Document:

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                                                                   EXHIBIT 10.19

                                PALL CORPORATION

                       2004 EXECUTIVE INCENTIVE BONUS PLAN

                                      -----

1.       Purpose

         This document sets forth the Pall Corporation 2004 Executive Incentive
Bonus Plan as adopted by the Compensation Committee of the Board of Directors on
October 16, 2003 effective for the fiscal year beginning August 3, 2003 and
subsequent fiscal years, subject to approval by shareholders.

         The purpose of the Plan is to encourage greater focus on performance
among the key executives of the Corporation by relating a significant portion of
their total compensation to the achievement of annual financial objectives.

2.       Certain Definitions

         As used herein with initial capital letters, the following terms shall
have the following meanings:

         "Average Equity" shall mean, for any Fiscal Year, the average of
stockholders' equity as shown on the fiscal year-end consolidated balance sheet
of the Corporation and its subsidiaries as of the end of such Fiscal Year and as
of the end of the immediately preceding Fiscal Year except that the amounts
shown on said balance sheets as "Accumulated other comprehensive" income or
loss, as the case may be, shall be disregarded.

         "Base Salary" shall mean, with respect to any Executive and for any
Fiscal Year, the annual rate of base salary in effect for the Executive as of
the first day of such year or, if later, as of the first day of the Executive's
Term of Employment, as determined under the Executive's Employment Agreement.

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

         "Bonus" shall mean the bonus payable to an Executive under this Plan
for any Fiscal Year.

         "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 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
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         (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.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

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

         "Corporation" shall mean Pall Corporation.

         "Covered Executive" shall mean, with respect to any Fiscal Year, each
individual who is a "Covered Employee" of the Corporation for such year for the
purpose of section 162(m) of the Code.

         "Employment Agreement" shall mean, with respect to any executive
employee of the Corporation, an employment agreement between the Corporation and
such employee which provides that the employee shall be eligible to receive
annual bonuses under this Plan.

         "Executive" shall mean an executive employee of the Corporation with
whom the Corporation has entered into an Employment Agreement.

         "Fiscal Year" shall mean the fiscal year of the Corporation ending on
July 31, 2004, and each subsequent fiscal year of the Corporation.

         "Maximum R.O.E. Target" shall mean, for any Fiscal Year, the Return on
Equity that must be achieved or exceeded in order for the Performance Percentage
for the year to equal 100%, as determined by the Committee prior to the first
day of such year or within such period of time thereafter as may be permitted
under the regulations issued under ss.162(m) of the Code.

         "Minimum R.O.E. Target" shall mean, for any Fiscal Year, the Return on
Equity that must be exceeded in order for any Bonus to be paid to any Executive
for the year, as determined by the Committee prior to the first day of such year
or within such period of time thereafter as may be permitted under the
regulations issued under ss.162(m) of the Code.

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         "Net Earnings" shall mean, for any Fiscal Year, the after-tax
consolidated net earnings of the Corporation and its subsidiaries as certified
by the Corporation's independent accountants for inclusion in the annual report
to shareholders ("Annual Report"), adjusted so as to eliminate the effects of
any decreases in or charges to earnings for (a) the effect of foreign currency
exchange rates, (b) any acquisitions, divestitures, discontinuance of business
operations, restructuring or any other special charges, (c) the cumulative
effect of any accounting changes, and (d) any "extraordinary items" as
determined under generally accepted accounting principles, to the extent such
decreases or charges referred to in clauses (a) through (d) are separately
disclosed in the Corporation's Annual Report for the year.

         "Plan" shall mean the Pall Corporation Executive Incentive Bonus Plan,
as set forth herein and as amended from time to time.

         "Return on Equity" shall mean, for any Fiscal Year, the percentage
determined by dividing the Net Earnings for the year by the Average Equity for
the year.

         "Target Bonus Percentage" shall mean, with respect to any Executive,
the target bonus percentage specified for such Executive in his or her
Employment Agreement.

3.       Determination of Bonus Amounts

         For each Fiscal Year falling in whole or in part within an Executive's
Term of Employment, as defined in his or her Employment Agreement, the Executive
shall be entitled to receive a Bonus in an amount determined in accordance with
the provisions of this Section 3, subject, however, to the provisions of Section
4.

         (a) The amount of the Bonus payable to an Executive for each such
Fiscal Year shall be equal to (i) the Target Bonus Percentage of the Executive's
Base Salary for such year, multiplied by (ii) the Performance Percentage for
such year, as determined under (b) below.

         (b) The Performance Percentage for any Fiscal Year shall be determined
in accordance with the following provisions:

                  (i) If the Return on Equity equals or exceeds the Maximum
         R.O.E. Target for the year, the Performance Percentage for the year
         shall be 100%.

                  (ii) If the Return on Equity equals or is less than the
         Minimum R.O.E. Target for the year, the Performance Percentage for the
         year shall be zero, and no Bonus shall be payable under the Plan for
         such year to any Executive.

                  (iii) Except as other provided in (iv) below, if the Return on
         Equity is less than the Maximum R.O.E. Target for the year but exceeds
         the Minimum R.O.E. Target for the year, the Performance Percentage for
         the year shall be equal to the quotient resulting from dividing (A) the
         excess of the Return on Equity for the year over the Minimum R.O.E.
         Target for the year, by (B) the excess of the Maximum R.O.E. Target for
         the year over the Minimum R.O.E. Target for the year.

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                  (iv) At the time it establishes the Minimum and Maximum R.O.E.
         Targets for any Fiscal Year beginning on or after August 3, 2003, the
         Committee may also (A) establish one or more R.O.E. targets (each, an
         "Intermediate R.O.E. Target") for such year that are greater than the
         Minimum R.O.E. Target but less than the Maximum R.O.E. Target for such
         year, and (B) determine the Performance Percentage that will apply if
         the Return on Equity exceeds the Minimum R.O.E. Target, or equals any
         of the Intermediate R.O.E. Targets established for such year. If one or
         more Intermediate R.O.E. Targets are established for any such Fiscal
         Year and the Return on Equity for such year exceeds the Minimum R.O.E
         Target or any Intermediate R.O.E Target established for the year (the
         "Achieved Target") but is less than the next highest Intermediate R.O.E
         Target established for the year (the "Next Highest Target"), the
         Performance Percentage for such year shall be equal to the Performance
         Percentage that would apply if the Return on Equity were equal to the
         Achieved Target, plus the percentage resulting from multiplying (1) the
         excess of the Performance Percentage that would apply if the Return on
         Equity were equal to the Next Highest Target, over the Performance
         Percentage that would apply if the Return on Equity were equal to the
         Achieved Target , by (2) the percentage resulting from dividing (x) the
         excess of the Return on Equity over the Achieved Target, by (y) the
         excess of the Next Highest Target over the Achieved Target. If the
         Return on Equity for the year exceeds the highest Intermediate R.O.E.
         Target for the year but is less than the Maximum R.O.E. Target for the
         year, the Performance Percentage for the year shall be determined in
         the manner described in the preceding sentence but for this purpose,
         the Maximum R.O.E. Target for the year shall be treated as the Next
         Highest Target for the year.

         (c) If an Executive's Term of Employment commences after the start of a
Fiscal Year, or ends prior to the close of a Fiscal Year, the amount of the
Bonus payable to the Executive for the Fiscal Year in which the Executive's Term
of Employment commences, or for the Fiscal Year in which the Executive's Term of
Employment ends, as determined in accordance with the other applicable
provisions of the Plan, shall be prorated on the basis of the number of days of
such Fiscal Year that fall within the Executive's Term of Employment; provided,
however, that (i) if an Executive's Term of Employment ends within 5 days prior
to the close of a Fiscal Year, there shall be no proration and the Executive
shall be entitled to receive the entire amount of the Bonus payable to the
Executive for such year, as determined in accordance with such other provisions,
and (ii) if the Executive's Term of Employment ends within 5 days following the
start of a Fiscal Year, the Executive shall not be entitled to receive any Bonus
with respect to such Fiscal Year.

4.       Adjustment of and Limitation on Bonus Amounts

         The amount of the Bonus otherwise payable to an Executive for any
Fiscal Year in accordance with Section 3 shall be subject to the following
adjustments and limitation:

         (a) The Committee may, in its discretion, reduce the amount of the
Bonus otherwise payable to any Executive in accordance with Section 3, (i) to
reflect any decreases in or charges to earnings that were not taken into account
in determining Net Earnings for the year pursuant to clause (a), (b), (c) or (d)
contained in the definition of such term in Section 2, (ii) to reflect any
credits to earnings for extraordinary items of income or gain that were taken
into account in determining Net Earnings for the year, (iii) to reflect the
Committee's evaluation of the Executive's individual performance, or (iv) to
reflect any other events, circumstances or factors which the Committee believes
to be appropriate in determining the amount of the Bonus to be paid to the
Executive for the year.

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         (b) The Committee may, in its discretion, increase the amount of the
Bonus otherwise payable to any Executive who is not a Covered Executive, as
determined under Section 3, to reflect the Committee's evaluation of the
Executive's individual performance, or to reflect such other circumstances or
factors as the Committee believes to be appropriate in determining the amount of
the Bonus to be paid to the Executive for the year. The Committee shall not have
any discretion to increase the amount of the Bonus payable to any Covered
Executive for the year, as determined under Section 3.

         (c) Notwithstanding any other provision herein to the contrary, the
amount of the Bonus otherwise payable to any Executive for any Fiscal Year
beginning on or after August 3, 2003, shall not exceed the lesser of (i) $2.0
million and (ii) 150% of the Executive's Base Salary for such Fiscal Year.

5. Payment of Bonuses

         The Bonus payable to an Executive for any Fiscal Year shall be paid in
accordance with the following provisions:

         (a) Except as otherwise provided in (b) or (c) below,

                  (i) if the Executive is not a Covered Executive for such year,
         not less than 50% of the estimated amount of the Executive's Bonus
         shall be paid to the Executive on such date in September next following
         the close of such year as the Committee in its discretion shall
         determine (the first "Bonus Payment Date"), and any remaining amount of
         the Executive's Bonus shall be paid to the Executive by no later than
         January 15 next following the close of such year;

                  (ii) if the Executive is a Covered Executive for such year,
         not less than 50% of the amount of the Executive's Bonus shall be paid
         to the Executive as soon as practicable after the Committee has
         certified in writing that all conditions for the payment of such Bonus
         to the Executive for such year have been satisfied, and any remaining
         amount of the Executive's Bonus shall be paid to the Executive by no
         later than January 15 next following the close of such year;

                  (iii) each amount payable to an Executive under (i) and (ii)
         above, reduced by the amount of all federal, state and local taxes
         required by law to be withheld therefrom, shall be paid to the
         Executive in the form of a single lump sum cash payment.

         (b) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Management Stock Purchase Plan (the "MSPP")
to have any part of the Bonus payable to the Executive for any Fiscal Year paid
in the form of Restricted Units to be credited to the Executive's account under
the MSPP, no cash payments shall be made to the Executive pursuant to (a) above
with respect to the part of the Executive Bonus that is subject to such
election, and the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged upon the
crediting of Restricted Units to the Executive's account under the MSPP in
accordance with the applicable provisions of such Plan.

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         (c) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Profit-Sharing Plan (the "Profit-Sharing
Plan") to have any part of the Bonus payable to the Executive for any Fiscal
Year reduced, and to have an amount equal to such part of the Executive's Bonus
contributed to the Profit-Sharing Plan as a 401(k) Contribution on the
Executive's behalf, an amount equal to such part of the Executive's Bonus shall
be contributed to the Profit-Sharing Plan on behalf of the Executive, and
thereupon, the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged.
However, no such contribution shall be made to the extent it would cause any
limitation applicable under the 401(k) Plan to be exceeded.

6.       Change in Control

         Notwithstanding any other provision in the Plan to the contrary (but
subject to the "provided, however" clause contained in the definition of "Change
in Control" in Section 2), upon the occurrence of a Change in Control, the
following provisions shall apply.

         (a) The amount of the Bonus payable to any Executive for the Fiscal
Year in which a Change in Control occurs shall be at least equal to the Target
Bonus Percentage of the Executive's Base Salary for such year or, in the case of
any Executive whose Term of Employment commences after the start of such year or
ends prior to the close of such year, a pro rata portion thereof determined on
the basis of the number of days of such Fiscal Year that fall within the
Executive's Term of Employment.

         (b) Each Executive whose Term of Employment has not ended prior to the
occurrence of a Change in Control shall be entitled to receive a Bonus for each
Contract Year (as defined in the Executive's Employment Agreement) that falls in
whole or in part within the Executive's Term of Employment and that ends after
the Fiscal Year in which the Change in Control occurs. The amount of the Bonus
payable to the Executive for each such Contract Year shall be at least equal to
the Target Bonus Percentage of the Executive's Base Salary for such Contract
Year or, in the case of any Executive whose Term of Employment ends after the
start of such Contract Year but prior to the close of such year, a pro rata
portion thereof determined on the basis of the number of days of such Contract
Year that fall within the Executive's Term of Employment.

         (c) The entire amount of the Bonus payable to an Executive for any
Fiscal Year or Contract Year pursuant to (a) or (b) above, reduced by the amount
of all federal, state and local taxes required to be withheld therefrom, shall
be paid to the Executive in a single cash lump sum as soon as practicable after
the close of such Fiscal Year or Contract Year.

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7. Rights of Executives

         An Executive's rights and interests under the Plan shall be subject to
the following provisions:

         (a) An Executive'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 Executive.

         (b) Neither the Plan nor any action taken hereunder shall be construed
as giving any Executive any right to be retained in the employment of the
Corporation or any of its subsidiaries.

8. 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.

         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 under the
Plan shall be final, conclusive and binding upon all parties. Notwithstanding
the foregoing, any determination made by the 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.

9.       Amendment or Termination

         The Board of Directors may, (acting by the Committee if the by-laws of
the Corporation so provide), 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 Executive with respect to any Bonus that has
become payable to the Executive under the Plan, without his or her written
consent, and (b) following a Change in Control, no amendment to Section 6, and
no termination of the Plan, shall be effective if such amendment or termination
adversely affects the rights of any Executive under the Plan.

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10.      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 Executives' 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.

11.      Governing Law

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

12.      Effective Date

         The Plan was adopted by the Committee, on October 16, 2003 effective
for the Fiscal Year beginning August 3, 2003, subject, however, to approval by
the shareholders of the Corporation at the 2003 annual meeting of the
shareholders, including any adjournment thereof.

                                       8<PAGE>

                                                                   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 and October
16, 2003.

         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.

                                      -1-
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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 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.

         "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.

                                      -2-
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         "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.

         "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.

                                      -3-
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         "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.

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.

                                      -4-
<PAGE>

         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
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.

                                      -5-
<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 Year beginning on
August 1, 1999, (ii) 331/3% 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, through and including the Plan Year beginning on
August 1, 2002, and (iii) 50% 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, 2003.

         (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 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.

                                      -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) 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, provided, however, that in
         the case of Units that vest on July 31, 2003 or August 24, 2003, the
         deferral election form may be filed with the Committee until, but not
         later than, February 14, 2003.

                  (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").

                                      -11-
<PAGE>

                  (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).

                  (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 1.457-2(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.

                                      -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) 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).

                                      -13-
<PAGE>

         A Participant's Account and Subaccounts shall be adjusted from time to
time to reflect all Dividend Equivalent Units to be credited thereto pursuant to
Section 5(f) and Section 7(d)(vi), all payments made with respect to the Units
reflected therein pursuant to Section 7, and, in the case of any Initial Award
Restricted Unit Subaccount, Purchased Restricted Unit Subaccount or Matching
Restricted Unit Subaccount maintained for a Participant, any forfeitures of
Units reflected therein pursuant to Section 6.

         A Participant's interest in any Deferred Vested Unit Subaccount
maintained for the Participant shall be fully vested and nonforfeitable at all
times.

9. Certain Adjustments to Plan Shares.

         In the event of any change in the shares of Common Stock by reason of
any stock dividend, stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares, or any rights
offering to purchase shares of Common Stock at a price substantially below fair
market value, or any similar change affecting the shares of Common Stock, the
number and kind of shares represented by Units credited to Participants'
Accounts shall be appropriately adjusted consistent with such change in such
manner as the Compensation Committee, in its sole discretion, may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, the Participants hereunder. The Committee shall give notice to
each Participant of any adjustment made pursuant to this Section and, upon such
notice, such adjustment shall be effective and binding for all purposes.

10. Listing and Qualification of Common Stock.

         The Corporation, in its discretion, may postpone the issuance,
delivery, or distribution of shares of Common Stock with respect to any Vested
Units until completion of such stock exchange listing or other qualification of
such shares under any state or federal law, rule or regulation as the
Corporation may consider appropriate, and may require any Participant or
Beneficiary to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
in compliance with applicable laws, rules and regulations.

11. Taxes.

         The Corporation or any of its Affiliated Companies may make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state and local taxes required by law to be withheld
with respect to any payments to be made under the Plan including, but not
limited to (i) deducting the amount so required to be withheld from any other
amount then or thereafter payable to a Participant or Beneficiary, and/or (ii)
requiring a Participant or Beneficiary to pay to the Corporation or any of its
Affiliated Companies the amount so required to be withheld as a condition of the
issuance, delivery, or distribution of any shares of Common Stock. With the
approval of the Compensation Committee, the Committee may permit such amount to
be paid in shares of Common Stock previously owned by the Participant, or a
portion of the shares of Common Stock that otherwise would be distributed to
such Participant in respect to his or her Vested Units, or a combination of cash
and shares of Common Shares.

                                      -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.

                                      -15-
<PAGE>

         (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
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-
<PAGE>

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.

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 a meeting held
October 16, 2003.

                                      -17-

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