Document:

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                                                                  EXHIBIT 10.25

                                PALL CORPORATION
                2001 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
                       (AS AMENDED ON SEPTEMBER 17, 2004)

ss. 1. PURPOSE

         The purpose of this Pall Corporation 2001 Stock Option Plan for
Non-Employee Directors (the "Plan") is to secure for Pall Corporation (the
"Company") and its stockholders the benefits of the incentive inherent in
increased common stock ownership by the members of the Board of Directors of the
Company (the "Board") who are not employees of the Company or any of its
subsidiaries.

ss. 2. ADMINISTRATION

         The Plan shall be administered by the Compensation Committee of the
Board (the "Committee"). The Committee shall have all the powers vested in it by
the terms of the Plan. However, the Board, not the Committee, shall have the
sole power and authority (within the limitations described herein) to prescribe
the form of the document embodying and evidencing stock options granted under
the Plan ("Options"). The Committee shall, subject to the provisions of the
Plan, have the power to construe the Plan, to determine all questions arising
thereunder and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. Any decision of the
Committee in the administration of the Plan, as described herein, shall be final
and conclusive. The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any one or more of their
number or the Secretary or any other officer of the Company to execute and
deliver documents in connection with the Plan, including Options granted under
the Plan. No member of the Committee shall be liable for anything done or
omitted to be done by such member or by any other member of the Committee in
connection with the Plan, except for his or her own willful misconduct or as
expressly provided by statute.

ss. 3. AMOUNT OF STOCK

         The stock which may be issued and sold under the Plan shall be the
Common Stock of the Company ("Common Stock") of a total number not exceeding
139,500 shares with respect to options granted prior to September 17, 2004 and
150,000 shares with respect to options granted after that date, subject to
adjustment as provided in ss. 6 hereof. The stock to be issued may be either
authorized and unissued shares or reacquired shares. In the event that Options
granted under the Plan shall terminate or expire without having been exercised
in full, new Options may be granted covering the shares not purchased under such
lapsed Options.

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ss. 4. ELIGIBILITY AND GRANT OF OPTIONS

         As used herein, the term "Granting Date" means the fifth day of January
in each year during which the Plan is in effect beginning with the year 2002
except that if said date is not a day on which trading takes place on the New
York Stock Exchange, the Granting Date shall be the first day after January 5th
on which trading does take place on said Exchange. Each member of the Board who
is not an employee of the Company or any of its subsidiaries at the time when
Options are to be granted under the ensuing provisions of this ss. 4 (a
"Non-Employee Director") shall automatically, by virtue of the Plan and without
any action by the Committee or the Board, be granted an Option as follows:

         (a) Each Non-Employee Director who is elected a director of the Company
by shareholders at an annual meeting of shareholders for the first time (i.e.,
disregarding any previous election of such person by the Board) shall be granted
an Option on 3,000 shares (an "Initial Grant") on the date of such annual
meeting of shareholders.

         (b) On the Granting Date in 2005 and in every year thereafter until the
Plan terminates in accordance with ss. 10 hereof, each person who is a
Non-Employee Director on such Granting Date shall be granted an Option on 3,000
shares.

ss. 5. TERMS AND CONDITIONS OF OPTIONS

         Each Option granted under the Plan shall be evidenced by an instrument
in such form as the Board shall prescribe from time to time in accordance with
the Plan and all applicable laws and regulations and shall be subject to the
following terms and conditions and those set forth elsewhere in the Plan, which
terms and conditions shall be deemed incorporated in each Option by reference to
the provisions of the Plan:

         (a) The Option exercise price shall be the Fair Market Value (as
defined in ss. 7(a) hereof) of the shares of Common Stock subject to such Option
on the date the Option is granted (the "date of grant") but in no event less
than the par value of the shares.

         (b) No part of an Option may be exercised (i) before the first
anniversary of the date of grant or (ii) after the seventh anniversary of the
date of grant. The minimum number of shares with respect to which an Option may
be exercised in part at one time shall be the lesser of (i) 100 or (ii) the
number of shares remaining available under the Option. Subject to the foregoing
and to the ensuing provisions of this ss. 5, an Option may be exercised as
follows:

                  (i) at any time or times from the first anniversary of the
         date of grant to the date preceding the second anniversary, both such
         dates inclusive, for any number of shares up to 25 percent of the
         number of shares covered thereby;

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                  (ii) at any time or times from the second anniversary of the
         date of grant to the date preceding the third anniversary, both such
         dates inclusive, as to any number of shares which, when added to the
         shares as to which such Option has theretofore been exercised, will not
         exceed 50 percent of the number of shares covered thereby;

                  (iii) at any time or times from the third anniversary of the
         date of grant to the date preceding the fourth anniversary, both such
         dates inclusive, as to any number of shares which, when added to the
         shares as to which such Option has theretofore been exercised, will not
         exceed 75 percent of the shares covered thereby; and

                  (iv) at any time or times from the fourth anniversary of the
          date of grant to the seventh anniversary, both such dates inclusive,
          as to any number of shares which, when added to the shares as to which
          the Option has theretofore been exercised, will not exceed the total
          number of shares covered thereby.

         (c) The Option shall not be transferable by the optionee otherwise than
by will or the laws of descent and distribution, and shall be exercisable during
the optionee's lifetime only by the optionee, or if a legal guardian or other
legal representative is appointed for an optionee, by such guardian or
representative, except that an Option in its entirety (or the entire portion
thereof remaining after any partial exercise thereof) is transferable to any
"family member" of the optionee, as the term "family member" is defined, at the
time of any such proposed transfer, in the General Instructions to Form S-8
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933 as amended (the "Securities Act"). It is a condition
to any such transfer to a family member that (i) not less than 20 days before
any such transfer, or such shorter period as the Committee may authorize in a
particular case, the optionee has notified the Secretary of the Company of his
or her intention to make such transfer and (ii) such transfer complies with the
requirements of said General Instructions to Form S-8 which are conditions to
the registration under the Securities Act on said Form S-8 of the issuance and
sale to the transferee of the shares issuable upon exercise of the Option,
including but not limited to the provision of said General Instructions that
Form S-8 is not available for the exercise of Options transferred "for value" as
defined therein. (For the information of optionees, at the time of adoption of
this Plan said General Instructions to Form S-8 define "family member" as
follows: "For purposes of this form, `family member' includes any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employees [sic] household (other than a
tenant or employee), a trust in which these persons have more than fifty percent
of the beneficial interest, a foundation in which these persons (or the
employee) control the management of assets, and any other entity in which these
persons (or the employee) own more than fifty percent of the voting interests."
In the event that the Commission should change that definition prior to any
proposed transfer, the definition as so changed shall apply and govern.)

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         (d) No Option or any part of an Option shall be exercisable:

                  (i) unless written notice of exercise, in form satisfactory to
         the Committee, is given to the Company; and

                  (ii) unless the person exercising the Option makes payment to
         the Company in full in United States dollars by cash or check of such
         amount as is sufficient to satisfy the Company's obligation, if any, to
         withhold federal, state and local taxes by reason of such exercise or
         makes such other arrangement satisfactory to the Committee as will
         enable the Company to satisfy any such obligation.

         (e) At the time notice of exercise of an Option is given pursuant to
ss. 5(d)(i) hereof, the person exercising the Option shall either (I) make full
payment in United States dollars by cash or check of the Option exercise price
of the shares being acquired (sometimes hereinafter called the "purchase price")
or (II) make payment in accordance with ss. 5(g) hereof.

         (f) Except as limited by ss. 7(c) hereof, the Board is authorized in
its discretion, and with the consent of the optionee, to make amendments, not in
conflict with the Plan or any applicable law or regulation, in the terms of any
Option granted under the Plan.

         (g) In addition to the method of payment of the Option exercise price
authorized by ss. 5(e) hereof, the person exercising the Option, at his or her
election, shall have the right to make payment at the time of exercise by
delivering to the Company shares of Common Stock of the Company having a total
Fair Market Value (as defined in ss. 7(a) hereof) equal to the Option exercise
price, or a combination of cash and such shares having a total Fair Market Value
equal to the Option exercise price. Certificates representing shares delivered
to the Company pursuant to this paragraph shall be duly endorsed or accompanied
by appropriate stock powers, in either case with signature guaranteed if so
required by the Company.

         (h) If at the time of the death of an optionee an Option granted under
the Plan has not been fully exercised and is outstanding, the optionee's estate
or any person who has acquired the right to exercise the Option by bequest or
inheritance or by reason of the optionee's death or by transfer during the
optionee's lifetime to a "family member" in accordance with ss. 5(c) hereof may,
until the date one year after the date of the optionee's death and not
thereafter (but in no event after the seventh anniversary of the date of grant),
exercise the Option with respect to the number of shares as to which the
optionee could have exercised it at the time of his or her death.

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         (i) If an optionee ceases to be a member of the Board for any reason
other than death or removal from the Board for cause in accordance with law,
then, except as provided in the next sentence hereof, the Option shall
thereafter be exercisable until the date one year after the date on which the
optionee ceases to be a member of the Board and not thereafter (but in no event
after the seventh anniversary of the date of grant) and only with respect to the
number of shares as to which the optionee could have exercised the Option at the
time that he or she ceased to be a member of the Board. Notwithstanding the
immediately preceding sentence, if at the time that an optionee ceases to be a
member of the Board he or she has been a member of the Board for at least two
full three-year terms (six years, more or less, depending on the dates of annual
meetings, which vary somewhat from year to year), the Option shall continue to
vest in accordance with the vesting schedule set forth in ss. 5(b) and shall
remain outstanding and exercisable until the seventh anniversary of the date of
grant (subject to the provisions of ss. 5(h) if the optionee shall die prior to
such seventh anniversary).

ss. 6. ADJUSTMENT IN THE EVENT OF CHANGE IN STOCK

         If the Company effects any stock split, stock dividend, combination,
exchange of shares or similar capital adjustment, the aggregate number and kind
of shares available under the Plan, the number, kind and price of shares subject
to outstanding Options and the number of shares constituting an Option grant
under ss. 4 hereof, shall be appropriately and equitably adjusted so as to
reflect such change, all as determined by the Board.

ss. 7. MISCELLANEOUS PROVISIONS

         (a) As used in the Plan, "Fair Market Value" means the arithmetic mean
of the highest and lowest sales prices of the Common Stock on the date of grant
or other date as of which the Common Stock is to be valued hereunder, as
reported in New York Stock Exchange Composite Transactions. If no sale shall be
reported in New York Stock Exchange Composite Transactions for the valuation
date in question, Fair Market Value shall be determined by the Committee in
accordance with Treasury Regulations applicable to incentive stock options.

         (b) Nothing in the Plan or in any Option granted under the Plan shall
confer any rights on any director to continue as a director of the Company or
shall interfere in any way with the right of the Company or its shareholders to
remove such person as a director in accordance with applicable law. If a
director shall be removed for cause in accordance with law, any Option held by
such person shall automatically terminate as of the date of such removal.

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         (c) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended and that any ambiguities or
inconsistencies in the Plan be interpreted to give effect to such intention. The
Committee may adopt rules and regulations under, and amend, the Plan in
furtherance of such intent. Anything elsewhere in the Plan to the contrary
notwithstanding, neither the Board nor the Committee shall have the power to
amend the Plan in any way or take any other action which would cause the Plan to
fail to qualify as or be disqualified as a "formula plan" under and for purposes
of Rule 16b-3 and the instructions thereto.

         (d) Any director has the right to waive the granting of Options to him
or her on the next Granting Date on which an Option would be granted to such
director, by notice to the Secretary of the Company given prior to such Granting
Date.

ss. 8. CHANGE IN CONTROL

         (a) In the event of a "Change in Control" of the Company (as defined in
ss. 8(b) hereof), Options outstanding under the Plan on the date on which the
Change in Control occurs shall become exercisable in full on said date (i.e., to
the extent that any such Option or portion thereof is not yet exercisable on the
date on which the Change in Control occurs, the right to exercise such Option as
to all or any part of the shares covered thereby shall be accelerated).

         (b) A "Change in Control" for purposes of the Plan shall mean the
occurrence of any of the following:

                   (i) the "Distribution Date" as defined in ss. 3 of the Rights
          Agreement dated as of November 17, 1989 between the Company and United
          States Trust Company of New York as Rights Agent, as amended by
          Amendment No. 1 thereto dated 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

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

                  (iii) any event described in ss. 13 of the Rights Agreement,
         or

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

provided, however, that no Change in Control shall be deemed to have occurred,
and no rights arising upon a Change in Control pursuant to ss. 8(a) shall exist,
to the extent that the Board so determines by resolution adopted prior to the
Change in Control. Any such resolution may be rescinded or countermanded by the
Board at any time.

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ss. 9. AMENDMENT

         Except as provided in ss. 7(c) hereof, the Plan may be amended at any
time and from time to time by the Board as the Board shall deem advisable,
including, but not limited to, amendments necessary to qualify for any exemption
or to comply with applicable law or regulations; provided, however, that the
Plan may not, without further approval by the shareholders of the Company, be
amended to increase the total number of shares of Common Stock which may be
issued upon the exercise of Options granted under the Plan above the number set
forth in ss. 3 hereof as said number may have been adjusted pursuant to ss. 6
hereof. No amendment of the Plan shall alter or impair any of the rights or
obligations of any optionee, without his or her consent, with respect to any
Option theretofore granted under the Plan.

ss. 10. TERMINATION

         The Plan shall terminate upon the earlier of the following dates or
events to occur:

         (a) upon the adoption of a resolution of the Board terminating the
Plan; or

         (b) on a Granting Date if on said date the number of shares remaining
available for grant of Options under the Plan is not sufficient for the making
of the grants required by ss. 4 hereof to be made on such Granting Date.

         No termination of the Plan shall alter or impair any of the rights or
obligations of any optionee, without his or her consent, with respect to any
Option theretofore granted under the Plan.

ss. 11. SHAREHOLDER APPROVAL

         The Plan shall be submitted to the shareholders of the Company for
their approval at the 2001 annual meeting of shareholders. The shareholders
shall be deemed to have approved the Plan if it is approved at said meeting,
including any adjournment thereof, in accordance with the Business Corporation
Law of the State of New York. If the shareholders do not approve the Plan at
said meeting, including any adjournment thereof, the Plan shall thereupon
terminate and shall be of no further force or effect.

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ss. 12. EFFECTIVE DATE OF AMENDMENT

         The amendment hereof approved by the Board of Directors on September
17, 2004 shall be effective on that date, provided, however, that if the
shareholders of the Company shall fail to approve the Pall Corporation 2005
Stock Compensation Plan at the 2004 annual meeting of shareholders, including
any adjournment thereof, the September 17, 2004 amendment hereof shall be
automatically rescinded and the Plan shall revert to its form prior to September
17, 2004.

[Note: This Plan was adopted by the
Board of Directors on July 17, 2001,
subject to approval by shareholders, and
was approved by shareholders at the
annual meeting on November 14, 2001 and amended
by the Board of Directors on September 17, 2004.]

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                                                                  EXHIBIT 10.26

                                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,
January 19, 2000, March 28, 2001, July 16, 2002, January 30, 2003, October 16,
2003, January 21, 2004, and September 10, 2004.

         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.

         "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.

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         "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 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.

         "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.

         "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.

         "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.

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         "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 the Pall Corporation Cash Balance 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 2,000,000 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.

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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. 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 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, or the Compensation Committee may
determine not to grant any Initial Award Units to such Eligible Employee.

         (b) BONUS UNITS. Each Employee who is an Eligible Employee for any Plan
Year beginning on or after August 1, 1999 may elect to have any part or all of
any Bonus that may become payable to the Participant during such year paid in
the form of Restricted Units that will be credited to his or her Account
hereunder and distributed in accordance with the provisions of this Plan,
instead of being paid to the Eligible Employee in cash. If an Eligible Employee
has so elected, the Eligible Employee's Account shall be credited on the first
Bonus Payment Date during such year with a number of Restricted Units determined
by dividing (i) the total amount of the portion of the Eligible Employee's Bonus
payable during such year which the Eligible Employee elected to have paid in the
form of Restricted Units, by (ii) the Closing Price of a share of Common Stock
on such Bonus Payment Date or, if such date is not a Trading Day, on the next
following day that is a Trading Day. 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.

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<PAGE>

         (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
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.

                                      -6-
<PAGE>

         (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 Years beginning on
August 1, 2003 and August 1, 2004 and Base Salary Units credited on August 1,
2005 and (ii) 100% of the number of Restricted Units (x) credited on January 31,
2005 with respect to Cash Payment Units purchased after September 10, 2004 and
(y) credited during each Plan Year beginning on or after August 1, 2005.

         (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.

         (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 August
         1, 2005 (based on the application of the bonus formula to the Plan Year
         ending July 31, 2005) shall be made no later than December 31, 2004. 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,
         2006 shall be made no less than one year before the beginning of such
         Plan Year (e.g., an election with respect to the Bonus for the Plan
         Year beginning August 1, 2006, payable during the Plan Year beginning
         August 1, 2007, must be made by the last Business Day of July 2005). 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.

                                      -7-
<PAGE>

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

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

         (h) OTHER ELECTION RULES. Elections made under Section 5(b) or (c)
shall be subject to the following rules:

                  (i) If an Eligible Employee who has made an election under
         Section 5(b) with respect to the Bonus payable to the Eligible Employee
         during any Plan Year terminates employment with the Company and all of
         its Affiliated Companies for any reason prior to any Bonus Payment Date
         for such Bonus but is nevertheless entitled to receive a Bonus payment
         on such date, the portion of such payment that is otherwise required to
         be paid by means of the crediting of Restricted Units to the Eligible
         Employee's Account pursuant to his or her election under Section 5(b)
         shall not be paid in such form, but shall be paid instead in the form
         of a single lump sum cash payment. Such payment shall be made as soon
         as practicable after such Bonus Payment Date.

                  (ii) If an Eligible Employee who has made an election under
         Section 5(c) with respect to the base salary payable to the Eligible
         Employee during any Plan Year terminates employment with the Company
         and all of its Affiliated Companies for any reason prior to any date on
         which Restricted Units are to be credited to his or her Account with
         respect to amounts withheld from his or her base salary pursuant to
         such election, no Restricted Units shall be so credited on such date
         but instead, the 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.

                                      -8-
<PAGE>

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 any such
         Subaccount with a Crediting Date on or before July 31, 2003,

                  (ii) the fourth anniversary of the Crediting Date for any such
         Subaccount with a Crediting Date after July 31, 2003,

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

                  (iv) 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

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

         (b) If a Participant's employment with the Corporation and all of its
Affiliated Companies terminates as a result of Retirement or Involuntary
Termination prior to the third anniversary of a Crediting Date occurring on or
before July 31, 2003, or prior to the fourth anniversary of a Crediting Date
occurring after July 31, 2003, 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, 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

                                      -9-
<PAGE>

                  (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 (A) by dividing by 36 the number of months in the period beginning on
the Crediting Date for such Subaccount (if such Crediting Date is on or before
July 31, 2003) and ending on the date of the Participant's termination of
employment, or (B) by dividing by 48 the number of months in the period
beginning on the Crediting Date for such Subaccount (if such Crediting Date is
after July 31, 2003) and ending on the date of the Participant's termination of
employment, in either case (A) or (B) 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 a
Crediting Date occurring on or before July 31, 2003, or prior to the fourth
anniversary of a Crediting Date occurring after July 31, 2003, 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
         (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.

                                      -10-
<PAGE>

         (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.

         (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) or (ii) 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, the first Business Day of any of the following: (A) the third
         calendar year following the calendar year in which the Vesting Date for
         such Units occurs, or any later calendar month; (B) the calendar year
         following the date on which the Participant's employment with the
         Corporation or any of its Affiliated Companies terminates for any
         reason; or (C) the earlier of (x) any calendar year or month selected
         by the Participant which is a year or month permitted to be selected
         under clause (A) of this sentence, or (y) the calendar year referred to
         in clause (B).

                                      -11-
<PAGE>

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

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

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

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

                  (viii) Notwithstanding any other provision in this Section 7
         to the contrary, payment with respect to any part or all of any
         Deferred Vested Unit Subaccount maintained for a Participant may be
         made to the Participant on any date earlier than the Payment Date
         specified by the Participant in his deferral election for such Units if
         (A) the Participant requests such early payment and (B) the Committee,
         in its sole discretion, determines that such early payment is necessary
         to help the Participant meet an "unforeseeable emergency" within the
         meaning of Section 1.457-6(c)(2) of the federal income tax regulations.
         The amount that may be so paid may not exceed the amount necessary to
         meet such emergency.

                                      -12-
<PAGE>

         (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) or (ii) for the Units designated in such form, the
         Participant's deferral election shall not be given effect, and payment
         with respect to such Units shall be made in accordance with the other
         applicable provisions of this Section 7.

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

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

8. ACCOUNTS.

         There shall be established on the books and records of the Corporation,
for 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.

                                      -13-
<PAGE>

         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.

                                      -14-
<PAGE>

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.

         (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.

                                      -15-
<PAGE>

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.

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.

                                      -16-
<PAGE>

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. The
effectiveness of the amendment to Section 5(e) made by the Compensation
Committee on September 10, 2004 is conditioned on approval of the Pall
Corporation 2005 Stock Compensation Plan by shareholders at the 2004 Annual
Meeting.

[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 Consents dated January 19, 2000 and March 28, 2001
and at a meeting held July 16, 2002, by the Executive Committee by Consent dated
January 30, 2003 and by the Compensation Committee at meeting held October 16,
2003, the last-mentioned amendment having been approved by shareholders at the
Annual Meeting on November 19, 2003, and further amended by the Compensation
Committee at meetings held January 21, 2004 and September 10, 2004.]

                                      -17-

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