a) Initial Award Units. Each Employee who is an Eligible Employee for
the Plan Year that begins on August 1, 1999 shall be credited as of such date
with such number of Restricted Units as the Compensation Committee in its sole
discretion may determine for such Employee. To the extent that the Compensation
Committee in its sole discretion so determines, any Employee who is designated
as an Eligible Employee at any time after August 1, 1999 shall be credited, as
of the date specified by the Compensation Committee in such determination, with
such number of Restricted Units as the Compensation Committee may determine for
such Employee.

         (b) Bonus Units. Each Employee who is an Eligible Employee for any Plan
Year beginning on or after August 1, 1999 may elect to have any part or all of

<PAGE>

any Bonus that may become payable to the Participant during such year paid in
the form of Restricted Units that will be credited to his or her Account
hereunder and distributed in accordance with the provisions of this Plan,
instead of being paid to the Eligible Employee in cash. If an Eligible Employee
has so elected, the Eligible Employee's Account shall be credited on the first
Bonus Payment Date during such year with a number of Restricted Units determined
by dividing (i) the total amount of the portion of the Eligible Employee's Bonus
payable during such year which the Eligible Employee elected to have paid in the
form of Restricted Units, by (ii) the Closing Price of a share of Common Stock
on such Bonus Payment Date or, if such date is not a Trading Day, on the next
following day that is a Trading Day. 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 on 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 Employee who is an Eligible Employee for
any Plan Year beginning on or after August 1, 1999 may elect to have up to 50%
of the amount of the base salary otherwise payable to the Eligible Employee on
each payday during such year paid in the form of Restricted Units that will be
credited to his or her Account hereunder and distributed in accordance with the
provisions of this Plan, instead of being paid to the Eligible Employee in cash.
If an Eligible Employee has so elected, the amount specified in such election
shall be withheld from the payment of base salary otherwise required to be made
to the Eligible Employee on each payday during such year, and the Eligible
Employee's Account shall be credited on January 31 and on July 31 of such year,
with a number of Restricted Units determined by dividing (i) the aggregate
amount so withheld from the start of such year, in the case of the Restricted
Units to be credited on January 31, or from January 31, in the case of the
Restricted Units to be credited on July 31, by (ii) the Closing Price of a share
of Common Stock on the applicable crediting date or, if such date is not a
Trading Day, on the next following day that is a Trading Day. 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
on 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.

         (d) Cash Payment Units. Each Employee who is an Eligible Employee for
any Plan Year beginning on or after August 1, 1999 may make a direct cash
payment to the Corporation at least seven days prior to (i) the first Bonus
Payment Date during such Plan Year and/or (ii) January 31 of such Plan Year. The
Crediting Dates with respect to such direct cash payments shall be (i) 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 (ii) January 31 with respect to

<PAGE>

cash payments made at least seven days prior to that date. In consideration of
any such cash payment, the Eligible Employee shall have his or her Account
credited, on the relevant Crediting Date, with a number of Restricted Units
determined by dividing (i) the amount of such cash payment by (ii) the Closing
Price of a share of Common Stock on such Crediting Date or, if such date is not
a Trading Day, on the next following day that is a Trading Day. 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 on 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 shall not exceed
the sum of (x) the amount by which 50% of the Eligible Employee's base salary
for such year exceeds the portion thereof which the Eligible Employee has
elected under Section 5(c) to have paid in the form of Restricted Units, plus
(y) the amount by which the Bonus payable to the Eligible Employee during such
Plan Year exceeds the portion thereof which the Eligible Employee elected under
Section 5(b) to have paid in the form of Restricted Units.

         (e) Matching Units. On each date on which any Restricted Units are
credited to an Eligible Employee's Account pursuant to the provisions of
paragraphs (b), (c) or (d) of this Section 5, there shall also be credited to
the Eligible Employee's Account on that date a number of Matching Restricted
Units equal to (i) 50% of the number of Restricted Units credited on such date,
in the case of Restricted Units credited during the Plan Year beginning on
August 1, 1999, and (ii) 33_% of the number of Restricted Units credited on such
date, in the case of Restricted Units credited during each Plan Year beginning
on or after August 1, 2000.

         (f) Dividend Equivalents. Until the Vesting Date for the Restricted
Units that have been credited to a Participant's Account pursuant to paragraphs
(a), (b), (c), (d) and (e) of this Section 5, additional Restricted Units shall
be credited to the Participant's Account, with respect to the Restricted Units
so credited, as of each Dividend Payment Date. The number of additional
Restricted Units to be so credited shall be determined separately for each
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 on the day immediately preceding such Dividend Payment Date
(including all Dividend Equivalent Units credited to such Subaccount on all
previous Dividend Payment Dates), by (B) the per-share dollar amount of the
dividend paid on such Dividend Payment Date and then, dividing the resulting
amount by the Closing Price of one share of Common Stock on such Dividend
Payment Date.

<PAGE>

         (g) Election Procedures. Any election made by an Eligible Employee
under paragraph (b) or (c) of this Section 5 shall be made in accordance with,
and shall be subject to, the provisions set forth below.

                  (i) any such election shall be made in writing, on a form
         furnished to the Eligible Employee for such purpose by the Committee
         and filed by the Eligible Employee with the Committee.

                  (ii) An election under Section 5(b) with respect to the Bonus
         payable to an Eligible Employee during the Plan Year beginning on
         August 1, 1999 shall be made by no later than July 23, 1999. An
         election under Section 5(b) with respect to the Bonus payable to an
         Eligible Employee during any Plan Year beginning on or after August 1,
         2000 shall be made by no later than April 30 of the immediately
         preceding Plan Year. An election under Section 5(c) with respect to the
         base salary payable to an Eligible Employee during any Plan Year shall
         be made on or prior to the last Business Day preceding the start of
         such Plan Year. Notwithstanding the foregoing, any Employee who is
         hired after the start of a Plan Year but who is designated under
         Section 4 as an Eligible Employee for such year may make election under
         Section 5(c) with respect to his or her base salary for such year at
         any time during the 30-day period commencing on his or her date of
         hire; provided, however, that any election so made shall be effective
         only with respect to base salary payable to the Eligible Employee for
         periods of service beginning after the date on which he or she files
         such election with the Committee.

                  (iii) In his or her election form, the Eligible Employee shall
         specify, by dollar amount (which shall be an even multiple of $100) or
         by percentage (which shall be an even multiple of 1%), the portion of
         his or her Bonus and/or base salary that the Eligible Employee wishes
         to have paid in the form of Restricted Units credited to his or her
         Account, instead of in cash. The dollar amount or percentage so
         specified shall be at least equal to any minimum amount or percentage
         which the Committee in its discretion may have determined to be
         applicable to elections under Section 5(b) and/or Section 5(c) for the
         Plan Year.

                  (iv) Any election made under Section 5(b) or (c) for any Plan
         Year shall be irrevocable.

         (h) Other Election Rules. Elections made under Section 5(b) or (c)
shall be subject to the following rules:

                  (i) If an Eligible Employee who has made an election under
         Section 5(b) with respect to the Bonus payable to the Eligible Employee
         during any Plan Year terminates employment with the Company and all of
         its Affiliated Companies for any reason prior to any Bonus Payment Date
<PAGE>

         for such Bonus but is nevertheless entitled to receive a Bonus payment
         on such date, the portion of such payment that is otherwise required to
         be paid by means of the crediting of Restricted Units to the Eligible
         Employee's Account pursuant to his or her election under Section 5(b)
         shall not be paid in such form, but shall be paid instead in the form
         of a single lump sum cash payment. Such payment shall be made as soon
         as practicable after such Bonus Payment Date.

                  (ii) If an Eligible Employee who has made an election under
         Section 5(c) with respect to the base salary payable to the Eligible
         Employee during any Plan Year terminates employment with the Company
         and all of its Affiliated Companies for any reason prior to any date on
         which Restricted Units are to be credited to his or her Account with
         respect to amounts withheld from his or her base salary pursuant to
         such election, no Restricted Units shall be so credited on such date
         but instead, the aggregate amount so withheld as of the date of the
         Eligible Employee's termination of employment shall be paid to the
         Eligible Employee, without interest thereon, in a single lump sum cash
         payment. Payment shall be made on such termination date, or as soon
         thereafter as is practicable.

                  (iii) Any election made by an Eligible Employee under Section
         5(b) or (c) shall not be given effect if, at any time during the
         12-month period ending on the date as of which any Restricted Units are
         otherwise required to be credited to his or her Account pursuant to
         such election, the Eligible Employee received a hardship withdrawal
         under Section 7.2 of the Pall Corporation Profit-Sharing Plan.

6.       Vesting of Units.

         Restricted Units credited to a Participant's Account, and Dividend
Equivalent Units credited with respect thereto, shall become vested in
accordance with the provisions set forth below.

         (a) All Restricted Units standing to a Participant's credit in any
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 on the earliest to occur of the following dates:

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

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

                  (iii) the date as of which the Participant first incurs a
         disability that entitles the Participant to a Social Security
         certificate of disability award under the Federal Social Security Act,
         or

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

         (b) If a Participant's employment with the Corporation and all of its
Affiliated Companies terminates as a result of Retirement or Involuntary
Termination prior to the third anniversary of the Crediting Date for any Initial
Reward Restricted Unit Subaccount, Purchased Restricted Unit Subaccount or
Matching Restricted Unit Subaccount maintained for the Participant under Section
8 and prior to the occurrence of a Change in Control, as of the date of such
termination of the Participant's employment

                  (i) all Units in any such 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 36 the number of months in the period beginning on the
Crediting Date for such Subaccount and ending on the date of the Participant's
termination of employment, with any fraction of a month included in such period
treated as a full month; and the "Unearned Portion" of the Units in any such
Subaccount shall mean the percentage of such Units determined by subtracting
from 100% the Earned Portion of such Units, as determined under the preceding
clause.

         (c) If a Participant's employment with the Corporation and all of its
Affiliated Companies terminates for any reason other than death, disability,
Retirement or Involuntary Termination prior to the third anniversary of the
Crediting Date for any Initial Award Restricted Unit Subaccount, Purchased
Restricted Unit Subaccount or Matching Restricted Unit Subaccount maintained for
the Participant under Section 8 and prior to the occurrence of a Change in
Control, upon such termination of the Participant's employment

                  (i) all Units in any such Initial Award Restricted Unit
         Subaccount and in any such Matching Restricted Unit Subaccount

<PAGE>
         (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 shall become vested.

7.       Payment for Vested Units.

         Payment with respect to a Participant's Vested Units shall be made in
accordance with the provisions set forth below.

         (a) Time for Payment. Payment with respect to a Participant's Vested
Units shall be made to the Participant or, in the event of the Participant's
death, to his or her Beneficiary, as soon as practicable after the Vesting Date
for such Units, except as otherwise provided in paragraph (d) below.

         (b) Form of Payment. Except as provided in paragraph (c) below, payment
to be made in accordance with paragraph (a) above with respect to all Restricted
Units that have become vested on any Vesting Date shall be made in the form of a
single lump sum payment consisting of (i) a number of shares of Common Stock
equal to the total number of whole Restricted Units that have become vested on
such Vesting Date, and (ii) a cash payment for any fractional part of a
Restricted Unit that has become vested on such Vesting Date. The amount of such
cash payment shall be determined by multiplying such fractional part by the
Closing Price of a share of Common Stock on the first Trading Day preceding the
date of payment.

         (c) Payment on Termination. Payment to be made in accordance with
paragraph (a) above with respect to all Restricted Units that have become vested
pursuant to Section 6(c)(ii) on any Vesting Date shall be made by the issuance
of a number of shares of Common Stock determined by dividing the lesser of (x)
the aggregate value of such Units determined by multiplying the number of such
Units by the Closing Price of a share of Common Stock on the date or dates as of
which such Units were credited to the Participant's Account, or (y) the
aggregate value of such Units determined by multiplying the number of such Units
by the Closing Price of a share of Common Stock on such Vesting Date, by (z) the
Closing Price of a share of Common Stock on such Vesting Date. If such Vesting
Date was not a Trading Day, the Closing Price of a share of Common Stock on the
first Trading Day following such Vesting Date shall be used for purposes of the
preceding sentence. If the number of shares of Common Stock determined in
accordance with the provisions of the second preceding sentence includes a
fractional part of a share, payment with respect to such fractional part shall
be made in cash, in an amount determined by multiplying such fractional part by
the Closing Price of a share of Common Stock on the first Trading Day preceding
the date of payment.

<PAGE>

         (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 the calendar year following the
         date of termination of his or her employment with the Corporation or
         any of its Affiliated Companies for any reason, or (B) the first
         Business Day of any earlier calendar month but no earlier than the
         first Business Day of the third calendar year following the calendar
         year in which the Vesting Date for such Units occurs.

                  (iv) Any election made hereunder by the Participant shall be
         irrevocable.

                  (v)  As of the Vesting Date for any Restricted Units covered
         by a deferral election made by a Participant hereunder, the number of
         such Units shall be transferred from the Restricted Unit Subaccount or
         Matching Restricted Unit Subaccount in which such Units were recorded
         to the appropriate Deferred Vested Unit Subaccount established for the
         Participant under Section 8.

                  (vi) Until payment has been made with respect to all of the
         Units in any Deferred Vested Unit Subaccount maintained for the
         Participant under Section 8, there shall be credited to each such
         Subaccount, as of each Dividend Payment Date, a number of additional
         Deferred Vested Units determined by first multiplying (A) the total
         number of Deferred Vested Units standing to the Participant's credit in
         such Subaccount on the day immediately preceding such Dividend Payment
         Date (including all Dividend Equivalent Units credited to such
         Subaccount on all previous Dividend Payment Dates), by (B) the
         per-share dollar amount of the dividend paid on such Dividend Payment
         Date and then, dividing the resulting amount by the Closing Price of
         one share of Common Stock on such Dividend Payment Date.

<PAGE>
                  (vii) Except as provided in subparagraph (viii) below, payment
         with respect to the Deferred Vested Units in any Deferred Vested Unit
         Subaccount maintained for the Participant shall be made on the Payment
         Date specified by the Participant in his or her deferral election with
         respect to such Units. Payment with respect to the Deferred Vested
         Units payable on any Payment Date shall be made (A) by the issuance of
         one share of Common Stock for each whole Deferred Vested Unit payable
         on such Payment Date, and (B) by a cash payment for any fractional part
         of a Deferred Vested Unit payable on such Payment Date. The amount of
         such cash payment shall be determined by multiplying such fractional
         part by the Closing Price of a share of Common Stock on the first
         Trading Day preceding the date of payment.

                  (viii) Notwithstanding any other provision in this Section 7
         to the contrary, payment with respect to any part or all of any
         Deferred Vested Unit Subaccount maintained for a Participant may be
         made to the Participant on any date earlier than the Payment Date
         specified by the Participant in his deferral election for such Units if
         (A) the Participant requests such early payment and (B) the Committee,
         in its sole discretion, determines that such early payment is necessary
         to help the Participant meet an "unforeseeable emergency" within the
         meaning of Section 1.457-2(h)(4) of the federal income tax regulations.
         The amount that may be so paid may not exceed the amount necessary to
         meet such emergency.

         (e) Limitations on Deferrals. A deferral election otherwise permitted
to be made under paragraph (d) above shall be subject to the following
limitations:

                  (i) The Committee may deny any Participant the right to make
         such election if it determines, in its sole discretion, that such
         deferral election by the Participant might cause the Plan to fail to be
         treated as a plan of deferred compensation "for a select group of
         management or highly compensated employees" for purposes of ERISA.

                  (ii) If a Change in Control should occur after the date on
         which the Participant's election form is filed with the Committee but
         before the date that otherwise would have been the Vesting Date under
         Section 6(a)(i) for the Units designated in such form, the
         Participant's deferral election shall not be given effect, and payment
         with respect to such Units shall be made in accordance with the other
         applicable provisions of this Section 7.

                  (iii) No deferral election shall be effective hereunder if, at
         any time during the 12-month period ending on the Vesting Date, the
         Participant received a hardship withdrawal under Section 7.2 of the
         Pall Corporation Profit-Sharing Plan.

                  (iv) No amount may be deferred with respect to the
         Participant's Vested Units pursuant to a Participant's deferral
         election hereunder to the extent that any tax is required to be
         withheld with respect to such amount pursuant to applicable federal,
         state or local law.

<PAGE>

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).

         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.

<PAGE>

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.

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.

<PAGE>

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.

         (c) Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant any right to be retained in the employment of the
Corporation or any of its Affiliated Companies.

         (d) No Participant shall have the right, by virtue of having been
selected as an Eligible Employee with respect to any Plan Year, to be
automatically treated as an Eligible Employee with respect to any subsequent
Plan Year.

         (e) No Restricted Units credited to a Participant's Account, and no
payments made with respect to such Units upon or after they become vested, shall
be considered as compensation under any employee benefit plan of the Corporation
or any of its Affiliated Companies, except as specifically provided in any such
plan or as otherwise determined by the Board of Directors.

14.      Administration.

         The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan; provided, however, that any questions as to the
rights under the Plan of any person who is an Elected Officer under Section
4.01(a), of the By-Laws of the Corporation, as amended on June 29, 1999 or

<PAGE>

thereafter, shall be determined by the Compensation Committee instead of by the
Committee.

         The Committee may delegate any ministerial or nondiscretionary function
pertaining to the administration of the Plan to any one or more officers of the
Corporation.

         All decisions, actions or interpretations of the Committee or the
Compensation Committee under the Plan shall be final, conclusive and binding
upon all parties. Notwithstanding the foregoing, any determination made by the
Committee or the Compensation Committee after the occurrence of a Change in
Control that denies in whole or in part any claim made by any individual for
benefits under the Plan shall be subject to judicial review, under a "de novo",
rather than a deferential standard.

15.      Amendment or Termination.

         The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that no 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.

16.      Successor Corporation.

         The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.

17.      Governing Law.

         The Plan shall be governed by and construed in accordance with the laws
of the State of New York.

18.      Effective Date.

         The Plan was adopted effective as of June 29, 1999 by the Board of
Directors, acting by the Compensation Committee, subject, however, to approval
by the shareholders of the Corporation by a majority of the votes cast in person
or by proxy at the 1999 annual meeting of the Corporation's shareholders.
Restricted Units may be credited to the Accounts of Eligible Employees as
provided herein prior to such shareholder approval, subject to such approval
being obtained at such meeting.

<PAGE>

As adopted by the Compensation Committee of the Board of Directors on June 29,
1999, amended by that Committee by Consent dated October 1, 1999, approved by
shareholders at the annual meeting on November 17, 1999 and further amended by
the Compensation Committee by Consent dated January 19, 2000.

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