Document:

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                                                                    EXHIBIT 10.4

                                PALL CORPORATION

                         MANAGEMENT STOCK PURCHASE PLAN

                                      _____

1.       PURPOSE.

         This document sets forth the Pall Corporation Management Stock Purchase
Plan as amended and restated effective as of January 1, 2005.

         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.

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

         "COMMITTEE" shall mean the CEO and such other officers of the
Corporation as the CEO in his discretion may appoint from time to time. The CEO
shall have the power to remove any other member of the Committee at any time.

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

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

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         "CORPORATION" shall mean Pall Corporation.

         "CREDITING DATE" shall mean, with respect to any Initial Award
Restricted Unit Subaccount, Purchased Restricted Unit Subaccount or Matching
Restricted Unit Subaccount maintained for a Participant under Section 8, the
date as of which Restricted Units, or Matching Restricted Units, were first
credited to such Subaccount pursuant to Section 5(a), (b), (c), (d), or (e).

         "DEFERRED VESTED UNITS" shall mean Vested Units with respect to which
the Participant has elected to defer payment in accordance with the provisions
of Section 7(d) hereof.

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

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

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

         "DIVIDEND PAYMENT DATE" shall mean each date on which the Corporation
pays a dividend on its Common Stock.

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

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

         "INVOLUNTARY TERMINATION" shall mean a Participant's Termination of
Employment initiated by the Corporation, or by any of its Affiliated Companies,
for any reason other than for disability or becoming Disabled 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).

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

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

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

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

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

         "RETIREMENT" shall mean a Participant's Termination of Employment for
any reason other than death, 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.

         "TERMINATION OF EMPLOYMENT" shall mean the cessation of a Participant's
employment with the Corporation and all of its Affiliated Companies irrespective
of the reason therefor and irrespective of whether initiated by the Corporation,
an Affiliated Company, the Participant or otherwise.

         "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.

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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.

         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.

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         (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.

         (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

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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 (the "Cash
Purchase Year") shall not exceed the sum of (x) the amount by which 50% of the
Eligible Employee's base salary for the Plan Year immediately preceding the Cash
Purchase Year exceeds the portion thereof which the Eligible Employee has
elected under Section 5(c) to have paid in the form of Restricted Units, plus
(y) the amount by which the Bonus payable to the Eligible Employee during the
Cash Purchase Year (based on results of operations for the immediately preceding
Plan Year) exceeds the portion thereof which the Eligible Employee elected under
Section 5(b) to have paid in the form of Restricted Units.

         (e) MATCHING UNITS. On each date on which any Restricted Units are
credited to an Eligible Employee's Account pursuant to the provisions of
paragraphs (b), (c) or (d) of this Section 5, there shall also be credited to
the Eligible Employee's Account on that date a number of Matching Restricted
Units equal to (i) 50% of the number of Base Salary Units credited on January
31, 2005 and August 1, 2005 and (ii) 100% of the number of Cash Payment Units
purchased after September 10, 2004 and credited on January 31, 2005 and 100% of
the number of Restricted Units of all kinds (other than Dividend Equivalent
Units) credited 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.

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

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

             (ii) An election under Section 5(b) with respect to the Bonus
         payable to an Eligible Employee during the Plan Year beginning August
         1, 2005 (based on the application of the bonus formula to the fiscal
         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 payable
         during the Plan Year beginning August 1, 2006 (based on the application
         of the bonus formula to the fiscal year ending July 31, 2006), must be
         made by the last Business Day of July 2005).

             (iii) An election under Section 5(c) with respect to base salary
         payable to an Eligible Employee during any Plan Year shall be made on
         or prior to the last Business Day preceding the start of such Plan
         Year, except as otherwise provided under subparagraph (iv) or (v)
         below.

             (iv) In the case of any Eligible Employee who, in the absence of
         any election under Section 5(c) with respect thereto, would be required
         to include in his or her gross income for U.S. federal income tax
         purposes the base salary payable to the Eligible Employee during any
         Plan Year beginning on or after August 1, 2005, an election under
         Section 5(c) with respect to the Eligible Employee's base salary for
         any such Plan Year shall be made in accordance with the following
         provisions:

                           (A) For the Plan Year beginning on August 1, 2005,
                  any such election with respect to base salary payable to the
                  Eligible Employee during the period from August 1 through
                  December 31 of such Plan Year shall be made on or prior to
                  March 15, 2005, and any such election with respect to base
                  salary payable to the Eligible Employee during the period from
                  January 1 through July 31 of such Plan Year shall be made on
                  or prior to the last Business Day preceding the start of such
                  Plan Year.

                            (B) For each Plan Year beginning on or after August
                  1, 2006, any such election with respect to base salary payable
                  to the Eligible Employee during the period from August 1
                  through December 31 of such Plan Year shall be made on or
                  prior to the close of the calendar year immediately preceding
                  the start of such Plan Year, and any such election with
                  respect to base salary payable to the Eligible Employee during
                  the period from January 1 through July 31 of such Plan Year
                  shall be made on or prior to the last Business Day preceding
                  the start of such Plan Year.

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                           (C) If prior to the start of any Plan Year beginning
                  on or after August 1, 2006, regulations, rulings or other IRS
                  guidance are issued under section 409A of the Code ("section
                  409A Guidance") that permit base salary payable with respect
                  to services performed by an employee during his or her
                  employer's fiscal year to be deferred pursuant to an election
                  made by no later than the close of the employer's preceding
                  fiscal year, clause (B) above shall not apply with respect to
                  any such Plan Year starting after the date on which such
                  section 409A Guidance is issued. Instead, an election under
                  Section 5(c) with respect to base salary payable to the
                  Eligible Employee during any portion of such Plan Year shall
                  be made on or prior to the last Business Day of the Plan Year
                  immediately preceding such Plan Year. However, if, prior to
                  the date on which such section 409A Guidance is issued, an
                  Eligible Employee made an election under Section 5(c) in
                  accordance with clause (B) above with respect to base salary
                  payable to the Eligible Employee during the period from August
                  1 through December 31 of such Plan Year, the election so made
                  shall remain in effect except to the extent the Committee, in
                  its discretion, permits such election to be modified prior to
                  the start of such Plan Year.

                  (v) Any Employee who is hired after the start of a Plan Year
         but who is designated under Section 4 as an Eligible Employee for such
         year may make election under Section 5(c) with respect to his or her
         base salary for such year at any time during the 30-day period
         commencing on his or her date of hire; provided, however, that any
         election so made shall be effective only with respect to base salary
         payable to the Eligible Employee for periods of service beginning after
         the date on which he or she files such election with the Committee.

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

                  (vii) Except as otherwise provided in the last sentence of
         paragraph (iv)(C) above, 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:

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                  (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 within 30
         days 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 within 30 days after such termination
         date.

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

6.       VESTING OF UNITS.

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

         (a) All Restricted Units standing to a Participant's credit in any
Initial Award Restricted Unit Subaccount, Purchased Restricted Unit Subaccount
or Matching Restricted Unit Subaccount maintained for the Participant under
Section 8 (including, in each case, all such Units that are Dividend Equivalent
Units) shall become vested on the earliest to occur of the following dates:

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

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                  (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, on and after January 1, 2005, the date on which the Participant
         becomes Disabled,

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

         (b) If a Participant's Termination of Employment occurs as a result of
Retirement or Involuntary Termination prior to the 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 the
Participant's Termination of Employment:

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

                  (ii) the Earned Portion (as defined below) of all Units in any
         such Initial Award Restricted Unit Subaccount and in any such Matching
         Restricted Unit Subaccount (including all such Units that are Dividend
         Equivalent Units), shall become vested; and

                  (iii) the Unearned Portion (as defined below) of all Units in
         any such Initial Award Restricted Unit Subaccount and in any such
         Matching Restricted Unit Subaccount (including all such Units that are
         Dividend Equivalent Units) shall be forfeited, and the Participant
         shall have no further rights with respect thereto.

         For purposes of the foregoing, the "Earned Portion" of the Units in any
Initial Award Restricted Unit Subaccount and in any Matching Restricted Unit
Subaccount maintained for a Participant shall mean the percentage of such Units
determined (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.

                                      -11-
<PAGE>

         (c) If a Participant's Termination of Employment occurs for any reason
other than death, disability or becoming Disabled, 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 the Participant's Termination of
Employment:

                  (i) all Units in any such Initial Award Restricted Unit
         Subaccount and in any such Matching Restricted Unit Subaccount
         (including all such Units that are Dividend Equivalent Units), shall be
         forfeited, and the Participant shall have no further rights with
         respect thereto; and

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

7.       PAYMENT FOR VESTED UNITS.

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

         (a) TIME FOR PAYMENT. Payment with respect to a Participant's Vested
Units shall be made to the Participant or, in the event of the Participant's
death, to his or her Beneficiary, within 30 days after the Vesting Date for such
Units, except as otherwise provided in paragraph (d), (f)(i) or (f)(ii)(B)
below.

         (b) FORM AND AMOUNT OF PAYMENT. Except as provided in paragraph (c)
below, payment to be made with respect to any of a Participant's Vested Units at
the time specified in paragraph (a) above, or at the time specified in paragraph
(f)(i) below, shall be made in the form of a single lump sum payment consisting
of (i) a number of shares of Common Stock equal to the total number of whole
Vested Units payment for which is to be made at such time (including, in the
case of any Vested Units payment for which is to be made under paragraph (f)(i),
all Dividend Equivalent Units credited with respect to such Vested Units
pursuant to paragraph (f)(vi) below), and (ii) a cash payment for any fractional
part of a Unit payment for which is to be made at such time. The amount of such
cash payment shall be determined by multiplying such fractional part by the
Closing Price of a share of Common Stock on the first Trading Day preceding the
date of payment.

         (c) PAYMENT ON ACCOUNT OF TERMINATION. Payment to be made at the time
specified in paragraph (a) above, or at the time specified in paragraph
(f)(ii)(B) below, with respect to a Participant's Units that become vested
pursuant to Section 6(c)(ii) shall be made, in either case, by the issuance of a
number of shares of Common Stock determined by dividing the lesser of (x) the
aggregate value of the number of such Units payment for which is to be made at
such time, determined by multiplying such number of Units by the Closing Price
of a share of Common Stock on the date or dates as of which such Units were
credited to the Participant's Account, or (y) the aggregate value of the number
of such Units payment for which is to be made at such time, determined by

                                      -12-
<PAGE>

multiplying such number of Units by the Closing Price of a share of Common Stock
on the Vesting Date for such Units, by (z) the Closing Price of a share of
Common Stock on such Vesting Date or, if such Vesting Date was not a Trading
Day, the Closing Price of a share of Common Stock on the first Trading Day
preceding such Vesting Date. If payment for any of such Units is to be made at
the time specified in paragraph (f)(ii)(B) below, payment with respect to such
Units shall consist of the number of shares of Common Stock determined in
accordance with the preceding sentence, plus the number of Dividend Equivalent
Units credited with respect to such Units pursuant to paragraph (f)(vi) below.
If the total number of shares of Common Stock determined in accordance with the
provisions of either of the two preceding sentences includes a fractional part
of a share, payment with respect to such fractional part shall be made in cash,
in an amount determined by multiplying such fractional part by the Closing Price
of a share of Common Stock 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, (A)(1) the first Business Day of the third calendar year
         following the calendar year in which the Vesting Date for such Units
         occurs, or any later calendar month, or (2) in the case of any such
         Units that become vested on or after January 31, 2006, the first
         Business Day of any calendar year or month after the fifth anniversary
         of the Vesting Date for such Units; (B)(1) the first Business Day of
         the calendar year following the date on which the Participant's
         Termination of Employment occurs for any reason, or (2) in the case of
         any such Units that become vested on or after January 31, 2006, the
         later of (x) the first Business Day referred to in clause (B)(1) or (y)
         the first Business Day of the calendar month following the fifth
         anniversary of the Vesting Date for such Units; or (C) the earlier of
         (1) the first Business Day of 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 (2) the first Business Day of the
         calendar year or month referred to in clause (B) of this sentence.

                                      -13-
<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 or, if applicable, on the Delayed Payment Date
         for such Units provided in paragraph (f)(iii) below. Payment with
         respect to the Deferred Vested Units payable on any Payment Date or
         Delayed Payment Date shall be made (A) by the issuance of one share of
         Common Stock for each whole Deferred Vested Unit payable on such
         Payment Date or Delayed Payment Date, and (B) by a cash payment for any
         fractional part of a Deferred Vested Unit payable on such Payment Date
         or Delayed Payment Date. The amount of such cash payment shall be
         determined by multiplying such fractional part by the Closing Price of
         a share of Common Stock on the first Trading Day preceding the date of
         payment.

                  (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
         or, in the case of any request for early payment made after January 1,
         2005, within the meaning of section 409A(a)(2)(B)(ii)(I) of the Code.
         The amount that may be so paid may not exceed the amount necessary to
         meet such emergency or, for any early payment requested after January
         1, 2005, the amount permitted to be paid under section
         409A(a)(2)(B)(ii)(II) of the Code.

                                      -14-
<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.

         (f) DELAY IN TIME FOR PAYMENT. To the extent provided in subparagraph
(i), (ii) or (iii) below, payment otherwise required to be made with respect to
any of a Participant's Vested Units at the time specified in paragraph (a)
above, and payment otherwise required to be made with respect to any of
Participant's Deferred Vested Units on the Payment Date for such Units
determined under clause (B)(2) or clauses (B)(2) and (C)(2) of paragraph
(d)(iii) above, shall not be made at such times but shall be made, instead, at
the times provided in subparagraph (i), (ii) or (iii) below.

                  (i) Payment with respect to any of a Participant's Post-2004
         Bonus and Base Salary Units that become vested pursuant to Section
         6(a)(v) by reason of the occurrence of a Change in Control shall be
         made within 30 days after, (A) the earliest date on which such Units
         otherwise would become vested under Section 6(a) in the absence of the
         occurrence of a Change in Control, or (B), if earlier, the date of the
         Participant's Termination of Employment for any reason other than death
         or as a result of the Participant's having become Disabled; provided,
         however, that if the Participant was a Key Employee (as defined in
         subparagraph (iv) below) immediately prior to such Termination of
         Employment, payment pursuant to this clause (B) shall be made on the
         day that is 6 months after the date of such Termination of Employment
         or, if the Participant dies before that day, by no later than 7
         Business Days after the Corporation receives written notice of the
         Participant's death.

                                      -15-
<PAGE>

                  (ii) In the case of a Participant whose Termination of
         Employment occurs after January 31, 2005 for any reason other than the
         Participant's death or as a result of the Participant having become
         Disabled, and who was a Key Employee immediately prior to his or her
         Termination of Employment, payment with respect to any of the
         Participant's Post-2004 Bonus and Base Salary Units that become vested
         pursuant to Section 6(b) or (c) by reason of the Participant's
         Termination of Employment shall be made at the times provided below:

                           (A) Payment with respect to any such Units that
                  become vested by reason of the Participant's Termination of
                  Employment at any time during calendar year 2005 shall be made
                  at the time specified in paragraph (a) above, provided that
                  such payment is made on or prior to December 31, 2005. Such
                  payment shall be treated as having been made to the
                  Participant upon his or her termination of participation in
                  the Plan, for purposes of Q & A 20 of IRS Notice 2005-1.

                           (B) Payment with respect to any such Units that
                  become vested by reason of the Participant's Termination of
                  Employment at any time after December 31, 2005 (or which
                  become vested by reason of the Participant's Termination of
                  Employment before that date but payment with respect to which
                  is not made to the Participant on or before that date) shall
                  be made on the day which is 6 months after the date of the
                  Participant's Termination of Employment or, if the Participant
                  dies before such day, by no later than 7 Business Days after
                  the Corporation receives written notice of the Participant's
                  death.

                  (iii) In any case where (A) any of a Participant's Deferred
         Vested Units that became vested on or after January 31, 2006 have a
         Payment Date determined by reference to the date of the Participant's
         Termination of Employment pursuant to clause (B)(2) or clauses (B)(2)
         and (C)(2) under paragraph (d)(iii) above, (B) the Payment Date for
         such Units, as so determined, is earlier than 6 months after the date
         of the Participant's Termination of Employment, (C) the Participant's
         Termination of Employment occurs for any reason other than death or as
         a result of the Participant having becoming Disabled, and (D) the
         Participant is a Key Employee immediately prior to the Participant's
         Termination of Employment, payment with respect to such Deferred Vested
         Units shall be made on the day which is 6 months after the date of the
         Participant's Termination of Employment or, if the Participant dies
         before such day, by no later than 7 business days after the Corporation
         receives written notice of the Participant's death.

                                      -16-
<PAGE>

                  (iv) For purposes of this paragraph (f), the term "Key
         Employee" shall mean a Participant who, as of any date of reference, is
         a "specified employee" within the meaning of section 409A(a)(2)(B)(i)
         of the Code.

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

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

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).

                                      -17-
<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.

                                      -18-
<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.

                                      -19-
<PAGE>

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

14.      ADMINISTRATION.

         The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan; provided, however, that any questions as to the
rights under the Plan of any person who is an Elected Officer under Section
4.01(a) of the By-Laws of the Corporation, as amended on July 15, 2003 or
thereafter, shall be determined by the Compensation Committee instead of by the
Committee.

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

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

15.      AMENDMENT OR TERMINATION.

         The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that (a) no amendment, suspension or termination of the Plan
shall adversely affect the rights of any Participant with respect to any Units
previously credited to the Participant's Account, without his or her written
consent and (b) no amendment which constitutes a "material revision" of the
Plan, as the term material revision is defined in the applicable rules of the
New York Stock Exchange, shall be effective unless approved by the shareholders
in the manner required by such rules and by applicable law.

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.

                                      -20-
<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 was conditioned on approval of the Pall
Corporation 2005 Stock Compensation Plan by shareholders at the 2004 Annual
Meeting, which approval was granted at the Annual Meeting on November 17, 2004.

[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, September 10, 2004, January 19,
2005 and July 19, 2005.]

                                      -21-<PAGE>

                                                                    EXHIBIT 10.5

                  AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated July 20, 2005,
         between PALL CORPORATION, a New York corporation (the "Company"), and
         ERIC KRASNOFF ("Executive").

                  WHEREAS, the parties hereto are parties to an Amended and
         Restated Employment Agreement dated January 21, 2004, (the "Existing
         Agreement"), and

                  WHEREAS, the parties hereto wish to amend the Existing
         Agreement to comply with the requirements of section 409A of the
         Internal Revenue Code of 1986, as amended (the "Code") and to make
         certain other changes in the Existing Agreement,

                  NOW, THEREFORE, in consideration of the foregoing and the
         mutual agreements hereinafter set forth, the parties hereto agree that
         the Existing Agreement is hereby amended and restated to read in its
         entirety as follows:

                  ss.1. Employment and Term.
                        -------------------

                  The Company hereby employs Executive, and Executive hereby
         agrees to serve, as an executive employee of the Company, with the
         duties set forth in ss.2, for a term (hereinafteR called the "Term of
         Employment") which began August 1, 2003 (the "Term Commencement Date")
         and ending, unless sooner terminated under ss.2 or ss.4, on the
         effective date specified in a notice OF termination given by either
         party to the other except that such effective date shall not be earlier
         than the second anniversary of the date on which such notice is given.

                  ss.2. Duties.
                        ------

                  (a) As used herein, the term "chief executive officer" means
         the person who has the title of chief executive officer of the Company
         and also has such authority and duties as are customarily possessed by
         and assigned to a chief executive officer. If at any time during the
         Term of Employment--

<PAGE>

                      (i) the Board of Directors shall fail to elect Executive
         to, or shall remove him from, the office which, in accordance with the
         by-laws as then in effect or any resolution or resolutions of the Board
         of Directors, carries with it the title, authority and duties of chief
         executive officer, or

                      (ii) the by-laws are amended in such a way that, or the
         Board of Directors takes any action the effect of which is that,
         Executive no longer has the title of and the authority and duties which
         are customarily possessed by and assigned to a chief executive officer,

         then in either such event Executive shall have the right at his option
         to terminate the Term of Employment by not less than 30 days' notice to
         the Secretary of the Company given at any time thereafter. During any
         period of time when Executive has the right to terminate under this
         paragraph but elects not to do so, he shall hold such office or offices
         in the Company, and perform such duties and assignments relating to the
         business of the Company, as the Board of Directors and/or the chief
         executive officer shall direct except that Executive shall not be
         required to hold any office or perform any duties or assignment
         inconsistent with his experience and qualifications or not customarily
         performed by a senior executive corporate officer. So long as Executive
         is performing or stands ready to perform duties and assignments in
         accordance with the preceding sentence, the Term of Employment shall
         continue until it thereafter terminates or is terminated pursuant to
         any applicable provision hereof (including but not limited to
         termination at Executive's option under this paragraph).

                  (b) During the Term of Employment, Executive shall, except
         during customary vacation periods and periods of illness, devote
         substantially all of his business time and attention to the performance
         of his duties hereunder and to the business and affairs of the Company
         and its subsidiaries and to promoting the best interests of the Company
         and its subsidiaries, and he shall not, either during or outside of
         such normal business hours, engage in any activity inimical to such
         best interests.

                  ss.3. Compensation and Benefits During Term of Employment.

                                       -2-
<PAGE>

                  (a) Base Salary. With respect to the period beginning on the
         Term Commencement Date and ending on July 31, 2004, the Company shall
         pay to Executive a Base Salary (in addition to the compensation
         provided for elsewhere in this Agreement) at the rate of $760,000 per
         annum (hereinafter called the "Original Base Salary"). With respect to
         each Contract Year beginning with the Contract Year which starts August
         1, 2004, the Company shall pay Executive a Base Salary at such rate as
         the Board of Directors may determine but not less than the Original
         Base Salary adjusted as follows: The term "Contract Year" as used
         herein means the period from August 1 of each year through July 31 of
         the following year. For each Contract Year during the Term of
         Employment beginning with the Contract Year which starts August 1,
         2004, the minimum compensation payable to Executive under this ss.3(a)
         (hereinafter called the "Minimum Base Salary") shall be determined by
         increasing (or decreasing) the Original Base Salary by the percentage
         increase (or decrease) of the Consumer Price Index (as hereinafter
         defined) for the month of June immediately preceding the start of the
         Contract Year in question over (or below) the Consumer Price Index for
         June 2003. The term "Consumer Price Index" as used herein means the
         "Consumer Price Index for all Urban Consumers" compiled and published
         by the Bureau of Labor Statistics of the United States Department of
         Labor for "New York - Northern N. J. - Long Island, NY-NJ-CT-PA". To
         illustrate the operation of the foregoing provisions of this ss.3(a):
         Executive's Base Salary for the Contract Year August 1, 2004 through
         July 31, 2005 shall be not less than the Original Base Salary adjusted
         by the percentage increase (or decrease) of the Consumer Price Index
         for June 2004 over (or below) said Index for June 2003. Further
         adjustment in the Minimum Base Salary shall be made for each ensuing
         Contract Year, in each case (i) using the Consumer Price Index for June
         2003 as the base except as provided in the immediately following
         paragraph hereof and (ii) applying the percentage increase (or
         decrease) in the Consumer Price Index since said base month to the
         Original Base Salary to determine the Minimum Base Salary. The Base
         Salary shall be paid in such periodic installments as the Company may
         determine but not less often than monthly.

                  If with respect to any Contract Year (including the Contract
         Year beginning August 1, 2004) the Board of Directors fixes the Base
         Salary at an amount higher than the Minimum Base Salary, then (unless a

                                       -3-
<PAGE>

         resolution adopted simultaneously with the resolution fixing such
         higher Base Salary for such Contract Year provides otherwise), for the
         purpose of determining the Minimum Base Salary for subsequent Contract
         Years: (i) the amount of the higher Base Salary so fixed shall be
         deemed substituted for the Original Base Salary wherever the Original
         Base Salary is referred to in the immediately preceding paragraph
         hereof, and (ii) the base month for determining the Consumer Price
         Index adjustment shall be June of the calendar year in which the
         Contract Year to which such higher Base Salary is applicable begins
         (e.g., if the Board fixes a Base Salary for the Contract Year beginning
         August 1, 2004 which is higher than the Minimum Base Salary, then June
         2004 would become the base month for the purposes of making the CPI
         adjustment to determine the Minimum Base Salary for subsequent Contract
         Years).

                  (b) Bonus Compensation. With respect to each Fiscal Year of
         the Company falling in whole or in part within the Term of Employment
         beginning with the Fiscal Year ending July 31, 2004, Executive shall be
         eligible to receive a Bonus (in addition to his Base Salary) in
         accordance with the terms of the Pall Corporation 2004 Executive
         Incentive Bonus Plan adopted by the Compensation Committee of the Board
         of Directors of the Company on October 16, 2003, approved by
         shareholders at the annual meeting of shareholders on November 19,
         2003, and amended by the Board of Directors, acting by its Compensation
         Committee, on July 19, 2005, a copy of which is annexed hereto and
         incorporated herein by reference (the "Bonus Plan"). Words and terms
         used herein with initial capital letters and not defined herein are
         used herein as defined in the Bonus Plan. For purposes of determining
         the amount of the Bonus payable to Executive for any Fiscal Year under
         the Bonus Plan (the "Plan Bonus"), Executive's Target Bonus Percentage
         shall be 150% of his Base Salary for such Fiscal Year.

                  (c) Fringe Benefits and Perquisites. During the Term of
         Employment, Executive shall enjoy the customary perquisites of office,
         including but not limited to office space and furnishings, secretarial
         services, expense reimbursements, and any similar emoluments
         customarily afforded to senior executive officers of the Company.
         Executive shall also be entitled to receive or participate in all
         "fringe benefits" and employee benefit plans provided or made available
         by the Company to its executives or management personnel generally,
         such as, but not limited to, group hospitalization, medical, life and
         disability insurance, and pension, retirement, profit-sharing and stock
         option or purchase plans.

                                       -4-
<PAGE>

                  (d) Vacation. Executive shall be entitled each year to a
         vacation or vacations in accordance with the policies of the Company as
         determined by the Board or by an authorized senior officer of the
         Company from time to time. The Company shall not pay Executive any
         additional compensation for any vacation time not used by Executive.

                  (e) Relocation Expenses. If at any time during the Term of
         Employment Executive changes the location of his principal office,
         either at the request of the Company or because it is in the best
         interests of the Company for him to do so, to a location more than one
         hour's commuting time from the present principal office of the Company
         in East Hills, Long Island, New York, the Company shall reimburse
         Executive for all costs and expenses reasonably related to or arising
         from such relocation, including but not limited to the cost of suitable
         housing at the new location, the cost of continuing to maintain his
         residence at the old location if he so elects, moving expenses, and the
         amounts necessary to equalize Executive's taxes and cost of living
         between the old and new locations so that Executive will not have
         suffered any financial disadvantage from having relocated.

                  ss.4. Termination by Reason of Disability, Death, Retirement
         or Change in Control.

                  (a) Disability or Death. If, during the Term of Employment,
         Executive, by reason of physical or mental disability, has been
         incapable of performing his principal duties hereunder for an aggregate
         of 130 working days out of any period of 12 consecutive months, the
         Company at its option may terminate the Term of Employment effective
         immediately by notice to Executive given within 90 days after the end
         of such 12-month period. If Executive shall die during the Term of
         Employment or if the Company terminates the Term of Employment pursuant
         to the immediately preceding sentence by reason of Executive's
         disability, the Company shall pay to Executive, or to Executive's legal
         representatives, or in accordance with a direction given by Executive
         to the Company in writing, (i) Executive's Base Salary to the end of
         the month in which such death or termination for disability occurs and
         (ii) any Plan Bonus or pro rata portion thereof that Executive is
         entitled to receive in accordance with the terms of the Bonus Plan.

                                       -5-
<PAGE>

                  (b) Retirement.

                      (i) The Term of Employment shall end automatically,
                  without action by either party, on Executive's 65th birthday
                  unless prior to such birthday Executive and the Company have
                  agreed in writing that the Term of Employment shall continue
                  past such 65th birthday. In the latter event, unless the
                  parties have agreed otherwise, the Term of Employment shall be
                  automatically renewed and extended each year, as of
                  Executive's birthday, for an additional one-year term, unless
                  either party has given a Non-Renewal Notice. A Non-Renewal
                  Notice shall be effective as of Executive's ensuing birthday
                  only if given not less than 60 days before such birthday and
                  shall state that the party giving such notice elects that this
                  Agreement shall not automatically renew itself further, with
                  the result that the Term of Employment shall end on
                  Executive's ensuing birthday.

                      (ii) If the Term of Employment ends pursuant to this
                  ss.4(b) by reason of a notice given by either party as herein
                  permitted or automatically at age 65 or any subsequent
                  birthday, the Company shall pay to Executive, or to another
                  payee specified by Executive to the Company in writing, (i)
                  Executive's Base Salary prorated to the date on which the Term
                  of Employment ends and (ii) any Plan Bonus or pro rata portion
                  thereof that Executive is entitled to receive in accordance
                  with the terms of the Bonus Plan.

                      (iii) Anything hereinabove to the contrary
                  notwithstanding, if any provision of this ss.4(b) violates
                  federal or applicable state law relating to discrimination on
                  account of age, such provision shall be deemed modified or
                  suspended to the extent necessary to eliminate such violation
                  of law. If at a later date, by reason of changed circumstances
                  or otherwise, the enforcement of such provision as set forth
                  herein would no longer constitute a violation of law, then it
                  shall be enforced in accordance with its terms as set forth
                  herein.

                                       -6-
<PAGE>

                  (c) Change in Control. In event of a Change in Control (as
         defined in the Bonus Plan), Executive shall have the right to terminate
         the Term of Employment, by notice to the Company given at any time
         after such Change in Control, effective on the date specified in such
         notice, which date shall not be more than (but can be less than) one
         year after the giving of such notice.

                  ss.5. Severance.

                  In the event that the Term of Employment is terminated by the
         Company under ss.1 hereof or by Executive under ss.2 or ss.4(c) hereof,
         Executive shall be entitled to receive from the Company, as severance
         pay, a single lump sum cash payment in an amount equal to the present
         value, determined as of the date on which the Term of Employment ends
         by reason of such termination, of (i) the Base Salary that would have
         been paid to Executive during or with respect to the 24-month period
         following the end of the Term of Employment if Base Salary had
         continued to be payable to Executive during or with respect to such
         period at the same annual rate at which Executive's Base Salary was
         payable immediately prior to the end of the Term of Employment (the
         "Base Salary Severance Component") and (ii) an amount equal to 150% of
         the Base Salary Severance Component (representing the maximum Bonus
         payable to Executive under the Bonus Plan). In determining such present
         value, it shall be assumed (i) that the Base Salary Severance Component
         is payable in equal periodic installments, at the same times that
         Executive's Base Salary would have been payable if the Term of
         Employment had not ended and (ii) that the 150%-of-Base-Salary bonus
         component of the severance pay, provided for in clause "(ii)" of the
         preceding sentence, is payable in two equal installments, at the end of
         the 12th month and the 24th month of such 24-month period. In
         determining such present value, the discount rate to be used shall be
         equal to the yield to maturity on the issue of two-year U.S. Treasury
         Notes most recently offered by the U.S. Treasury Department for sale to
         the public prior to the date on which the Term of Employment ends. The
         severance payment provided for herein shall be made within 20 days
         after the end of the Term of Employment.

                                       -7-
<PAGE>

                  ss.6. Annual Contract Pension and Medical Coverage After Term
         of Employment.

                  (a) For a period of 120 consecutive months beginning with the
         month following the end of the Term of Employment, the Company shall
         pay

                      (i) to Executive during his lifetime, and

                      (ii) if Executive is not living at the time any such
         payment is due, then to such payee or payees (including a trust or
         trusts) as Executive may at any time (whether during or after the Term
         of Employment) designate by written notice to the Company or in his
         last will and testament or, if no such designation is made, then to the
         legal representatives of Executive's estate (any such designated payee
         or estate being hereinafter called "Executive's Successor")

         an "Annual Contract Pension" computed as follows: The term "Final Pay"
         as used herein means one-third of the aggregate of Executive's total
         cash compensation (i.e., Base Salary plus incentive compensation and
         any other bonus payments) for those three full fiscal years out of the
         last five full fiscal years of the Term of Employment with respect to
         which three fiscal years Executive received the highest total cash
         compensation. The Annual Contract Pension payable to Executive for each
         "Retirement Year" (as hereinafter defined) shall be an amount
         determined by (I) adjusting Executive's Final Pay for changes in the
         Consumer Price Index in the manner set forth in ss.3(a) except that for
         purposes of the adjustment under this ss.6, the base month, instead of
         being June 2003, shall be the month preceding the month in which
         payment of the Annual Contract Pension commences and the comparison
         month shall be the same month in each succeeding year and (II)
         multiplying the Final Pay as so adjusted by 60% and subtracting
         therefrom the amount which, as of the last day of the Term of
         Employment (i.e., the effective date of termination of the Term of

                                       -8-
<PAGE>

         Employment under any of the provisions of ss.ss. 1, 2 or 4 hereof), is
         the maximum annual benefit payable, in accordance with ss.415(b)(1)(A)
         of the Internal Revenue Code (or successor section), as adjusted by the
         Secretary of the Treasury to such last day under ss. 415(d) of the Code
         (or successor section), under a pension plan which qualifies under ss.
         401(a) of the Code (or successor section). Such maximum annual benefit
         is hereinafter called the "Maximum Qualified Plan Pension". Each
         12-month period beginning on the first day of the month in which the
         Annual Contract Pension first becomes payable hereunder and on the
         first day of the same month during each of the succeeding years in
         which the Annual Contract Pension is payable hereunder is herein called
         a "Retirement Year." There shall be no adjustment of the Final Pay
         based on the Consumer Price Index for the purpose of determining the
         Annual Contract Pension for the first Retirement Year so that during
         such first Retirement Year the Annual Contract Pension shall be 60% of
         Final Pay minus the Maximum Qualified Plan Pension; there shall be such
         adjustment of Final Pay for the purpose of determining the Annual
         Contract Pension for the second and each succeeding Retirement Year.

                  (b) The Company hereby represents to and agrees with
         Executive, in order to induce Executive to enter into this Employment
         Agreement, as follows: For purposes of the Company's Supplementary
         Pension Plan, the amount of the offset pursuant to ss. 3.1(b)(i)
         thereof shall be the amount of the pension in fact payable to Executive
         under the Pall Corporation Cash Balance Pension Plan, after giving
         effect to any distribution theretofore made under said Plan pursuant to
         a qualified domestic relations order. The immediately preceding
         sentence shall not, however, be deemed to modify the penultimate
         sentence of said ss. 3.1, which reads and provides as follows:

                  "For purposes of this Section, the amount of the pension
                  payable to the Member under any Other Retirement Program shall
                  be deemed to be the amount payable thereunder to the Member in
                  the form of a single life annuity for the Member's life,
                  whether or not the Member receives payment of such pension in
                  such form; provided, however, that the amount of such pension
                  shall be taken into account under (b)(i) above only on and
                  after the date on which payment of the Member's pension under
                  such Other Retirement Program commences or is paid."

                                       -9-
<PAGE>

                  (c) The Annual Contract Pension shall be paid in equal monthly
         installments on the last business day of each month during the period
         with respect to which the Annual Contract Pension is payable.

                  (d) So long as Executive is living it shall be a condition of
         the payment of the Annual Contract Pension that, to the extent
         permitted by Executive's health, he shall be available for advisory
         services requested by the Board of Directors of the Company, the
         Executive Committee of said Board or the chief executive officer of the
         Company, provided that such advisory services shall not require more
         than 15 hours in any month. The Company shall reimburse Executive for
         all travel and other expenses which he incurs in connection with such
         advisory services.

                  (e) At the option of the Board of Directors of the Company,
         payment of the Annual Contract Pension shall cease and the right of
         Executive and Executive's Successor to all future such payments shall
         be forfeited if Executive shall, without the written consent of the
         chief executive officer of the Company, render services to any
         corporation or other entity engaged in any activity, or himself engage
         in any activity, which is competitive to any material extent with the
         business in which the Company or any of its subsidiaries shall be
         engaged at the end of the Term of Employment and in which the Company
         or any such subsidiary shall still be engaged at the date such services
         or activity is rendered or engaged in by Executive, provided, however,
         that if the Company terminates under ss.1 following a Change in Control
         (as defined in the Bonus Plan), the provisions of this ss.6(e) shall be
         deemed deleted from this Agreement and shall have no force or effect.

                  (f) Beginning at the end of the Term of Employment, the
         Company at its sole expense shall provide, in accordance with the
         provisions set forth below, medical coverage for Executive and his
         Dependents (as hereinafter defined) during his lifetime and following
         Executive's death, for Executive's surviving Dependents during their
         respective lifetimes. As used herein, the term "Dependents" shall mean
         Executive's spouse and each child or stepchild of Executive.

                                      -10-
<PAGE>

                      (i) Subject to (ii) and (iii) below, the medical coverage
                  to be provided hereunder shall consist of the same coverages
                  and benefits as provided under the terms of the
                  hospitalization, medical and dental plans maintained by the
                  Company for its U.S. employees who are not covered by a
                  collective bargaining agreement (the "Company's Medical
                  Plans"), as in effect immediately prior to the end of the Term
                  of Employment.

                      (ii) If prior to the end of the Term of Employment any of
                  the Company's Medical Plans is amended following the
                  occurrence of a Change in Control (as defined in the Bonus
                  Plan) to eliminate any coverage or benefit previously provided
                  under such Plan, or to make any coverage or benefit so
                  provided available on terms less favorable to Executive than
                  those in effect prior to such amendment, such coverage or
                  benefit, as provided under the terms of the Plan in effect
                  immediately prior to such amendment, shall be included in the
                  medical coverage to be provided under this Section 6 (f).

                      (iii) If at any time after the end of the Term of
                  Employment any of the Company's Medical Plans is amended to
                  add any coverage or benefit that was not provided under such
                  Plan immediately prior to the end of the Term of Employment,
                  or to provide any coverage or benefit on terms more favorable
                  than those applicable to Executive, or to any of his surviving
                  Dependents, under the Plan as in effect immediately prior to
                  the end of the Term of Employment, the coverage or benefit so
                  added or so modified shall be included in the medical coverage
                  to be provided under this Section 6 (f), commencing as of the
                  effective date of such amendment. As soon as practicable after
                  any amendment is made to any of the Company's Medical Plans
                  after the end of the Term of Employment, the Company shall
                  furnish to Executive (or, in the case of any such amendment
                  that is made after the Executive's death, to each of his
                  surviving Dependents), a revised Summary Plan Description for
                  such Plan and copies of any other written notices that the
                  Company furnishes to its employees explaining the changes made
                  to the Plan pursuant to such amendment.

                                      -11-
<PAGE>

                      (iv) The coverages and benefits to be provided hereunder
                  shall be provided upon the same terms and conditions
                  (including required deductibles, co-payments and annual and
                  lifetime maximum benefits) as would have applied to Executive,
                  or to his surviving Dependents, if such coverages and benefits
                  had been provided under the Company's Medical Plans as in
                  effect on the date or dates applicable hereunder, other than
                  any provision therein requiring an employee or his spouse or
                  other dependents to make payments to the Company, by payroll
                  deduction or otherwise, towards the cost of their coverage
                  under such Plan.

                      (v) At the Company's option, the coverages and benefits to
                  be provided hereunder may be provided through insurance, or by
                  the Company directly paying, or reimbursing Executive or any
                  of his Dependents for his or her payment of, expenses covered
                  under this Section 6 (f).

                      (vi) The Company's obligation to provide any coverage or
                  benefit otherwise required under this Section 6(f) shall be
                  reduced to the extent that such coverage or benefit has been
                  or will be provided under (A) any policy of insurance
                  maintained by Executive or any of his Dependents, (B) any
                  plan, program or insurance policy maintained by a subsequent
                  employer of Executive or by an employer of any of Executive's
                  Dependents, or (C) the provisions of any federal or state law.
                  However, neither Executive nor any of his Dependents shall be
                  required to obtain any hospitalization, medical or dental
                  coverage from any source referred to in clause (A), (B) or (C)
                  of the preceding sentence as a condition for eligibility for
                  the medical coverage to be provided under this Section 6(f).

                                      -12-
<PAGE>

                      (vii) Notwithstanding any other provision herein, medical
                  coverage provided pursuant to this Section 6 (f) for any
                  Dependent who is a child of Executive shall cease (A) as of
                  the end of the calendar year in which such child attains age
                  18, or (B), if such child is a "student", as defined in
                  section 151(c)(4) of the Internal Revenue Code of 1986, as
                  amended (or any successor provision thereto) during the
                  calendar year referred to in clause (A), as of the end of the
                  earlier of (x) the calendar year in which such child attains
                  age 23, or (y) the calendar year in which such child ceases to
                  be a "student", as so defined.

                  ss.7. Code Sections 409A and 4999.

                  (a) Delay in Payment. Notwithstanding any provision in this
         Agreement to the contrary, any payment otherwise required to be made
         hereunder to Executive at any date as a result of the termination of
         the Term of Employment shall be delayed for such period of time as may
         be necessary to meet the requirements of section 409A(a)(2)(B)(i) of
         the Code. On the earliest date on which such payments can be made
         without violating the requirements of section 409A(a)(2)(B)(i) of the
         Code (the "Delayed Payment Date"), there shall be paid to Executive (or
         if Executive has died, to "Executive's Successor") (as the quoted term
         is defined in Section 6 (a) hereof), in a single cash lump sum, an
         amount equal to the aggregate amount of all payments delayed pursuant
         to the preceding sentence, plus interest thereon at the Delayed Payment
         Interest Rate (as defined below) computed from the date on which each
         such delayed payment otherwise would have been made to Executive until
         the Delayed Payment Date. For purposes of the foregoing, the "Delayed
         Payment Interest Rate" shall mean the national average annual rate of
         interest payable on jumbo six month bank certificates of deposit, as
         quoted in the business section of the most recently published Sunday
         edition of the New York Times preceding the date on which the Term of
         Employment ends.

                                      -13-
<PAGE>

                  (b) Section 4999 Excise Tax. If any payments to Executive,
         whether under this Agreement or otherwise, would be subject to excise
         tax under section 4999 of the Code, then payments hereunder shall be
         reduced or deferred to the extent required (and only to the extent
         required) to avoid the application of section 4999; provided, however,
         that no such reduction or deferral shall be made unless as a result
         thereof Executive's after-tax economic position (taking into account
         not only payments under this Agreement and the taxes thereon, but also
         the taxes that would otherwise be imposed on any payments to which
         Executive is otherwise entitled) would be improved. In making the
         determination whether Executive's after-tax economic position would be
         so improved, the judgment of a certified public accountant or attorney
         chosen by Executive shall be final. In the event of a reduction or
         deferral of payments pursuant to this paragraph, Executive shall be
         entitled to specify which payments shall be reduced or deferred.

                  ss.8. Acceleration of Stock Options.

                  On the date which is 30 days before the date on which the Term
         of Employment will end by reason of a notice of termination given by
         either party hereto under any of the provisions hereof, all employee
         stock options held by Executive shall become exercisable in full (i.e.,
         to the extent that any such option or portion thereof is not yet
         exercisable, the right to exercise the same in full shall be
         accelerated) and such option shall thereafter be fully vested and
         exercisable in full (to the extent not theretofore exercised) until it
         expires by its terms.

                  ss.9. Covenant Not to Compete.

                  For a period of 18 months after the end of the Term of
         Employment if the Term of Employment is terminated by notice to the
         Company given by Executive under ss.1, ss.2 or ss.4 hereof, or for a
         period of 12 months after the end of the Term of Employment if the Term
         of Employment is terminated by notice to Executive given by the Company
         under ss.1 or ss.4 hereof or terminates under ss.4 by reason of
         Executive's attaining the age of 65, Executive shall not render
         services to any corporation or other entity engaged in any activity, or
         himself engage directly or indirectly in any activity, which is
         competitive to any material extent with the business of the Company or
         any of its subsidiaries, provided, however, that if the Company
         terminates under ss.1 following a Change in Control (as defined in the
         Bonus Plan), the foregoing covenant not to compete shall not apply.

                  ss.10. Company's Right to Injunctive Relief.

                                      -14-
<PAGE>

                  Executive acknowledges that his services to the Company are of
         a unique character, which gives them a peculiar value to the Company,
         the loss of which cannot be reasonably or adequately compensated in
         damages in an action at law, and that therefore, in addition to any
         other remedy which the Company may have at law or in equity, the
         Company shall be entitled to injunctive relief for a breach of this
         Agreement by Executive.

                  ss.11. Inventions and Patents.

                  All inventions, ideas, concepts, processes, discoveries,
         improvements and trademarks (hereinafter collectively referred to as
         intangible rights), whether patentable or registrable or not, which are
         conceived, made, invented or suggested either by Executive alone or by
         Executive in collaboration with others during the Term of Employment,
         and whether or not during regular working hours, shall be disclosed to
         the Company and shall be the sole and exclusive property of the
         Company. If the Company deems that any of such intangible rights are
         patentable or otherwise registrable under any federal, state or foreign
         law, Executive, at the expense of the Company, shall execute all
         documents and do all things necessary or proper to obtain patents
         and/or registrations and to vest the Company with full title thereto.

                  ss.12. Trade Secrets and Confidential Information.

                  Executive shall not, either directly or indirectly, except as
         required in the course of his employment by the Company, disclose or
         use at any time, whether during or subsequent to the Term of
         Employment, any information of a proprietary nature owned by the
         Company, including but not limited to records, data, formulae,
         documents, specifications, inventions, processes, methods and
         intangible rights which are acquired by him in the performance of his
         duties for the Company and which are of a confidential information or
         trade-secret nature. All records, files, drawings, documents, equipment
         and the like, relating to the Company's business, which Executive shall
         prepare, use, construct or observe, shall be and remain the Company's
         sole property. Upon the termination of his employment or at any time
         prior thereto upon request by the Company, Executive shall return to
         the possession of the Company any materials or copies thereof involving
         any confidential information or trade secrets and shall not take any
         material or copies thereof from the possession of the Company.

                                      -15-
<PAGE>

                  ss.13. Mergers and Consolidations; Assignability.

                  In the event that the Company, or any entity resulting from
         any merger or consolidation referred to in this ss.13 or which shall be
         a purchaser or transferee so referred to, shall at any time be merged
         or consolidated into or with any other entity or entities, or in the
         event that substantially all of the assets of the Company or any such
         entity shall be sold or otherwise transferred to another entity, the
         provisions of this Agreement shall be binding upon and shall inure to
         the benefit of the continuing entity in or the entity resulting from
         such merger or consolidation or the entity to which such assets shall
         be sold or transferred. Except as provided in the immediately preceding
         sentence of this ss.13, this Agreement shall not be assignable by the
         Company or by any entity referred to in such immediately preceding
         sentence. This Agreement shall not be assignable by Executive, but in
         the event of his death it shall be binding upon and inure to the
         benefit of his legal representatives to the extent required to
         effectuate the terms hereof.

                  ss.14. Captions.

                  The captions in this Agreement are not part of the provisions
         hereof, are merely for the purpose of reference and shall have no force
         or effect for any purpose whatsoever, including the construction of the
         provisions of this Agreement, and if any caption is inconsistent with
         any provisions of this Agreement, said provisions shall govern.

                  ss.15. Choice of Law.

                  This Agreement is made in, and shall be governed by and
         construed in accordance with the laws of, the State of New York.

                  ss.16. Entire Contract.

                  This Agreement contains the entire agreement of the parties on
         the subject matter hereof except that the rights of the Company
         hereunder shall be deemed to be in addition to and not in substitution
         for its rights under the Company's standard printed form of "Employee's
         Secrecy and Invention Agreement" or "Employee Agreement" if heretofore
         or hereafter entered into between the parties hereto so that the making
         of this Agreement shall not be construed as depriving the Company of
         any of its rights or remedies under any such Secrecy and Invention
         Agreement or Employee Agreement. This Agreement may not be changed
         orally, but only by an agreement in writing signed by the party against
         whom enforcement of any waiver, change, modification, extension or
         discharge is sought.

                                      -16-
<PAGE>

                  ss.17. Notices.

                  All notices given hereunder shall be in writing and shall be
         sent by registered or certified mail or overnight delivery service such
         as Federal Express or delivered by hand, and, if intended for the
         Company, shall be addressed to it (if sent by mail or overnight
         delivery service) or delivered to it (if delivered by hand) at its
         principal office for the attention of the Secretary of the Company, or
         at such other address and for the attention of such other person of
         which the Company shall have given notice to Executive in the manner
         herein provided, and, if intended for Executive, shall be delivered to
         him personally or shall be addressed to him (if sent by mail or
         overnight delivery service) at his most recent residence address shown
         in the Company's employment records or at such other address or to such
         designee of which Executive shall have given notice to the Company in
         the manner herein provided. Each such notice shall be deemed to be
         given on the date on which it is mailed or received by the overnight
         delivery service or, if delivered personally, on the date so delivered.

                  IN WITNESS WHEREOF, the parties hereto have executed this
         Amended and Restated Employment Agreement as of the day and year first
         above written.

                                            PALL CORPORATION

                                            By: ________________________________
                                                 Marcus Wilson,
                                                 President

                                            EXECUTIVE

                                            ____________________________________
                                                     Eric Krasnoff

                                      -17-
<PAGE>

            [ATTACHMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                           DATED JULY 20, 2005 BETWEEN
                       PALL CORPORATION AND ERIC KRASNOFF]

                                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, approved by shareholders at the Annual Meeting on
November 19, 2003 and amended by the Board of Directors, acting by its
Compensation Committee, on July 19, 2005.

         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:

<PAGE>

         (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

         (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.

                                       -2-
<PAGE>

         "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) (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.

                                       -3-
<PAGE>

             (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.

             (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-
<PAGE>

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.

         (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;

                                       -5-
<PAGE>

             (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.

         (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.

                                       -6-
<PAGE>

         (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, but in no event later than 2 1/2
months after the close of such Fiscal Year or Contract Year.

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.

                                       -7-
<PAGE>

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.

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-

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