Document:

EX-4.3

Exhibit 4.3

PALL CORPORATION

2005 STOCK COMPENSATION PLAN

1. Purpose

This document sets forth the Pall Corporation 2005 Stock Compensation Plan as adopted by the Board
of Directors of Pall Corporation on September 17, 2004, approved by shareholders at the 2004 Annual
Meeting of Shareholders on November 17, 2004 and amended by the Board of Directors on July 19,
2005, January 19, 2006 and September 22, 2008 and approved by the shareholders at the 2008 Annual
Meeting of Shareholders and amended by the Board of Directors on September 17, 2008 and January 1,
2009.

The purpose of the Plan is to attract and retain individuals of outstanding ability to serve as
employees in positions of responsibility with the Corporation and its Affiliated Companies, or to
serve as non-employee directors of the Corporation, by providing them with the opportunity to
acquire a proprietary interest (or to increase their proprietary interest) in the Corporation, and
to provide them with incentives and awards that will motivate their efforts and contributions
towards the success of the Corporation and its Affiliated Companies and the growth of their
businesses.

2. Definitions

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

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

“Annual Award Units” shall mean Units awarded to an Eligible Director pursuant to Section 8.

“Annual Award Grant Date” shall mean, with respect to any calendar year beginning on or after
January 1, 2005, January 5 of such year or, if January 5 of such year is not a Trading Day, the
next day following January 5 of such year that is a Trading Day.

“Award” shall mean the grant of any Option, Share or Unit to any Eligible Employee or Eligible
Director under the Plan.

“Beneficiary” shall mean the person or persons designated by a Participant in accordance with
Section 15 to receive any payment that is required to be made under the Plan upon or after the
Participant’s death.

“Board of Directors” shall mean the Board of Directors of the Corporation.

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

“Change in Control” means the occurrence of any of the following:

	 	(a)	 	the “Distribution Date” as defined in Section 3 of the Rights Agreement dated
as of November 17, 1989 between the Corporation and United States Trust Company of New
York as Rights Agent, as amended by Amendment No. 1 thereto dated April 20, 1999, and
as the same may have been further amended or extended to the time in question or in any
successor agreement (the “Rights Agreement”); or

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	 	(b)	 	any event described in Section 11(a)(ii)(B) of the Rights Agreement; or
	 
	 	(c)	 	any event described in Section 13 of the Rights Agreement; or
	 
	 	(d)	 	the date on which the number of duly elected and qualified directors of the
Corporation who were not either elected by the Board of Directors or nominated by the
Board of Directors or its Nominating Committee for election by the shareholders shall
equal or exceed one-third of the total number of directors of the Corporation as fixed
by its by-laws;

provided, however, that no Change in Control shall be deemed to have occurred, and
no rights arising upon a Change in Control as provided in Section 12 hereof shall exist (other than
the rights provided for in Section 12(b) hereof), to the extent that the Board of Directors so
determines by resolution adopted and not rescinded prior to the Change in Control.

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

“Committee” shall mean (i) the Board of Directors, with respect to any Award that may be granted,
or that has been granted, to any Eligible Director; (ii) the Compensation Committee, with respect
to any Award that may be granted, or that has been granted, to any Eligible Employee, except as
otherwise provided in (iii); or (iii) the CEO, with respect to those specific matters pertaining to
Awards to Eligible Employees who are not Elected Officers that are within the scope of the
authority granted to the CEO under Section 14(d) or delegated to the CEO by the Compensation
Committee under to Section 14(e).

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

“Compensation Committee” shall mean the Compensation Committee of the Board of Directors.

“Corporation” shall mean Pall Corporation, a New York Corporation.

“Covered Executive” shall mean, with respect to any Award granted hereunder, any individual who at
the Date of Grant of such Award is a “Covered Employee” of the Corporation for such year for
purposes of section 162(m) of the Code.

“Date of Grant” shall mean, with respect to any Award, the date on which the Committee approves the
grant of such Award, or such later date as may be specified as the date of grant of such Award in
the instrument evidencing the grant of such Award.

“Disability” shall mean, with respect to any Eligible Employee, such employee’s “permanent and
total disability” as defined in section 22(e)(3) of the Code or any successor provision.

“Dividend Equivalent Units” shall mean additional Units credited with respect to a Participant’s
Restricted Units, Performance Units, or Annual Award Units pursuant to Section 6(c), Section 7(b)
or Section 8(b).

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

“Elected Officer” shall mean any individual who is an Elected Officer under Section 4.01(a)(i) of
the By-Laws of the Corporation.

“Eligible Director” shall mean any member of the Board of Directors who is not an employee of the
Corporation or any of its Affiliated Companies.

“Eligible Employee” shall mean any employee of the Corporation or any of its Affiliated Companies
who, in the judgment of the Committee, is expected to make significant contributions to the success
of the Corporation and its Affiliated Companies and to the growth of their businesses.

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“Fair Market Value” shall mean, with respect to any Share or Unit or any fractional Share or
fractional Unit as of any date of reference herein, the closing price of a share of Common Stock as
reported in the New York Stock Exchange Consolidated Transactions for such date or, if such date is
not a Trading Day, on the next Trading Day preceding such date.

“Incentive Stock Option” shall mean an Option that is an “incentive stock option” within the
meaning of Section 422 of the Code.

“Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option.

“Option” shall mean an option to purchase Shares granted pursuant to Section 5 of the Plan or,
solely for purposes of Section 5(h)(ii), granted under any other stock option plan maintained by
the Corporation.

“Participant” shall mean any Eligible Employee or Eligible Director who holds an Award granted
under the Plan, and any successor, permitted transferee or Beneficiary that succeeds to such
individual’s interest in such Award.

“Performance Goals” shall mean the performance goals established by the Committee in connection
with Awards granted to Eligible Employees under Section 7 that must be met in order for payment to
be made with respect to such Awards.

“Performance Period” shall mean the period established by the Committee for measuring whether, and
to what extent, any Performance Goals established in connection with any Award granted under
Section 7 hereof have been met.

“Performance Shares” shall mean Shares that may be issued and delivered at the end of a Performance
Period pursuant to an Award made to an Eligible Employee under Section 7, depending on the
achievement, or the level of achievement, of one or more Performance Goals within such period, as
provided in Section 7.

“Performance Units” shall mean Units credited to an Eligible Employee at the beginning of a
Performance Period pursuant to an Award made to such employee under Section 7, and any Dividend
Equivalent Units that are credited to the employee with respect to such Units during such
Performance Period, payment with respect to which Units and related Dividend Equivalent Units
depends on the achievement, or the level of achievement, of one or more Performance Goals within
such period, as provided in Section 7.

“Plan” shall mean the Pall Corporation 2005 Stock Compensation Plan, as set forth herein and as
amended from time to time.

“Pro Rata Portion” shall mean, with respect to any portion of the Restricted Shares or Restricted
Units granted pursuant to an Award made hereunder to an Eligible Employee, or with respect to any
Performance Shares or Performance Units included in an Award made hereunder to an Eligible
Employee, the percentage determined by dividing (i) the number of months in the period commencing
on the first day of the Restricted Period established for such portion of the Restricted Shares or
Restricted Units so granted, or the Performance Period established for the Performance Shares or
Performance Units so awarded, and ending on the date of the Eligible Employee’s Termination of
Employment, by (ii) the total number of months in such Restricted Period, or in such Performance
Period.

“Restricted Period” shall mean the period of time during which Restricted Shares or Restricted
Share Units are subject to Restrictions as set forth in Section 6.

“Restricted Shares” shall mean Shares which are granted subject to Restrictions pursuant to Section
6.

“Restricted Units” shall mean Units credited to an Eligible Employee subject to Restrictions at the
beginning of a Restricted Period pursuant to an Award made to such employee under Section 6, and
any Dividend
Equivalent Units that are credited to the employee with respect to such Units during such
Restricted Period as provided in Section 6.

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“Restrictions” shall mean the restrictions to which Restricted Shares or Restricted Units are
subject under the provisions of Section 6.

“Retirement” shall mean the termination of a Participant’s employment with the Corporation and all
of its Affiliated Companies, if at the time of such termination of employment the Participant has
attained age 62 and is eligible to receive 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.

“Share” shall mean a share of Common Stock.

“Termination of Board Membership” shall mean, with respect to any Eligible Director, his or her
ceasing to be a member of the Board of Directors.

“Termination of Employment” shall mean, with respect to any Eligible Employee, his or her ceasing
to be employed by the Corporation or any of its Affiliated Companies.

“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 among the rights which the holder of a
Unit does not have are the right to vote such share and the right to receive dividends thereon),
except to the extent otherwise specifically provided herein.

3. Awards

     (a) Form of Awards. Awards under the Plan may be made in the form of Options,
Restricted Shares, Restricted Units, Performance Shares, Performance Units, and Annual Award Units.
An Award in any of the foregoing forms other than Annual Award Units may be granted to any
individual Eligible Employee, or to any group of Eligible Employees, upon terms and conditions that
differ from the terms and conditions upon which any other Awards in the same form are made to other
individual Eligible Employees or groups of Eligible Employees.

     (b) Written Instrument. Each Award made to an Eligible Employee or Eligible Director
under the Plan shall be evidenced by a written instrument in such form as the Committee shall
prescribe, setting forth the terms and conditions of the Award. The instrument evidencing the
grant of any Award hereunder shall specify that the Award shall be subject to all of the terms and
provisions of the Plan as in effect from time to time but subject to the limitation on amendments
set forth in Section 16 of the Plan.

     (c) Surrender and Exchange of Awards. The Committee may in its discretion grant to a
Participant who has been granted an Award under the Plan or an award under any other employee
compensation or benefit plan maintained by the Corporation or any of its Affiliates (any such Award
or award is referred to herein as a “Prior Award”), in exchange for the surrender and cancellation
of such Prior Award or any portion thereof, a new Award under the Plan. As the Committee may
determine in its discretion, the new Award so granted may be in a form different than that of the
Prior Award surrendered, and may be granted subject to terms and conditions that differ from those
to which the surrendered Prior Award were subject. Notwithstanding the foregoing, no grant of a new
Award in exchange for a Prior Award may be made hereunder unless (i) the aggregate fair value of
the new Award does not exceed the aggregate fair value of the Prior Award, determined as of the
time the new Award is granted; and (ii) the grant of the new Award would
not constitute a “repricing” of any Option or would not otherwise be treated as a “material
revision” of the Plan for purposes of the applicable rules of the New York Stock Exchange.

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4. Shares Available for Awards

Shares distributed in respect of Awards made under the Plan may be authorized but unissued Shares,
Shares held in the treasury of the Corporation, or Shares purchased by the Corporation on the open
market at such time or times and in such manner as it may determine. The Corporation shall be
under no obligation to issue or acquire Shares in respect of an Award made under the Plan before
the time when delivery of Shares is due under the terms of the Award. The number of Shares
available for distribution in respect of Awards made under the Plan shall be subject to the
following limitations:

     (a) The aggregate number of Shares that may be distributed in respect of Awards made under the
Plan shall be limited to 6,000,000 Shares. Of that aggregate number, no more than 2,500,000 Shares
in the aggregate shall be available for Awards of Restricted Shares, Restricted Units, Performance
Shares, Performance Units and Annual Award Units. The maximum aggregate number of Shares that may
be issued pursuant to the exercise of stock options granted under the Plan shall not exceed
3,500,000 Shares, and the maximum aggregate number of Shares that may be issued pursuant to the
exercise of Incentive Stock Options granted under the Plan shall not exceed 2,500,000 Shares.

     (b) Upon the grant of any Award, the overall aggregate number of Shares available for further
Awards under the Plan, and if the Award so granted was in a form subject to a limitation on the
aggregate number of shares available for Awards in that form, the aggregate number of Shares
available for further Awards under the Plan in that form, shall be reduced by the number of Shares
subject to the Award so granted.

     (c) There shall be added back to the aggregate number of Shares available for the grant of
Awards under the Plan, as determined under (a) and (b) above, the following: (i) any Shares as to
which an Option granted hereunder has not been exercised at the time of its expiration,
cancellation or forfeiture; (ii) any Shares that otherwise would have been issued upon the exercise
of an Option granted hereunder that are surrendered in payment of the exercise price of such
Option; (iii) any Shares included in any other form of Award granted hereunder, to the extent that
the Participant’s right to receive such Shares, or any cash payment in settlement of such Award,
becomes forfeited; (iv) any Shares that otherwise would have been issued upon the exercise of an
Option or in payment with respect to any other form of Award granted hereunder, that are
surrendered in payment or partial payment of taxes required to be withheld with respect to the
exercise of such option or the making of such payment; (v) any Shares represented by Restricted
Units or Performance Units granted hereunder as to which payment is made in cash instead of by the
issuance and delivery of Shares; and (vi) any Shares subject to an Option granted hereunder, or
covered by any other form of Award made hereunder, to the extent such Option or other Award is
surrendered in exchange for any other Award made hereunder, subject to the limitations set forth in
the last sentence of Section 3(c) hereof.

     (d) The limitations provided in this Section 4 shall be subject to adjustment as provided in
Section 13.

5. Awards of Options

Subject to the limitations set forth in Section 4 and to the other terms and conditions of the
Plan, Options may be granted under the Plan to such Eligible Employees for the purchase of such
number of Shares, at such times, and upon such terms and conditions, as the Committee in its
discretion may determine. Options shall be granted in accordance with the provisions set forth
below.

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     (a) Type of Options. Each Option granted hereunder shall be identified in the
instrument evidencing such grant as either (i) an Option intended to be treated as an Incentive
Stock Option, or (ii) an Option that shall be treated as a Non-Qualified Stock Option.

     (b) Maximum Number of Shares Subject to Options. The total number of Shares with
respect to which Options may be granted to any Eligible Employee during any period of 24
consecutive months shall not exceed 300,000 Shares, subject to adjustment as provided in Section
13.

     (c) Term of Options. The term during which an Option may be exercised shall be such
period of time as determined by the Committee and specified in the instrument evidencing the grant
of the Option, but in no event may the term of any Option exceed ten years from the Date of Grant
of the Option. Notwithstanding any other provision in the Plan to the contrary, no Option may be
exercised after its expiration.

     (d) Exercise of Options. Each Option granted hereunder shall become exercisable, in
whole or in part, at such time or times during its term as the instrument evidencing the grant of
such Option shall specify. To the extent that an Option has become exercisable pursuant to the
preceding sentence, it may be exercised thereafter at any time or from time to time during its
term, as to any or all Shares as to which the Option has become and remains exercisable, subject to
the provisions of (e) below.

     (e) Termination of Employment. Except as the instrument evidencing the grant of an
Option may otherwise provide, the portion of any outstanding Option held by an Eligible Employee on
the date of his or her Termination of Employment that has not become exercisable prior to such
date, and the portion of such Option which was exercisable but had not been exercised prior to such
date, shall be forfeited on such date.

     The instrument evidencing the grant of an Option may provide for the portion of the Option
that is exercisable at the time of the Eligible Employee’s Termination of Employment to remain
exercisable, and for the portion of such Option that is not yet exercisable at such time to become
exercisable in accordance with the terms of the Option and remain exercisable thereafter, during
such period of time after the date on which the Eligible Employee’s Termination of Employment
occurs (but not beyond the expiration of the term of the Option), in such circumstances and subject
to such terms and conditions, as are specified in such instrument. However, to the extent that any
Option granted hereunder to an Eligible Employee as an Incentive Stock Option is exercised more
than three months after the date of such employee’s Termination of Employment for any reason other
than Disability, or more than one year after such date if the employee’s Termination of Employment
occurred because of Disability, the Option shall be treated as a Non-Qualified Stock Option for
purposes of the Plan.

     (f) Exercise Price and Method of Exercise. The price at which Shares may be purchased
upon any exercise of an Option shall be the price per share determined by the Committee and
specified in the instrument evidencing the grant of such Option, but in no event shall the exercise
price per share be less than (i) the Fair Market Value of a Share determined as of the Date of
Grant of the Option, or (ii), if greater, the par value of a Share.

An Option shall be exercised by delivery of a written notice of exercise, in a form satisfactory to
the Committee, to the Corporation at its principal business office and addressed to the attention
of the Corporation’s Secretary or such other person as the Corporate Secretary may have designated
to receive such notice.. The notice shall specify the number of Shares with respect to which the
Option is being exercised. The notice shall be accompanied by payment of the exercise price of the
Shares for which the Option is being exercised, which payment shall be made under one or more of
the methods of payment provided in (g) below.

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An Option may not be exercised at any one time as to less than 100 Shares, or less than the number
of Shares to which the Option is then exercisable if that number is less than 100 Shares.

     (g) Payment. Payment of the exercise price for Shares purchased upon the exercise of
an Option shall be made by one, or by a combination of any, of the following methods: (i) in cash,
which may be paid by check or other instrument acceptable to the Corporation, or by wire transfer
of funds, in each case in United States dollars; (ii) if permitted by the Committee and subject to
any terms and conditions it may impose on the use of such methods, by (A) the delivery to the
Corporation of other Shares owned by the Participant, or (B) the surrender to the Corporation of
Shares that otherwise would have been delivered to the Participant upon exercise of the Option;
(iii) to the extent permissible under applicable law, through any cashless exercise sale and
remittance procedure that the Committee in its discretion may from time to time approve; (iv) to
the extent permissible under applicable law and permitted by the Committee, by the execution by the
Participant and delivery to the Corporation of a promissory note or other instrument evidencing the
Participant’s agreement to pay part or all of the option exercise price on a deferred or
installment payment basis, upon such terms and conditions (including without limitation terms
requiring Shares purchased upon the exercise of the Option to be pledged to the Corporation to
secure payment of any outstanding balance of the option exercise price ) as the Committee shall
require; or (v) any other method of payment as the Committee may from time to time approve.

For purposes of determining the portion of the exercise price payable upon the exercise of an
Option that will be treated as satisfied by the delivery or surrender of Shares pursuant to clause
(ii) (A) or (B) above, Shares so delivered or surrendered shall be valued at their Fair Market
Value determined as of the Trading Day next preceding the date on which the Option is exercised.

     (h) Incentive Stock Options. Notwithstanding any other provisions of the Plan,
Incentive Stock Options granted under the Plan shall be subject to the following provisions:

     (i) No Incentive Stock Option may be granted under the Plan after November 16, 2014,
unless the shareholders of the Corporation have approved an extension of the period for
granting Incentive Stock Options under the Plan beyond that date.

     (ii) To the extent that the aggregate Fair Market Value of Shares with respect to which
Incentive Stock Options granted under the Plan and under all other stock option plans
maintained by the Corporation are exercisable for the first time by a Participant during any
calendar year shall exceed $100,000, the Incentive Stock Options so exercisable shall be
treated as Non-Qualified Stock Options. For purposes of the foregoing, the Fair Market
Value of Shares as to which any Incentive Stock Option may be exercised shall be determined
as of the date on which such Option is granted. The determination of whether the limitation
set forth in the second preceding sentence shall apply with respect to any Incentive Stock
Option granted under the Plan shall be made in accordance with applicable provisions of
section 422 of the Code and the regulations issued thereunder.

     (iii) No Incentive Stock Option shall be granted to an Eligible Employee if, as of the
Date of Grant of such Option, such Eligible Employee owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the Corporation,
unless (A) the exercise price per Share under such Option is at least 110% percent of the
Fair Market Value of a Share determined as of the Date of Grant of such Option, and (B) such
Option is not exercisable after the expiration of five years from the Date of Grant of such
Option.

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     (iv) The instrument evidencing the grant of any Incentive Stock Option shall require
that if any Shares acquired upon the exercise of such option are disposed of within 2 years
from the Date of Grant of such option, or within one year from the date as of which the
Shares disposed of were transferred to the Participant pursuant to the exercise of such
option, the Participant shall give the Corporation written notice of such disposition,
within ten days following the date of such disposition.

     (i) Other Option Provisions. The instrument evidencing the grant of any Option
hereunder may contain such other terms and conditions, not inconsistent with the provisions of the
Plan or any applicable law, as the Committee may determine.

     (j) Rights of a Shareholder. Upon the exercise of an Option or any portion thereof in
accordance with the Plan, the provisions of the instrument evidencing the grant of such Option and
any applicable rules and regulations established by the Committee, the holder of the Option shall
have all of the rights of a shareholder of the Corporation with respect to the Shares issued as a
result of such exercise.

6. Awards of Restricted Shares and Restricted Units

Subject to the limitations set forth in Section 4 and to the other terms and conditions of the
Plan, Restricted Shares or Restricted Units may be granted to such Eligible Employees, at such
times, and in such amounts, as the Committee may determine in its discretion. Restricted Shares
and Restricted Units shall be granted in accordance with the provisions set forth below.

     (a) Restrictions and Restricted Period. At the time of each grant of Restricted
Shares or Restricted Units to any Participant, the Committee shall establish a period of time
within which the Restricted Shares or Restricted Units covered by such grant (and the Participant’s
right to receive payment with respect to such restricted Units) may not be sold, assigned,
transferred (other than a transfer to the Participant’s Beneficiary occurring by reason of the
Participant’s death), made subject to gift, or otherwise disposed of, mortgaged, pledged or
otherwise encumbered, whether voluntarily or by operation of law. The Committee in its discretion
may prescribe a separate Restricted Period for any specified portion of the Restricted Shares or
Restricted Units granted pursuant to any Award.

     (b) Rights While Restricted Shares Remain Subject to Restrictions. Restricted Shares
granted to a Participant hereunder shall be issued to the Participant as of the Date of Grant as
uncertificated shares. Until the Restrictions to which such shares are subject lapse in accordance
with the provisions of (d) below or Section 12(c), the Restricted Shares granted to a Participant
shall be held in the Participant’s name in a bookkeeping account maintained by the Corporation. A
separate account shall be maintained for all Restricted Shares granted to a Participant with a
Restricted Period ending on the same date.

Except for the Restrictions to which such shares are subject, and subject to the forfeiture
provisions applicable under (e) below, a Participant shall have, with respect to all Restricted
Shares so held for his account, all of the rights of a shareholder of the Corporation, including
full voting rights with respect to such shares and the right to receive currently with respect to
the Participant’s Restricted Shares all dividends and other distributions payable generally on the
Corporation’s Shares. If any dividends or distributions so payable are paid in Shares, the Shares
paid as a dividend or distribution with respect to a Participant’s Restricted Shares shall be
subject to the same Restrictions and provisions relating to forfeiture as apply to the Restricted
Shares with respect to which they were paid. Such stock dividend Shares shall themselves be
treated as Restricted Shares, and shall be credited to the same account which the Corporation
maintains for those Restricted Shares of the Participant with respect to which such stock dividends
or distributions were paid.

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Notwithstanding the foregoing, if the instrument evidencing the grant of any Restricted Shares to a
Participant so provides, all cash dividends and distributions payable generally on the
Corporation’s Shares that are otherwise payable with respect to the Restricted Shares granted to
the Participant shall not be paid currently to the Participant but instead, shall be applied to the
purchase of additional Shares for the Participant’s account. The additional Shares so purchased
shall be subject to the same Restrictions and provisions relating to forfeiture as apply to the
Restricted Shares with respect to which they were paid. Such additional Shares shall themselves be
treated as Restricted Shares, and shall be credited to the same account which the Corporation
maintains for those Restricted Shares of the Participant with respect to which such dividends or
distributions were paid. The purchase of any such additional Shares shall be made either (i)
through the Corporation’s Dividend Reinvestment Plan, or (ii) in accordance with such other
procedure as may be specified in the instrument evidencing the grant of the Restricted Shares on
which such dividends are paid.

     (c) Rights While Restricted Units Remain Subject to Restrictions. No Shares shall be
issued at the time any award of Restricted Units is made hereunder. Restricted Units granted to a
Participant hereunder shall be credited to a bookkeeping account maintained by the Corporation for
the Participant. A separate account shall be maintained for all Restricted Units granted to a
Participant with a Restricted Period ending on the same date, and for all Dividend Equivalent Units
that are to be credited to such account in accordance with the next following paragraph.

     Until the Restrictions applicable to the Restricted Units credited upon grant to any account
maintained for a Participant in accordance with the preceding paragraph shall lapse, additional
Restricted Units shall be credited to such account with respect to the Restricted Units so
credited, as of each Dividend Payment Date. The number of additional Restricted Units to be
credited shall be determined by first multiplying (A) the total number of Restricted Units
standing to the Participant’s credit in such account on the day immediately preceding such Dividend
Payment Date (including all Dividend Equivalent Units credited to such account 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.

     (d) Lapse of Restrictions and Payment. Upon the expiration of the Restricted Period
for any Restricted Shares or Restricted Units granted to a Participant hereunder but subject to the
provisions of (e) below, the Restrictions applicable to such Restricted Shares or Restricted Units
shall lapse, and payment with respect to such Restricted Shares or Restricted Units (including any
related Dividend Equivalent Units) shall be made in accordance with the following provisions:

     (i) In the case of Restricted Shares, payment shall be made by delivery to the
Participant of a stock certificate for the number of such Restricted Shares, free and clear
of all Restrictions to which such shares were subject. However, if the Restricted Shares
with respect to which the applicable Restrictions have lapsed includes a fractional Share,
payment for such fractional Share shall be made in cash, in an amount equal to the Fair
Market Value of such fractional Share determined as of the date on which such Restrictions
lapsed. Delivery of such stock certificate and any such cash payment shall be made to the
Participant as soon after the lapse of the applicable Restriction as is practicable.

     (ii) In the case of Restricted Units (including related Dividend Equivalent Units),
payment shall be made by the deposit of an equivalent number of whole and fractional Shares
into a brokerage account created in the name of the Participant by the third party
administrator charged with performing the recordkeeping services for the Plan.
Notwithstanding the foregoing, payment for Restricted Units (including related Dividend
Equivalent Units) with respect to which the applicable Restrictions have lapsed shall be
made solely in cash, in an amount equal to the Fair Market Value of all of such Units and
any fractional Unit, determined as of the date on which such Restrictions lapsed, if the
instrument
evidencing the grant of such Restricted Units so provides. Payment shall be made in
such manner and at such time or times as provided in such instrument. If such instrument so
permits, payment with respect to any part or all of an Eligible Employee’s Restricted Units
(including related Dividend Equivalent Units) may be deferred, at the Eligible Employee’s
election, upon such terms and conditions as are specified in such instrument.

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     (e) Termination of Employment. Upon an Eligible Employee’s Termination of Employment
for any reason prior to the expiration of the Restricted Period for any Restricted Shares or
Restricted Units (and related Dividend Equivalent Units) standing to his or her credit immediately
prior to such Termination of Employment, the Eligible Employee’s right to receive payment with
respect to such Restricted Shares, Restricted Units and Dividend Equivalent Units shall be
forfeited and cancelled as of the date of such Termination of Employment, and no payment of any
kind shall be made with respect to such Restricted Shares, Restricted Units and Dividend Equivalent
Units, except as otherwise provided in the instrument or instruments evidencing the grant of such
Shares or Units.

If the Committee so determines in its discretion, the instrument evidencing the Award of such
Restricted Shares or Restricted Units may provide that if the Eligible Employee’s Termination of
Employment prior to the end of the Restricted Period established for such Restricted Shares or
Restricted Units occurs as a result of the Eligible Employee’s death, Disability, Retirement, or
for any other reason other than discharge by the Corporation or any of its Affiliated Companies for
“cause” as defined in such instrument, payment shall be made with respect to all or a Pro Rata
Portion of such Restricted Shares or Restricted Units and any related Dividend Equivalent Units .
In such case, only the Eligible Employee’s right to receive payment with respect to any remaining
portion of the Restricted Shares or Restricted Units (and related Dividend Equivalent Units) for
which such Restricted Period was established shall be cancelled and forfeited. Any payment required
to be made with respect to an Eligible Employee’s Restricted Shares or Restricted Units (and
related Dividend Equivalent Units) pursuant to this paragraph shall be made as soon as practicable
after the date of such employee’s Termination of Employment, and shall be made in the manner
specified in Section 6(d)

     (f) Notice of Code Section 83(b) Election. A Participant who files an election under
section 83(b) of the Code to include in gross income the Fair Market Value of any Restricted Shares
granted hereunder while such Shares are still subject to Restrictions shall furnish the Corporation
with a copy of the election so filed by the Participant, within ten days of the filing of such
election with the Internal Revenue Service.

7. Awards of Performance Shares and Performance Units

Subject to the limitations set forth in Section 4 and to the other terms and conditions of the
Plan, Performance Shares or Performance Units may be granted to such Eligible Employees, at such
times, in such amounts, and upon such terms and conditions, as the Committee may determine in its
discretion. Performance Shares and Performance Units shall be granted in accordance with the
provisions set forth below.

     (a) Establishment of Performance Goals and Performance Targets. In connection with
each Award of Performance Shares or Performance Units, the Committee shall establish in writing,
and the instrument evidencing the grant of such Award shall specify, (i) the Performance Goal or
Goals and the Performance Period that will apply with respect to such Award; (ii) the level or
levels of achievement of the Performance Goal or Goals that must be met in order for payment to be
made with respect to the Award; (iii) the number of Performance Shares that will be issued and
delivered to the recipient of the Award, or the percentage of the Performance Units (and any
related Dividend Equivalent Units) credited to the recipient in connection with the Award as to
which payment will be made, if the Performance Goal or Goals applicable to such Award (A) have been
fully achieved, (B) have been exceeded, or (C) have not been fully achieved but have been achieved
at or beyond any

9

 

 minimum or intermediate level of achievement specified in the instrument
evidencing the grant of such Award, and (iv) such other terms and conditions pertaining to the
Award as the Committee in its discretion may determine. In connection with any such Award made to
any Covered Executive, the matters described in the preceding sentence shall be established within
such period of time as may be permitted by the regulations issued under section 162(m) of the Code.

     (b) Accounts and Dividend Equivalent Units for Performance Units Awards. No Shares
shall be issued at the time any award of Performance Units is made hereunder. Performance Units
granted to an Eligible Employee hereunder shall be credited to a bookkeeping account maintained by
the Corporation for such employee. A separate account shall be maintained for all Performance Units
included in each separate Award of Performance Units made to an Eligible Employee, and for all
Dividend Equivalent Units that are to be credited with respect to the Performance Units included in
such Award in accordance with the next following sentence. If the instrument evidencing the grant
of any Award of Performance Units so provides, Dividend Equivalent Units shall be credited with
respect to the Performance Units included in such Award on each Dividend Payment Date occurring
within the Performance Period applicable to such Award in the same manner as Dividend Equivalent
Units are credited with respect to Restricted Units during the applicable Restricted Period, as set
forth in Section 6(c) above.

     (c) Limit on Award Amounts. The total number of Shares for which any Award of
Performance Shares may be made to any Eligible Employee, and the total number of Units for which
any Award of Performance Units may be made to any Eligible Employee (exclusive of any Dividend
Equivalent Units credited with respect to the Performance Units awarded to such employee), may not
exceed 75,000 Shares, or 75,000 Units, for each 12-month period included in the Performance Period
established for such Award. The foregoing limits shall be subject to adjustment as provided in
Section 13.

     (d) Performance Goals for Covered Executives. In the case of any Award of
Performance Shares or Performance Units to any Eligible Employee who is a Covered Executive, the
Performance Goal or Goals established in connection with such Award shall be based on one or more
of the following business criteria, as determined by the Committee in its discretion: (i) the
attainment of specified levels of, or increases in, the Corporation’s after-tax or pretax return on
stockholder’s equity, (ii) the attainment of specified levels in the fair market value of the
Corporation’s Shares; (iii) the attainment of specified levels of growth in the value of an
investment in the Corporation’s Shares, assuming that all dividends paid on the Corporation’s
Common Stock are reinvested in additional Shares; (iv) the attainment of specified levels of, or
increases in, the Corporation’s pre-tax or after-tax earnings, profits, net income, or earnings per
share; (v) the attainment of specified levels of, or increases in, the Corporation’s earnings
before income tax, depreciation and amortization (EBITDA); (vi) attainment of specified levels of,
or increases in, the Corporation’s net sales, gross revenues or cash flow from operations; (vii)
the attainment of specified levels of, or increases in, the Corporation’s working capital, or in
its return on capital employed or invested; (viii) the attainment of specified levels of, or
decreases in, the Corporation’s operating costs or any one or more components thereof, or in the
amount of all or any specified portion of the Corporation’s debt or other outstanding financial
obligations.

Any of the business criteria described in the preceding sentence which the Committee establishes as
a Performance Goal may be measured either by the performance of the Corporation and its Affiliated
Companies on a consolidated basis, or by the performance of any one or more of the Corporation’s
subsidiaries, divisions, or other business units, as the Committee in its discretion may determine.
In its discretion, the Committee may also establish Performance Goals, based on any of the
business criteria described in this Section 7(d), that require the attainment of a specified level
of performance of the Corporation, or any of its subsidiaries, divisions or other business units,
relative to the performance of other specified corporations, in order for such Goals to be met.

10

 

The Committee may also, in its discretion, include in any Performance Goal the attainment of which
depends on a determination of the net earnings or income of the Corporation or any of its
subsidiaries, divisions or other business units, provisions which require such determination to be
made by eliminating the effects of any decreases in or charges to earnings for (A) the effect of
foreign currency exchange rates, (B) any acquisitions, divestitures, discontinuances of business
operations, restructurings or 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 that such decreases or charges referred to in clauses (A) through (D) are
separately disclosed in the Corporation’s Annual Report for each fiscal year within the applicable
Performance Period.

     (e) Performance Goals for Non-Covered Executives. In the case of Awards of
Performance Shares or Performance Units made hereunder to Eligible Employees who are not Covered
Executives, the Performance Goal or Goals applicable to such Awards shall be such corporate or
individual goals as the Committee in its discretion may determine.

     (f) Measurement of Performance. At the end of the Performance Period established in
connection with any Award, the Committee shall determine the extent to which the Performance Goal
or Goals established for such Award have been attained, and shall determine, on that basis, the
number of Performance Shares or Performance Units included in such Award that have been earned and
as to which payment will be made pursuant to section 7(h) below, subject to the adjustments
provide for in Section (7)(g) and the forfeiture provisions of Section 7(i). In the case of any
Award granted to a Covered Executive, the Committee shall certify in writing the extent to which it
has determined that the Performance Goal or Goals established by it for such Award have been
attained.

     (g) Adjustment of Award Amounts. The Number of Shares or the amount of cash otherwise
payable with respect to an Award on the basis of the level of attainment of the applicable
Performance Goals as determined by the Committee under Section 7(f) shall be subject to adjustment
in accordance with the following provisions.

     (i) To the extent not inconsistent with the terms of the Plan and if the instrument
evidencing the Award so provides, the number of Shares or the amount of cash otherwise so
payable with respect to an Award to an Eligible Employee who is not a Covered Executive may
be increased or decreased to the extent determined by the Committee in its discretion, based
on the Committee’s evaluation of the Eligible Employee’s individual performance or to
reflect such other events, circumstances or factors as the Committee in its discretion deems
appropriate in determining the extent to which payment should be made with respect to the
Eligible Employee’s Award.

     (ii) The Committee shall not have any authority to increase the number of Shares or the
amount of cash otherwise so payable with respect to any Award to a Covered Executive.
However, if the instrument evidencing such Award so provides, the Committee may in its
discretion reduce the number of Shares or the amount of cash otherwise so payable with
respect to such Award (A) to reflect any decreases in or charges to earnings that were not
taken into account pursuant to clause (A), (B), (C), or (D) of Section 7(e) in determining
net earnings or income for purposes of any Performance Goal established in connection with
such Award; (B) to reflect any credits to earnings for extraordinary items of income or gain
that were taken into account in determining net earnings or income for such purposes; (C) to
reflect the Committee’s evaluation of the Covered Executive’s individual performance; or (D)
to reflect any other events, circumstances or factors which the Committee believes to be
appropriate in determining the extent to which payment should be made with respect to the
Covered Executive’s Award.

11

 

     (h) Payment of Awards. Payment with respect to that number of Performance Shares or
Performance Units subject to any Award which the Committee has determined under Section 7(f) above
to have been earned, as adjusted to the extent determined by the Committee under Section 7(g),
shall be made in accordance with the following provisions:

     (i) In the case of any such Performance Shares, payment shall be made by the issuance
and delivery to the Participant of a stock certificate for the requisite number of such
Shares. If the instrument evidencing the Award of such Shares so provides, a cash payment
shall also be made to the Participant, in an amount equal to all of the dividends that would
have been paid to the Participant upon such earned and adjusted number of Shares if such
Shares had been issued to the Participant as of the Date of Grant of the Award in question.
Such Shares shall be issued and delivered, and, if applicable, such cash payment shall be
made, to the Participant as soon as practicable after the end of the Performance Period
applicable to the Award in question.

     (ii) In the case of any such Performance Units, (including related Dividend Equivalent
Units), payment shall be made (A) by the issuance and delivery to the Participant of a stock
certificate for a number of Shares equal to the total number of such whole Performance Units
and related Dividend Equivalent Units, and (B) by payment in cash for any fractional Unit in
an amount equal to the Fair Market Value of such fractional Unit determined as of the
Trading Day immediately preceding the date as of which payment is to be made.
Notwithstanding the foregoing, payment for such Performance Units (including related
Dividend Equivalent Units) shall be made solely in cash, in an amount equal to the Fair
Market Value of all of such Units and any fractional Unit, determined as of the Trading Day
immediately preceding the date as of which payment is to be made, if the instrument
evidencing the grant of such Performance Units so provides. Payment shall be made in such
manner and at such time or times as provided in such instrument. If such instrument so
permits, payment with respect to any part or all of an Eligible Employee’s Performance Units
(including any related Dividend Equivalent Units) may be deferred, at the Eligible
Employee’s election, upon such terms and conditions as are specified in such instrument.

     (i) Termination of Employment. Upon an Eligible Employee’s Termination of Employment
for any reason prior to the end of the Performance Period established for any Award of Performance
Shares or Performance Units made to the Eligible Employee hereunder, such Award shall be cancelled
as of the date of such Termination of Employment, the Eligible Employee’s right to receive payment
with respect to any Performance Shares or Performance Units included in such Award and any Dividend
Equivalent Units that were credited with respect to such Performance Units, shall be forfeited as
of such date, and no payment of any kind shall be made with respect to such Award, except as
otherwise provided in the instrument evidencing the grant of such Award.

     If the Committee so determines in its discretion, the instrument evidencing any Award of
Performance Shares or Performance Units may provide that if the Eligible Employee’s Termination of
Employment prior to the end of the Performance Period established for such Award occurs as a result
of the Eligible Employee’s death, Disability, Retirement, or for any other reason other than
discharge by the Corporation or any of its Affiliated Companies for “cause” as defined in such
instrument, payment shall be made at the end of the Performance Period, in accordance with the
provisions of Section 7(h), with respect to all or a Pro Rata Portion of the number of Shares
and/or the amount of cash that otherwise would have been payable to the Eligible Employee, as
determined in accordance with the provisions of Sections 7(f) and (g), if the Eligible Employee’s
Termination of Employment had not occurred prior to the end of such Performance Period. In such
case, only the Eligible Employee’s right to receive payment with respect to any remaining portion
of the Performance
Shares or Performance Units (and related Dividend Equivalent Units) included in such Award
shall be cancelled and forfeited.

12

 

8. Awards to Eligible Directors

Subject to the limitations set forth in Section 4 and to the other terms and conditions of the
Plan, Annual Award Units shall be granted to Eligible Directors in accordance with the provisions
set forth below:

     (a) Annual Grants. In each fiscal year of the Corporation beginning with the fiscal
year ending July 31, 2006 and ending with the fiscal year ending on July 31, 2008, each member of
the Board of Directors who is an Eligible Director on the Annual Award Grant Date in such fiscal
year shall be entitled to receive 1750 Annual Award Units, of which 1000 shall be granted on the
Annual Award Grant Date (January 5, 2006) and 750 shall be granted on January 19, 2006. In each
subsequent fiscal year, beginning with the fiscal year ending July 31, 2007 and ending with the
fiscal year ending on July 31, 2008, said 1750 Annual Award Units shall automatically be granted on
the Annual Award Grant Date. In each subsequent fiscal year beginning with the fiscal year ending
July 31, 2009, each member of the Board of Directors who is an Eligible Director on the Annual
Award Grant Date in such fiscal year shall be entitled to receive and shall be automatically
granted on the Annual Grant Date such number of Annual Award Units as is equal to $120,000 (based
on the closing price of a share of common stock as reported for NYSE Composite Transactions on the
date of grant). If any Eligible Director has elected not to receive the Annual Award Units to
which he is entitled in any fiscal year beginning with the fiscal year ending July 31, 2006 but,
prior to the end of such fiscal year, desires to change his election, the Board of Directors shall
have the power to award to such Eligible Director, before the end of such fiscal year, the Annual
Award Units which he was entitled to receive during such fiscal year. Each person who is elected a
director of the Corporation by shareholders at an annual meeting of shareholders for the first time
(i.e., disregarding any previous election of such person by the Board of Directors) and thereby
becomes an Eligible Director shall automatically be granted 1,000 Annual Award Units on the date of
such annual meeting of shareholders.

     (b) Accounts and Dividend Equivalent Units. No Shares shall be issued at the time any
Annual Award Units are granted hereunder. Annual Award Units granted to an Eligible Director
hereunder shall be credited to a bookkeeping account maintained by the Corporation for the Eligible
Director. As of each Dividend Payment Date occurring prior to the date on which payment with
respect to an Eligible Director’s Annual Award Units is made pursuant to (c) below, Dividend
Equivalent Units shall be credited to the Eligible Director’s account with respect to all Annual
Award Units (and all Dividend Equivalent Units credited to such account on all previous Dividend
Payment Dates) standing to the Eligible Director’s credit in such account immediately prior to such
Dividend Payment Date. The number of Dividend Equivalent Units to be so credited shall be
determined in the same manner as Dividend Equivalent Units are credited with respect to Restricted
Units during the applicable Restricted Period, as set forth in Section 6(c) above.

     (c) Payment with respect to Annual Award Units.  Upon an Eligible Director’s
Termination of Board Membership for any reason other than removal for cause in accordance with law,
the Eligible Director (or if such Termination has occurred by reason of death, his or her
Beneficiary) shall be entitled to receive payment with respect to all Annual Award Units and
related Dividend Equivalent Units then standing to his or her credit in the account maintained for
the Eligible Director pursuant to (b) above. Payment shall be made by the deposit of an equivalent
number of whole and fractional Shares into a brokerage account created in the name of the Eligible
Director, or his or her Beneficiary, by the third party administrator charged with performing the
recordkeeping services for the Plan. Payment shall be made as soon as practicable after the date
on which the Eligible Director’s Termination of Board Membership occurs.

13

 

     (d) Forfeiture of Annual Award Units. Upon an Eligible Director’s Termination of
Board Membership as a result of removal for cause in accordance with law, all Annual Award Units
and related Dividend Equivalent Units standing to his or her credit immediately prior to such
Termination of Board Membership shall be cancelled as of the date of such Termination of Board
Membership, the Eligible Director’s right to receive payment with respect to such Annual Award
Units and Dividend Equivalent Units shall be forfeited as of such date, and no payment of any kind
shall be made with respect to such Annual Award Units and Dividend Equivalent Units.

9. Transferability of Awards

Any Option granted to an Eligible Employee under the Plan shall be nontransferable and may be
exercised during the Eligible Employee’s lifetime only by the Eligible Employee. A Participant’s
right to receive payment of Shares or cash with respect to any other Award granted to the
Participant 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.

Notwithstanding the foregoing, if the instrument evidencing the grant of any Award other than an
Incentive Stock Option so provides, the recipient of such Award may transfer his or her rights with
respect to such Award, or any portion thereof, to any “family member” of the recipient, as that
term is defined in the General Instructions to Form S-8 promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, subject to such limitations, terms and
conditions as may be specified in such instrument.

10. Listing and Qualification of Shares

The Corporation, in its discretion, may postpone the issuance, delivery, or distribution of Shares
with respect to any Award 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 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

Notwithstanding any other provision of the Plan, 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
the exercise of any Option or with respect any payments to be made in respect of any other form of
Award granted to a Participant under the Plan, including but not limited to (i) deducting the
amount of taxes so required to be withheld from any other compensation or other amounts then or
thereafter payable to the Participant, and/or (ii) withholding delivery of any Shares or payment of
any cash amount otherwise required to be delivered or paid to the Participant with respect to the
exercise of such Option, or with respect to such other form of Award, until the amount of taxes so
required to be withheld has been paid in full to the Corporation or any of its Affiliated
Companies. With the approval of the Compensation Committee and subject to such terms and
conditions as it may require, such amount may be paid in Shares previously owned by the
Participant, or by the surrender of a portion of the Shares that otherwise would be delivered or
paid to such Participant with respect to his or her Award, or by a combination of payments in cash
and Shares.

12. 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.

14

 

     (a) Each Option outstanding under the Plan on the day preceding the date on which the Change
in Control occurs shall become immediately and fully exercisable on the date of the Change in
Control, and shall remain fully exercisable, irrespective of the Participant’s subsequent
Termination of Employment for any reason, until the date on which the Option otherwise would expire
by the passage of time in accordance with its terms.

     (b) If a Change in Control would be treated as having occurred but for the adoption by the
Board of Directors of a resolution described in the “provided, however” clause in
the definition of “Change in Control” in Section 2, and if such resolution so provides and has not
been rescinded prior to the Change in Control, the Board of Directors shall have the right in its
discretion (i) to direct that all Options then outstanding and held by Participants shall be
cancelled as of a date to be fixed by the Board, provided, however, that not less
than 30 days written notice of the date so fixed shall be given to each such Participant, and each
such Participant shall have the right during such period (irrespective of the Participant’s
Termination of Employment during such period) to exercise his or her Option as to all or any part
of the Shares covered thereby, including any Shares as to which the Option has not yet become
exercisable, or (ii) to authorize the substitution for each outstanding Option of a new Option,
provided that (A) each such new Option has a value at the time it is granted that is at least equal
to the value of the outstanding Option in substitution for which it is granted, and contains terms
and conditions no less favorable to the Participant than those contained in his or her outstanding
Option, and (B) in the case of any new Incentive Stock Option that is granted in substitution of an
outstanding Incentive Stock Option, the requirements of section 424(a) of the Code are met with
regard to such substitution.

     (c) The Restricted Periods applicable to all Restricted Shares and Restricted Units (including
any related Dividend Equivalent Units) granted to a Participant hereunder that are still
outstanding on the day immediately preceding the date on which such Change in Control occurs shall
expire on such date; all Restrictions applicable to such outstanding Restricted Shares, Restricted
Units and related Dividend Equivalent Units shall lapse on such date; and the Participant’s rights
to receive payment with respect to all such outstanding Shares, Restricted Units and related
Dividend Equivalent Units shall become nonforfeitable as of such date. Payment with respect to
such outstanding Restricted Shares, Restricted Units and related Dividend Equivalent Units shall be
made at the time or times, and in the manner, specified in the instrument or instruments evidencing
the grant thereof, except as the Committee may otherwise determine in its discretion at any time
prior to the Change in Control.

     (d) The Performance Periods applicable to all Performance Shares and Performance Units
(including any related Dividend Equivalent Units) granted to a Participant hereunder that are
still outstanding on the day immediately preceding the date on which such Change in Control occurs
shall end on such date; all Performance Goals that were established in connection with the Award of
such Performance Shares or Performance Units shall be deemed to have been attained as of such date
to the fullest extent necessary in order for the Participant to be entitled to receive payment with
respect to the maximum number of such Performance Shares, or with respect to the maximum percentage
of such Performance Units (and any related Dividend Equivalent Units), as to which payment could
be made under the terms of the applicable Awards, as specified in the instrument or instruments
evidencing the grant thereof; and the Participant shall acquire on such date a nonforfeitable right
to receive payment with respect to such maximum number of Performance Shares (including any cash
payment with respect to dividends that would have been paid thereon, if the instrument evidencing
the grant of such shares provides for such cash payment), or with respect to such maximum
percentage of Performance Units (and any related Dividend Equivalent Units), determined without any
adjustment under Section 7(g)(i) or (ii); provided, however, that any Participant
who, pursuant to Section 7(i), would have been entitled to receive payment with respect to only a
Pro Rata Portion of the number of Shares or the amount of cash otherwise payable with respect to
such Performance Shares or Performance Units if

15

 

no Change in Control had occurred, shall be entitled to receive only a Pro Rata Portion of the
payment that otherwise would be made with respect to such Performance Shares or Performance Units
under the provisions of this Section 7(d). Payment with respect to such Performance Shares,
Performance Units and related Dividend Equivalent Units shall be made at the time or times, and in
the manner, specified in the instrument or instruments evidencing the grant thereof, except as the
Committee may otherwise determine in its discretion at any time prior to the Change in Control.

     (e) If any payment that is required to be made hereunder with respect to any outstanding Award
as a result of the occurrence of a Change in Control is to be made by the issuance and delivery of
Shares to the Participant, the Corporation shall take whatever steps are necessary to cause such
Shares to be issued to the Participant, and to be treated as outstanding, at the effective time of
the transaction constituting the Change in Control.

13. Certain Adjustments to 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, (i) the maximum
aggregate number and kind of shares specified herein as available for the grant of Awards, or for
the grant of any particular form of Award, under the Plan, (ii) the number and kind of shares that
may be issued and delivered to Participants upon the exercise of any Option, or in payment with
respect to any Award of Restricted Shares or Performance Shares, that is outstanding at the time of
such change, (iii) the number and kind of shares represented by any Restricted Units, Performance
Units, Annual Award Units or Dividend Equivalent Units that are outstanding at the time of such
change, and (iv) the exercise price per share of any Options granted hereunder that are
outstanding at the time of such change, 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.

In the case of any outstanding Incentive Stock Option, any such change shall be made in the manner
that satisfies the requirements that must be met under section 424 of the Code in order for such
change not to be treated as a “modification” of such Option as defined under section 424 of the
Code.

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.

14. Administration

The Plan shall be administered in accordance with the provisions set forth below.

     (a) In General. Except as otherwise specifically provided in the Plan, the Plan shall
be administered by (i) the Board of Directors, with respect to all matters pertaining to Awards
that may be granted or that have been granted hereunder to Eligible Directors; (ii) by the
Compensation Committee, with respect to all matters pertaining to Awards that may be made or that
have been made to Eligible Employees, except as otherwise provided in (iii); and (iii) by the CEO,
with respect to those specific matters pertaining to Awards to Eligible Employees who are not
Elected Officers that are within the scope of the authority granted to the CEO under (d) below or
delegated by the Compensation Committee to the CEO pursuant to (e) below.

     (b) The Committee’s Authority and Powers. 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

16

 

Plan, to interpret the Plan, and to make all determinations it considers necessary or advisable for the administration of
the Plan. 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.

     (c) Modification of Awards. To the extent not inconsistent with the terms of the Plan
or any provision of applicable law, the Committee in its discretion may waive or modify any of the
terms and conditions set forth in the instrument evidencing the grant of any Award made to a
Participant hereunder, including without limitation, (i) in the case of any Option, to permit such
Option to become exercisable as to any portion of the Shares subject to the Option at any time
earlier than the time specified in such instrument, to extend the term of such Option beyond the
date specified in such instrument as the expiration date for the term of the Option (but not beyond
the day immediately preceding the tenth anniversary of the Date of Grant of the Option), or to
permit such Option, to the extent it has become or becomes exercisable, to remain exercisable for
any period of time (including any period after the Eligible Employee’s Termination of Employment)
beyond the period of time specified in such instrument but not beyond the date of expiration of the
Option, including any extension thereof permitted under this clause (i); and (ii) in the case of
any Award of Restricted Shares or Restricted Units, to cause the Restricted Period applicable to
such Restricted Shares or restricted Units to expire, and the Restrictions applicable to such
Restricted Shares or Restricted Units to lapse, as of any date earlier than the date provided for
in such instrument;

Notwithstanding the foregoing, no waiver or amendment may be authorized or directed by the
Committee pursuant to this Section 14 (c) without the consent of the Participant if (A) it would
adversely affect, to any material extent, any of the rights or obligations of the Participant with
respect to such Award, or (B) in the case of any Option granted hereunder that was intended to
constitute an Incentive Stock Option, if such waiver or amendment would cause such Option to fail
to be treated as an “incentive stock option” within the meaning of section 422 of the Code. In
addition, no such waiver or amendment may be authorized or directed by the Committee pursuant to
this Section 14(c) with respect to any Option, Performance Shares or Performance Units awarded to
any Covered Executive, if such waiver or amendment would cause the delivery of Shares or the
payment of any cash amounts that are made with respect to such Award to fail to be deductible for
federal income tax purposes pursuant to the applicable provisions of section 162(m) of the Code and
the regulations issued thereunder.

     (d) The CEO’s Authority and Powers. With respect to such number of Shares as the
Compensation Committee may in its discretion determine to be available from time to time for the
grant of Awards in any form to Eligible Employees who are not Elected Officers, the CEO shall have
the authority (i) to determine which of such Eligible Employees shall receive Awards in each form
specified by the Compensation Committee; (ii) to determine the time or times when Awards in such
form shall be made to such Eligible Employees; (iii) to determine the number of Shares that will be
subject to any Option, or the number of Restricted Shares, Restricted Units, Performance Shares or
Performance Units, to be included in any Award to any such Eligible Employee; (iv) with respect to
any Award of Performance Shares or Performance Units made to any such Eligible Employees, to make
all determinations which the Committee is authorized to make with respect to such Award under the
provisions of Section 7(a)(i),(ii) and (iii), Section 7(e) and Section 7(g)(i); and (v) with
respect to any Awards made to any such Eligible Employees pursuant to the CEO’s exercise of the
authority granted to him under this Section 14(d), to exercise all of the authority and powers
granted to the Committee under (b) above and under the second paragraph of (e) below, but only to
the extent that any such exercise by the CEO is not inconsistent with any action taken by the
Compensation Committee, or with any determination, decision or interpretation of the Plan made by
the Compensation Committee, under (b) above or any delegation made by the Compensation Committee
under the second paragraph of (e) below.

17

 

     Except for the matters specified in the foregoing paragraph and any additional matters
pertaining to Awards to Eligible Employees who are not Elected Officers with respect to which
authority has been granted to the CEO pursuant to (e) below, the CEO shall not have any of the
authority or powers otherwise granted to the Committee under any other provisions of the Plan.

     The Compensation Committee in its discretion may at any time, by resolution duly adopted by it
and without any amendment of the Plan, revoke or modify in any manner or respect the authority and
powers granted to the CEO under this Section 14(d).

     (e) Delegation. In addition to the authority and powers granted to the CEO under (d)
above, the Compensation Committee in its discretion may, by resolution duly adopted by it, delegate
to the CEO authority with respect to such other matters pertaining to Awards to Eligible Employees
who are not Elected Officers as the Compensation Committee may specify in such resolution. Any
authority so delegated to the CEO may be revoked or modified by the Compensation Committee, in
whole or in part, at any time.

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

     (f) Non-U.S. Participants. In order to comply with any applicable provisions of local
law and regulations in any foreign country in which the Corporation or any of its Affiliated
Companies operates, the Committee may in its sole discretion (i) modify the terms and conditions of
Awards granted under the Plan to Eligible Employees located in such foreign country, (ii) establish
subplans with such modifications to the terms of the Plan as it determines to be necessary or
appropriate under the circumstances applicable in such foreign country, or (iii) take any other
action that it deems necessary or appropriate in order to comply with, or obtain any exemptions
from the applicability of, the local laws and regulations in such foreign country.

15. Designation and Change of Beneficiary

Each Participant shall file with the Committee, or with such employee of the Corporation who has
been designated by the Committee to receive same, a written designation of one or more persons as
the Beneficiary who shall be entitled to receive any Shares or cash amount payable under the Plan
upon or after the Participant’s 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 or its designee. The last such designation received by
the Committee or its designee 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 15, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives to receive any
Shares or cash amount payable under the Plan with respect to the Participant after his or death,
the Participant’s estate shall be treated as the Participant’s Beneficiary for purposes of the
Plan.

16. 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
Awards previously granted to the Participant 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

18

 

be effective unless approved by the shareholders of the Corporation in the manner required by such
rules and by applicable law.

17. General Provisions

     (a) Rights of Participants. A Participant’s rights and interests under the Plan shall
be subject to the following provisions:

     (i) 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.

     (ii) 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, or shall interfere with the right of the Corporation or any of its
Affiliated Companies with whom the Participant is employed to terminate the Participant’s
employment at any time subject, however, to the Participant’s rights under any employment
contract in effect between the Participant and the Corporation or any of its Affiliated
Companies.

     (iii) No Award made to a Participant under the Plan, and no payment made with respect
to such Award, shall be considered as compensation under any employee benefit plan of the
Corporation or any of its Affiliated Companies, except as specifically provided in such plan
or as otherwise determined by the Board of Directors.

     (b) Successors. 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.

     The provisions of the Plan and the terms and conditions contained in the instrument evidencing
any Award made to a Participant hereunder shall be binding upon the Participant, his or her
successors and permitted transferees.

     (c) 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 on September 17, 2004 by the Board of Directors, subject, however, to approval
by the shareholders of the Corporation, in accordance with the requirements of the New York Stock
Exchange and applicable law, at the 2004 annual meeting of the Corporation’s shareholders including
any adjournment thereof. The effective date of the Plan shall be the date of such approval by the
Corporation’s shareholders, and no Awards may be granted hereunder prior to such date.

19EX-4.3

Exhibit 4.3

PALL CORPORATION MANAGEMENT STOCK PURCHASE PLAN

1. PURPOSE.

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

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

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

2. DEFINITIONS.

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

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

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

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

     “BOARD OF DIRECTORS” shall mean the Board of Directors of the Corporation.

     “BONUS” shall mean, with respect to any Eligible Employee for any Plan Year, the Bonus payable
to such Eligible Employee during such year under the Corporation’s Executive Incentive Bonus Plan,
or under the Eligible Employee’s employment agreement with the Corporation, or under any other
plan, program or arrangement of annual incentive compensation maintained by the Corporation or any
of its Affiliated Companies.

     “BONUS PAYMENT DATE” shall mean each date on which Bonus payments are made under the
Corporation’s Executive Incentive Bonus Plan.

 

 

     “BUSINESS DAY” shall mean any day on which the Corporation’s principal office in the U.S. is
open for business.

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

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

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

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

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

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

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

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

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

Page 2 of 19

 

     “COMPENSATION COMMITTEE” shall mean the Compensation Committee of the Board of Directors.

     “CORPORATION” shall mean Pall Corporation.

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

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

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

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

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

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

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

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

     “INVOLUNTARY TERMINATION” shall mean a Participant’s Termination of Employment initiated by
the Corporation, or by any of its Affiliated Companies, for any reason other than for becoming
Disabled or for Cause.

Page 3 of 19

 

     “MATCHING RESTRICTED UNITS” shall mean Restricted Units that are credited to a Participant’s
Account pursuant to Section 5(e), to match Restricted Units that are credited to the Participant’s
Account under Section 5(b), (c) or (d).

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

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

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

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

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

     “RETIREMENT” shall mean a Participant’s Termination of Employment for any reason prior to the
Participant becoming Disabled (other than death or for Cause) if at the time of such Termination of
Employment the Participant has attained age 62 and is eligible to receive (i) a “Retirement
Benefit” under the Pall Corporation Cash Balance Pension Plan, as defined therein, or (ii), in the
case of any Participant who is not a resident of the U.S., a similar type of benefit under any plan
or program maintained by the Corporation or any of its Affiliated Companies (or to which the
Corporation or any of its Affiliated Companies makes contributions) that provides benefits to
Employees upon their retirement.

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

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

     “TRADING DAY” shall mean any day on which the New York Stock Exchange is open for trading.

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

Page 4 of 19

 

     “VESTED UNIT” shall mean a Unit credited to a Participant pursuant to Section 5 that has
become vested in accordance with the provisions of Section 6.

     “VESTING DATE” shall mean, with respect to any Restricted Units credited to a Participant’s
Account, the date on which such Restricted Units become vested in accordance with the provisions of
Section 6.

3. MAXIMUM NUMBER OF SHARES OF COMMON STOCK AVAILABLE.

     The number of shares of Common Stock that may be distributed under the Plan for the period
commencing January 24, 1999, with respect to Restricted Units and Deferred Vested Units credited to
Participants under the Plan, (including Dividend Equivalent Units credited with respect to such
Units) shall be limited to 3,000,000 shares of Common Stock. If any Restricted Units initially
credited to a Participant shall be forfeited, the number of shares of Common Stock no longer
payable with respect to the Restricted Units so forfeited shall thereupon be released and shall
thereafter be available for the crediting of new Restricted Units under the Plan. The limitation
provided under this Section 3 shall be subject to adjustment as provided in Section 9.

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

4. ELIGIBILITY.

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

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

     Any person who has been selected as an Eligible Employee for any Plan Year shall continue to
be an Eligible Employee in the Plan for each subsequent Plan Year prior to Termination of
Employment, subject, however, to the Compensation Committee’s right to terminate such individual’s
eligibility effective beginning as of the first base salary payment date or, if earlier, the first
Bonus Payment Date occurring after the date on which the Compensation Committee makes its
determination to terminate such individual’s eligibility, provided that any elections made by the
Participant under Section 5 or 7 of the Plan prior to such termination of eligibility shall remain
in effect.

Page 5 of 19

 

5. CREDITING OF RESTRICTED UNITS.

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

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

     (b) BONUS UNITS. Each Eligible Employee may elect to have any part or all of any Bonus that
may become payable to the Participant during such year paid in the form of Restricted Units that
will be credited to his or her Account hereunder and distributed in accordance with the provisions
of this Plan, instead of being paid to the Eligible Employee in cash. If an Eligible Employee has
so elected, the Eligible Employee’s Account shall be credited as of the first Bonus Payment Date
during such year with a number of Restricted Units determined by dividing (i) the total amount of
the portion of the Eligible Employee’s Bonus payable during such year which the Eligible Employee
elected to have paid in the form of Restricted Units, by (ii) the Closing Price of a share of
Common Stock on such Bonus Payment Date or, if such date is not a Trading Day, as of the next
following day that is a Trading Day. In the event that an Eligible Employee’s Bonus is payable in
a unit of currency other than U.S. dollars, the portion of the bonus which the Eligible Employee
has elected to have paid in the form of Restricted Units shall be converted to U.S. dollars as of
the Crediting Date (the first Bonus Payment Date during the Plan Year in which such Bonus is
payable) at a rate equal to the exchange rate of such currency and U.S. dollars on such Crediting
Date as reported in The Wall Street Journal in its issue following the Crediting Date.

     (c) BASE SALARY UNITS. Each Eligible Employee may elect to have up to 50% of the amount of
the base salary otherwise payable to the Eligible Employee on each payday during such year paid in
the form of Restricted Units that will be credited to his or her Account hereunder and distributed
in accordance with the provisions of this Plan, instead of being paid to the Eligible Employee in
cash. If an Eligible Employee has so elected, the amount specified in such election shall be
withheld from the payment of base salary otherwise required to be made to the Eligible Employee on
each payday during such year, and the Eligible Employee’s Account shall be credited as of January
31 and July 31 of such year, with a number of Restricted Units determined by dividing (i) the
aggregate amount so withheld from the start of such year, in the case of the Restricted Units to be
credited as of January 31, or from January 31, in the case of the Restricted Units to be credited
as of July 31, by (ii) the Closing Price of a share of Common Stock as of the applicable Crediting
Date or, if such date is not a Trading Day, as of the next following day that is a Trading Day. In
the event that an Eligible Employee’s base salary is payable in a unit of currency other than U.S.
dollars, the aggregate amount withheld shall be converted to U.S. dollars as of the January 31 or
July 31 Crediting Date, as the case may be, at a rate equal to the exchange rate of such currency
and U.S. dollars on such Crediting Date as reported in The Wall Street Journal in its issue
following the Crediting Date.

Page 6 of 19

 

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

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

     (e) MATCHING UNITS. On each date on which any Restricted Units are credited to an Eligible
Employee’s Account pursuant to the provisions of paragraphs (b), (c) or (d) of this Section 5,
there shall also be credited to the Eligible Employee’s Account on that date a number of Matching
Restricted Units equal to 100% of the number of Restricted Units of all kinds (other than Dividend
Equivalent Units).

     (f) DIVIDEND EQUIVALENTS. Until the Vesting Date for the Restricted Units that have been
credited to a Participant’s Account pursuant to paragraphs (a), (b), (c), (d) and (e) of this
Section 5, additional Restricted Units shall be credited to the Participant’s Account, with respect
to the Restricted Units so credited, as of each Dividend Payment Date. The number of additional
Restricted Units to be so credited shall be determined separately for each Initial Award Restricted
Unit Subaccount, for each Purchased Restricted Unit Subaccount, and for each Matching Restricted
Unit Subaccount, maintained for a Participant pursuant to Section 8. The number of additional
Restricted Units to be credited to each such Subaccount shall be determined by first multiplying
(A) the total number of Restricted Units standing to the Participant’s credit in such Subaccount as
of the day immediately preceding such Dividend Payment Date (including all Dividend Equivalent
Units credited to such Subaccount on all previous Dividend Payment Dates), by (B) the per-share
dollar amount of the dividend paid on such Dividend Payment Date
and then, dividing the resulting amount by the Closing Price of one share of Common Stock on
such Dividend Payment Date.

Page 7 of 19

 

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

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

     (ii) An election under Section 5(b) with respect to the Bonus payable to an Eligible
Employee during any Plan Year shall be made no less than one year before the beginning of
such Plan Year (e.g., an election with respect to the Bonus payable during the Plan Year
beginning August 1, 2008 (based on the application of the bonus formula to the fiscal year
ending July 31, 2008), must be made by the last Business Day of July 2007).

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

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

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

     (vi) In his or her election form, the Eligible Employee shall specify, by dollar amount
(which shall be an even multiple of $100) or by percentage (which shall be an even multiple
of 1%), the portion of his or her Bonus and/or base salary that the Eligible Employee wishes
to have paid in the form of Restricted Units credited to his or her Account, instead of in
cash. The dollar amount or percentage so specified

Page 8 of 19

 

shall be at least equal to any minimum amount or percentage which the Committee in its discretion
may have determined to be applicable to elections under Section 5(b) and/or Section 5(c) for
the Plan Year.

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

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

     (i) If an Eligible Employee who has made an election under Section 5(b) with respect to
the Bonus payable to the Eligible Employee during any Plan Year has a Termination of
Employment for any reason prior to any Bonus Payment Date for such Bonus but is nevertheless
entitled to receive a Bonus payment on such date, the portion of such payment that is
required to be paid by means of the crediting of Restricted Units to the Eligible Employee’s
Account pursuant to his or her election under Section 5(b) shall be paid in such form
subject to the terms of his or her applicable election.

     (ii) If an Eligible Employee who has made an election under Section 5(c) with respect
to the base salary payable to the Eligible Employee during any Plan Year has a Termination
of Employment for any reason prior to any date on which Restricted Units are to be credited
to his or her Account with respect to amounts withheld from his or her base salary pursuant
to such election, Restricted Units shall be so credited on such date subject to the terms of
his or her election.

     (iii) Any election made by an Eligible Employee under Section 5(b) or (c) shall not be
given effect if, at any time during the 12-month period ending on the date as of which any
Restricted Units are otherwise required to be credited to his or her Account pursuant to
such election, the Eligible Employee received a hardship withdrawal under Section 7.2 of the
Pall Corporation 401(k) Plan.

6. VESTING OF UNITS.

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

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

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

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

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

Page 9 of 19

 

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

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

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

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

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

     For purposes of the foregoing, the “Earned Portion” of the Units in any Initial Award
Restricted Unit Subaccount and in any Matching Restricted Unit Subaccount maintained for a
Participant shall mean the percentage of such Units determined by dividing by 48 the number of
months in the period beginning as of the Crediting Date for such Subaccount and ending as of the
date of the Participant’s Termination of Employment, with any fraction of a month included in such
period treated as a full month; and the “Unearned Portion” of the Units in any such Subaccount
shall mean the percentage of such Units determined by subtracting from 100% the Earned Portion of
such Units, as determined under the preceding clause.

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

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

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

Page 10 of 19

 

7. PAYMENT FOR VESTED UNITS.

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

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

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

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

Page 11 of 19

 

     (d) DEFERRED PAYMENT. Subject to the provisions of paragraph (e) below, payment with respect
to part or all of a Participant’s Restricted Units that become vested on any Vesting Date pursuant
to Section 6(a)(i) shall be deferred, and shall be made at the time and in the manner hereinafter
set forth, if the Participant so elects in accordance with the following provisions:

     (i) An election by the Participant hereunder with respect to any Restricted Units that
become vested on any Vesting Date shall be made in writing, on a form furnished to the
Participant for such purpose by the Committee. The form shall be filed with the Committee
at least one year prior to such Vesting Date.

     (ii) In the Participant’s election form, the Participant shall specify the number of
such Restricted Units with respect to which the Participant wishes to defer payment, and the
date on which payment with respect to such Units shall be made (the “Payment Date”).

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

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

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

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

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

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

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

Page 12 of 19

 

amount by the Closing Price of one share of Common Stock on such Dividend Payment Date.

     (vii) Except as provided in subparagraph (viii) below, payment with respect to the
Deferred Vested Units in any Deferred Vested Unit Subaccount maintained for the Participant
shall be made on the Payment Date specified by the Participant in his or her deferral
election with respect to such Units or, if applicable, on the Delayed Payment Date for such
Units provided in paragraph (f)(iii) below. Payment with respect to the Deferred Vested
Units payable on any Payment Date or Delayed Payment Date shall be made in a single lump sum
(A) by the issuance of one share of Common Stock for each whole Deferred Vested Unit payable
on such Payment Date or Delayed Payment Date, and (B) by a cash payment for any fractional
part of a Deferred Vested Unit payable on such Payment Date or Delayed Payment Date. The
amount of such cash payment shall be determined by multiplying such fractional part by the
Closing Price of a share of Common Stock on the first Trading Day preceding the date of
payment. Any amount of such cash payment determined to be less than $5 shall be forfeited
and the Participant shall have no further rights with respect thereto.

     (viii) Notwithstanding any other provision in this Section 7 to the contrary, payment
with respect to any part or all of any Deferred Vested Unit Subaccount maintained for a
Participant may be made to the Participant on any date earlier than the Payment Date
specified by the Participant in his or her deferral election for such Units if (A) the
Participant requests such early payment and (B) the Committee, in its sole discretion,
determines that such early payment is necessary to help the Participant meet an
“unforeseeable emergency” within the meaning of Section 409A of the Code. The amount that
may be so paid may not exceed the amount permitted to be paid under Section 409A of the
Code.

     (e) LIMITATIONS ON DEFERRALS. A deferral election otherwise permitted to be made under
paragraph (d) above shall be subject to the following limitations:

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

     (ii) No deferral election shall be effective hereunder if, at any time during the
12-month period ending on the Vesting Date, the Participant received a hardship withdrawal
under Section 7.2 of the Pall Corporation 401(k) Plan.

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

Page 13 of 19

 

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

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

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

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

Page 14 of 19

 

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

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

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

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

8. ACCOUNTS.

     There shall be established on the books and records of the Corporation, for bookkeeping
purposes only, a separate Account for each Participant, to reflect the Participant’s interest under
the Plan.

     Within each Account so established for each Participant there shall be established and
maintained the following Subaccounts: an “Initial Award Restricted Unit Subaccount” to reflect all
Restricted Units to be credited to the Participant’s Account on any Crediting Date pursuant to
Section 5(a); a “Purchased Restricted Unit Subaccount” to reflect all Restricted Units to be
credited to the Participant’s account on any Crediting Date pursuant to Section 5(b), (c) or (d); a
“Matching Restricted Unit Subaccount” to reflect all Matching Restricted Units to be credited to
the Participant’s Account on any Crediting Date pursuant to Section 5(e); and a “Deferred Vested
Unit Subaccount” to reflect all Vested Units with respect to which a Participant has
elected to defer payment, and for which the Participant has selected the same Payment Date,
pursuant to Section 7(d).

Page 15 of 19

 

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

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

9. CERTAIN ADJUSTMENTS TO PLAN SHARES.

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

10. LISTING AND QUALIFICATION OF COMMON STOCK.

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

11. TAXES.

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

Page 16 of 19

 

12. DESIGNATION AND CHANGE OF BENEFICIARY.

     Each Participant shall file with the Committee a written designation of one or more persons as
the Beneficiary who shall be entitled to receive any amount, or any shares of Common Stock, payable
under the Plan upon his or her death. A Participant may, from time to time, revoke or change his
or her Beneficiary designation without the consent of any previously designated Beneficiary by
filing a new designation with the Committee. The last such designation received by the Committee
shall be controlling; provided, however, that no designation, or change or revocation thereof,
shall be effective unless received by the Committee prior to the Participant’s death, and in no
event shall it be effective as of a date prior to such receipt. If at the date of a Participant’s
death, there is no designation of a Beneficiary in effect for the Participant pursuant to the
provisions of this Section 12, or if no Beneficiary designated by the Participant in accordance
with the provisions hereof survives to receive any amount, or any shares of Common Stock, payable
under the Plan by reason of the Participant’s death, the Participant’s estate shall be treated as
the Participant’s Beneficiary for purposes of the Plan.

13. RIGHTS OF PARTICIPANTS.

     A Participant’s rights and interests under the Plan shall be subject to the following
provisions:

     (a) A Participant shall have the status of a general unsecured creditor of the Corporation
with respect to his or her right to receive any payment under the Plan. The Plan shall constitute
a mere promise by the Corporation or the applicable Affiliated Company to make payments in the
future of the benefits provided for herein. It is intended that the arrangements reflected in the
Plan be treated as unfunded for tax purposes, as well as for purposes of any applicable provisions
of Title I of ERISA.

     (b) A Participant’s rights to payments under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Participant or his or her Beneficiary. The payment of an amount
shall not result in an actual or potential reduction of, or current or future offset to, an amount
of deferred compensation, and the Participant shall receive no loan the repayment of which is
secured by or may be accomplished through an offset of or a reduction in an amount deferred under
the Plan.

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

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

Page 17 of 19

 

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

14. ADMINISTRATION.

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

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

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

15. AMENDMENT OR TERMINATION.

     The Board of Directors may, with prospective or retroactive effect, amend, suspend or
terminate the Plan or any portion thereof at any time; provided, however, that (a) no amendment,
suspension or termination of the Plan shall adversely affect the rights of any Participant with
respect to any Units previously credited to the Participant’s Account, without his or her written
consent and (b) no amendment which constitutes a “material revision” of the Plan, as the term
material revision is defined in the applicable rules of the New York Stock Exchange, shall be
effective unless approved by the shareholders in the manner required by such rules and by
applicable law, and (c) no amendment, suspension, or termination may change the time and form of
payment of any outstanding Units except in accordance with Section 409A.

16. SUCCESSOR CORPORATION.

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

Page 18 of 19

 

17. GOVERNING LAW.

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

18. EFFECTIVE DATE.

     The Plan was adopted effective as of June 29, 1999 by the Board of Directors, acting by the
Compensation Committee, and approved by the shareholders of the Corporation by a majority of the
votes cast in person or by proxy at the 1999 annual meeting of the Corporation’s shareholders.
Amendments approved by the Board of Directors on October 16, 2008 are effective as of January 1,
2008, with respect to all outstanding Units as of that date and any outstanding Units granted
thereafter, other than any Units that were outstanding and vested prior to January 1, 2005 and not
materially modified thereafter.

Page 19 of 19

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