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Amendment Dated August 1, 1995 To Employment Agreement - PALL CORP - 10-24-1996

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Amendment Dated August 1, 1995 To Employment Agreement - PALL CORP - 10-24-1996 Powered By Docstoc
					EXHIBIT 10.18 [Elected Vice President Form] 10/31/95 FIRST AMENDMENT Amendment Dated August 1, 1995 to Employment Agreement Dated August 1, 1994. PALL CORPORATION, a New York Corporation ("the Company") and Peter Cope ("Executive") hereby agree that the Employment Agreement between them dated August 1, 1994 is hereby amended effective August 1, 1995 by changing Section 3(b) thereof to read and provide as follows: (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula:

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 3, 1996 will be the average of stockholders' equity as of July 29, 1995 and August 3, 1996) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equity adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earnings of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. 2

For fiscal year 1996, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage.

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 3, 1996 will be the average of stockholders' equity as of July 29, 1995 and August 3, 1996) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equity adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earnings of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. 2

For fiscal year 1996, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary). 3

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of

For fiscal year 1996, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary). 3

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of 4

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. ************************ Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of 4

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. ************************ Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

/s/ Peter Cope 12/1/95 -----------------------------------Executive

5

EXHIBIT 10.20 [Elected Vice President Form] 10/31/95 FIRST AMENDMENT Amendment Dated August 1, 1995 to Employment Agreement Dated

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. ************************ Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

/s/ Peter Cope 12/1/95 -----------------------------------Executive

5

EXHIBIT 10.20 [Elected Vice President Form] 10/31/95 FIRST AMENDMENT Amendment Dated August 1, 1995 to Employment Agreement Dated August 1, 1994. PALL CORPORATION, a New York Corporation ("the Company") and Robert Simkins ("Executive") hereby agree that the Employment Agreement between them dated August 1, 1994 is hereby amended effective August 1, 1995 by changing Section 3(b) thereof to read and provide as follows: (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula:

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus

EXHIBIT 10.20 [Elected Vice President Form] 10/31/95 FIRST AMENDMENT Amendment Dated August 1, 1995 to Employment Agreement Dated August 1, 1994. PALL CORPORATION, a New York Corporation ("the Company") and Robert Simkins ("Executive") hereby agree that the Employment Agreement between them dated August 1, 1994 is hereby amended effective August 1, 1995 by changing Section 3(b) thereof to read and provide as follows: (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula:

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 3, 1996 will be the average of stockholders' equity as of July 29, 1995 and August 3, 1996) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equIty adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earninqs of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. 2

For fiscal year 1996, "Zero Bonus Percentage" shalt mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 3, 1996 will be the average of stockholders' equity as of July 29, 1995 and August 3, 1996) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equIty adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earninqs of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. 2

For fiscal year 1996, "Zero Bonus Percentage" shalt mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary). 3

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of

For fiscal year 1996, "Zero Bonus Percentage" shalt mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary). 3

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of 4

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. ************************ Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of 4

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. ************************ Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

/s/ Robert Simkins -----------------------------------Executive

5

EXHIBIT 10.24 [Elected Vice President Form] 10/31/95 FIRST AMENDMENT AMENDMENT DATED AUGUST 1, 1995 TO EMPLOYMENT AGREEMENT DATED

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. ************************ Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

/s/ Robert Simkins -----------------------------------Executive

5

EXHIBIT 10.24 [Elected Vice President Form] 10/31/95 FIRST AMENDMENT AMENDMENT DATED AUGUST 1, 1995 TO EMPLOYMENT AGREEMENT DATED SEPTEMBER 26, 1994. PALL CORPORATION, a New York Corporation ("the Company") and Donald B. Stevens ("Executive") hereby agree that the Employment Agreement between them dated September 26, 1994 is hereby amended effective August 1, 1995 by changing Section 3(b) thereof to read and provide as follows: (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula:

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus

EXHIBIT 10.24 [Elected Vice President Form] 10/31/95 FIRST AMENDMENT AMENDMENT DATED AUGUST 1, 1995 TO EMPLOYMENT AGREEMENT DATED SEPTEMBER 26, 1994. PALL CORPORATION, a New York Corporation ("the Company") and Donald B. Stevens ("Executive") hereby agree that the Employment Agreement between them dated September 26, 1994 is hereby amended effective August 1, 1995 by changing Section 3(b) thereof to read and provide as follows: (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula:

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 3, 1996 will be the average of stockholders' equity as of July 29, 1995 and August 3, 1996) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equity adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earnings of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. 2

For fiscal year 1996, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 3, 1996 will be the average of stockholders' equity as of July 29, 1995 and August 3, 1996) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equity adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earnings of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. 2

For fiscal year 1996, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary). 3

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of

For fiscal year 1996, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1996 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1996 is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary). 3

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of 4

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. *********************** Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

(c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in July 1996 with respect to Bonus Compensation for the fiscal year ending August 3, 1996), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of 4

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. *********************** Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

/s/ Donald B. Stevens -----------------------------------Executive

5

EXHIBIT 10.25 [Elected Vice President] EMPLOYMENT AGREEMENT AGREEMENT made as of August 5, 1996 between PALL CORPORATION, a New York corporation (the "Company") and Paul Kohn ("Executive"). WHEREAS, the parties desire to terminate, as of August 4, 1996, any employment agreement between them

Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period. *********************** Except as expressly amended hereby, said Employment Agreement dated August 1, 1995 shall remain in full force and effect in accordance with its terms. PALL CORPORATION
By /s/ Jeremy Hayward-Surry -----------------------------------Jeremy Hayward-Surry President & Chief Financial Officer

/s/ Donald B. Stevens -----------------------------------Executive

5

EXHIBIT 10.25 [Elected Vice President] EMPLOYMENT AGREEMENT AGREEMENT made as of August 5, 1996 between PALL CORPORATION, a New York corporation (the "Company") and Paul Kohn ("Executive"). WHEREAS, the parties desire to terminate, as of August 4, 1996, any employment agreement between them then in effect, and to enter into a new employment agreement, on the terms and conditions hereinafter set forth, for a term beginning August 5, 1996. NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows: SECTION 1. EMPLOYMENT AND TERM The Company hereby employs Executive, and Executive hereby agrees to serve, as an executive employee of the Company with the duties set forth in Section 2, for a term (hereinafter called the "Term of Employment") beginning August 5, 1996 and ending, unless sooner terminated under Section 4, on the effective date specified in a notice of termination given by either party to the other except that such effective date shall not be earlier than the second anniversary of the date on which such notice is given.

SECTION 2. DUTIES (a) Executive agrees that during the Term of Employment he will hold such offices or positions with the Company, and perform such duties and assignments relating to the business of the Company, as the Board of Directors or the Chief Executive Officer of the Company shall direct except that Executive shall not be required to hold any

EXHIBIT 10.25 [Elected Vice President] EMPLOYMENT AGREEMENT AGREEMENT made as of August 5, 1996 between PALL CORPORATION, a New York corporation (the "Company") and Paul Kohn ("Executive"). WHEREAS, the parties desire to terminate, as of August 4, 1996, any employment agreement between them then in effect, and to enter into a new employment agreement, on the terms and conditions hereinafter set forth, for a term beginning August 5, 1996. NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows: SECTION 1. EMPLOYMENT AND TERM The Company hereby employs Executive, and Executive hereby agrees to serve, as an executive employee of the Company with the duties set forth in Section 2, for a term (hereinafter called the "Term of Employment") beginning August 5, 1996 and ending, unless sooner terminated under Section 4, on the effective date specified in a notice of termination given by either party to the other except that such effective date shall not be earlier than the second anniversary of the date on which such notice is given.

SECTION 2. DUTIES (a) Executive agrees that during the Term of Employment he will hold such offices or positions with the Company, and perform such duties and assignments relating to the business of the Company, as the Board of Directors or the Chief Executive Officer of the Company shall direct except that Executive shall not be required to hold any office or position or to perform any duties or assignment inconsistent with his experience and qualifications or not customarily performed by a corporate officer. The Company represents to Executive that the Board of Directors (acting by its Compensation Committee) has authorized the making of this Agreement and expressed its present intention that during the Term of Employment Executive will be an elected officer of the Company. The failure of any future Board of Directors to elect Executive as an officer of the Company shall not, however, be deemed to relieve either party hereto of any of his or its obligations under this Agreement. (b) If the Board of Directors or the Chief Executive Officer of the Company so directs, Executive shall serve as an officer of one or more subsidiaries of the Company (provided that the duties of such office are not inconsistent with Executive's experience and 2

qualifications and are duties customarily performed by a corporate officer) and part or all of the compensation to which Executive is entitled hereunder may be paid by such subsidiary or subsidiaries. However, such employment and/or payment of Executive by a subsidiary or subsidiaries shall not relieve the Company from any of its obligations under this Agreement except to the extent of payments actually made to Executive by a subsidiary. (c) During the Term of Employment Executive shall, except during customary vacation periods and periods of illness, devote substantially all of his business time and attention to the performance of his duties hereunder and to the business and affairs of the Company and its subsidiaries and to promoting the best interests of the Company and its subsidiaries and he shall not, either during or outside of such normal business hours, engage in any activity inimical to such best interests. SECTION 3. COMPENSATION DURING TERM OF EMPLOYMENT

SECTION 2. DUTIES (a) Executive agrees that during the Term of Employment he will hold such offices or positions with the Company, and perform such duties and assignments relating to the business of the Company, as the Board of Directors or the Chief Executive Officer of the Company shall direct except that Executive shall not be required to hold any office or position or to perform any duties or assignment inconsistent with his experience and qualifications or not customarily performed by a corporate officer. The Company represents to Executive that the Board of Directors (acting by its Compensation Committee) has authorized the making of this Agreement and expressed its present intention that during the Term of Employment Executive will be an elected officer of the Company. The failure of any future Board of Directors to elect Executive as an officer of the Company shall not, however, be deemed to relieve either party hereto of any of his or its obligations under this Agreement. (b) If the Board of Directors or the Chief Executive Officer of the Company so directs, Executive shall serve as an officer of one or more subsidiaries of the Company (provided that the duties of such office are not inconsistent with Executive's experience and 2

qualifications and are duties customarily performed by a corporate officer) and part or all of the compensation to which Executive is entitled hereunder may be paid by such subsidiary or subsidiaries. However, such employment and/or payment of Executive by a subsidiary or subsidiaries shall not relieve the Company from any of its obligations under this Agreement except to the extent of payments actually made to Executive by a subsidiary. (c) During the Term of Employment Executive shall, except during customary vacation periods and periods of illness, devote substantially all of his business time and attention to the performance of his duties hereunder and to the business and affairs of the Company and its subsidiaries and to promoting the best interests of the Company and its subsidiaries and he shall not, either during or outside of such normal business hours, engage in any activity inimical to such best interests. SECTION 3. COMPENSATION DURING TERM OF EMPLOYMENT (a) Base Salary. With respect to the period beginning August 5, 1996 and ending at the end of the Term of Employment, the Company shall pay to Executive base compensation (in addition to the compensation provided for elsewhere in this Agreement) at such 3

rate as the Board of Directors may determine (the amount so determined by the Board being herein called the "Base Salary") but at not less than the rate of $154,024 per annum (hereinafter called the "Original Base Salary") adjusted for each Contract Year (as hereinafter defined) beginning with the Contract Year which starts August 1, 1997, as follows: The term "Contract Year" as used herein means the period from August 1 of each year through July 31 of the following year. For each Contract Year during the Term of Employment beginning with the Contract Year which starts August 1, 1997, the minimum compensation payable to Executive under this Section 3 (a) (hereinafter called the "Minimum Base Salary") shall be determined by increasing (or decreasing) the Original Base Salary by the percentage increase (or decrease) of the Consumer Price Index (as hereinafter defined) for the month of June immediately preceding the start of the Contract Year in question over (or below) the Consumer Price Index for June 1996. The term "Consumer Price Index" as herein used means the "Consumer Price Index for all Urban Consumers" compiled and published by the Bureau of Labor Statistics of the United States Department of Labor for "New York - Northern New Jersey - Long Island, 4

NY-NJ-CT". To illustrate the operation of the foregoing provisions of this Section 3(a): Executive's Base Salary for the Contract Year August 1, 1997 through July 31, 1998 shall be not less than the Original Base Salary adjusted by the percentage increase (or decrease) of the Consumer Price Index for June 1997 over (or below)

qualifications and are duties customarily performed by a corporate officer) and part or all of the compensation to which Executive is entitled hereunder may be paid by such subsidiary or subsidiaries. However, such employment and/or payment of Executive by a subsidiary or subsidiaries shall not relieve the Company from any of its obligations under this Agreement except to the extent of payments actually made to Executive by a subsidiary. (c) During the Term of Employment Executive shall, except during customary vacation periods and periods of illness, devote substantially all of his business time and attention to the performance of his duties hereunder and to the business and affairs of the Company and its subsidiaries and to promoting the best interests of the Company and its subsidiaries and he shall not, either during or outside of such normal business hours, engage in any activity inimical to such best interests. SECTION 3. COMPENSATION DURING TERM OF EMPLOYMENT (a) Base Salary. With respect to the period beginning August 5, 1996 and ending at the end of the Term of Employment, the Company shall pay to Executive base compensation (in addition to the compensation provided for elsewhere in this Agreement) at such 3

rate as the Board of Directors may determine (the amount so determined by the Board being herein called the "Base Salary") but at not less than the rate of $154,024 per annum (hereinafter called the "Original Base Salary") adjusted for each Contract Year (as hereinafter defined) beginning with the Contract Year which starts August 1, 1997, as follows: The term "Contract Year" as used herein means the period from August 1 of each year through July 31 of the following year. For each Contract Year during the Term of Employment beginning with the Contract Year which starts August 1, 1997, the minimum compensation payable to Executive under this Section 3 (a) (hereinafter called the "Minimum Base Salary") shall be determined by increasing (or decreasing) the Original Base Salary by the percentage increase (or decrease) of the Consumer Price Index (as hereinafter defined) for the month of June immediately preceding the start of the Contract Year in question over (or below) the Consumer Price Index for June 1996. The term "Consumer Price Index" as herein used means the "Consumer Price Index for all Urban Consumers" compiled and published by the Bureau of Labor Statistics of the United States Department of Labor for "New York - Northern New Jersey - Long Island, 4

NY-NJ-CT". To illustrate the operation of the foregoing provisions of this Section 3(a): Executive's Base Salary for the Contract Year August 1, 1997 through July 31, 1998 shall be not less than the Original Base Salary adjusted by the percentage increase (or decrease) of the Consumer Price Index for June 1997 over (or below) said Index for June 1996. Further adjustment in the Minimum Base Salary shall be made for each ensuing Contract Year, in each case (i) using the Consumer Price Index for June 1996 as the base except as provided in the immediately following paragraph hereof and (ii) applying the percentage increase (or decrease) in the Consumer Price Index since said base month to the Original Base Salary to determine the Minimum Base Salary. The Base Salary shall be paid in such periodic installments as the Company may determine but not less often than monthly. If with respect to any Contract Year (including the Contract Year beginning August 1, 1996) the Board of Directors fixes the Base Salary at an amount higher than the Minimum Base Salary, then (unless the resolution fixing such higher Base Salary provides otherwise), for the purpose of determining the Minimum Base Salary for subsequent Contract Years: (1) the amount of the higher Base 5

Salary so fixed shall be deemed substituted for the Original Base Salary wherever the Original Base Salary is referred to in the immediately preceding paragraph hereof, and (ii) the base month for determining the Consumer Price Index adjustment shall be June of the calendar year in which the Contract Year to which such higher Base Salary is applicable begins (e.g., if the Board fixes a Base Salary for the Contract Year beginning August 1, 1997

rate as the Board of Directors may determine (the amount so determined by the Board being herein called the "Base Salary") but at not less than the rate of $154,024 per annum (hereinafter called the "Original Base Salary") adjusted for each Contract Year (as hereinafter defined) beginning with the Contract Year which starts August 1, 1997, as follows: The term "Contract Year" as used herein means the period from August 1 of each year through July 31 of the following year. For each Contract Year during the Term of Employment beginning with the Contract Year which starts August 1, 1997, the minimum compensation payable to Executive under this Section 3 (a) (hereinafter called the "Minimum Base Salary") shall be determined by increasing (or decreasing) the Original Base Salary by the percentage increase (or decrease) of the Consumer Price Index (as hereinafter defined) for the month of June immediately preceding the start of the Contract Year in question over (or below) the Consumer Price Index for June 1996. The term "Consumer Price Index" as herein used means the "Consumer Price Index for all Urban Consumers" compiled and published by the Bureau of Labor Statistics of the United States Department of Labor for "New York - Northern New Jersey - Long Island, 4

NY-NJ-CT". To illustrate the operation of the foregoing provisions of this Section 3(a): Executive's Base Salary for the Contract Year August 1, 1997 through July 31, 1998 shall be not less than the Original Base Salary adjusted by the percentage increase (or decrease) of the Consumer Price Index for June 1997 over (or below) said Index for June 1996. Further adjustment in the Minimum Base Salary shall be made for each ensuing Contract Year, in each case (i) using the Consumer Price Index for June 1996 as the base except as provided in the immediately following paragraph hereof and (ii) applying the percentage increase (or decrease) in the Consumer Price Index since said base month to the Original Base Salary to determine the Minimum Base Salary. The Base Salary shall be paid in such periodic installments as the Company may determine but not less often than monthly. If with respect to any Contract Year (including the Contract Year beginning August 1, 1996) the Board of Directors fixes the Base Salary at an amount higher than the Minimum Base Salary, then (unless the resolution fixing such higher Base Salary provides otherwise), for the purpose of determining the Minimum Base Salary for subsequent Contract Years: (1) the amount of the higher Base 5

Salary so fixed shall be deemed substituted for the Original Base Salary wherever the Original Base Salary is referred to in the immediately preceding paragraph hereof, and (ii) the base month for determining the Consumer Price Index adjustment shall be June of the calendar year in which the Contract Year to which such higher Base Salary is applicable begins (e.g., if the Board fixes a Base Salary for the Contract Year beginning August 1, 1997 which is higher than the Minimum Base Salary, then June 1997 would become the base month for the purposes of making the CPI adjustment to determine the Minimum Base Salary for subsequent Contract Years) . (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula: 6

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g.,

NY-NJ-CT". To illustrate the operation of the foregoing provisions of this Section 3(a): Executive's Base Salary for the Contract Year August 1, 1997 through July 31, 1998 shall be not less than the Original Base Salary adjusted by the percentage increase (or decrease) of the Consumer Price Index for June 1997 over (or below) said Index for June 1996. Further adjustment in the Minimum Base Salary shall be made for each ensuing Contract Year, in each case (i) using the Consumer Price Index for June 1996 as the base except as provided in the immediately following paragraph hereof and (ii) applying the percentage increase (or decrease) in the Consumer Price Index since said base month to the Original Base Salary to determine the Minimum Base Salary. The Base Salary shall be paid in such periodic installments as the Company may determine but not less often than monthly. If with respect to any Contract Year (including the Contract Year beginning August 1, 1996) the Board of Directors fixes the Base Salary at an amount higher than the Minimum Base Salary, then (unless the resolution fixing such higher Base Salary provides otherwise), for the purpose of determining the Minimum Base Salary for subsequent Contract Years: (1) the amount of the higher Base 5

Salary so fixed shall be deemed substituted for the Original Base Salary wherever the Original Base Salary is referred to in the immediately preceding paragraph hereof, and (ii) the base month for determining the Consumer Price Index adjustment shall be June of the calendar year in which the Contract Year to which such higher Base Salary is applicable begins (e.g., if the Board fixes a Base Salary for the Contract Year beginning August 1, 1997 which is higher than the Minimum Base Salary, then June 1997 would become the base month for the purposes of making the CPI adjustment to determine the Minimum Base Salary for subsequent Contract Years) . (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula: 6

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 2, 1997 will be the average of stockholders' equity as of August 3, 1996 and August 2, 1997) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equity adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earnings of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to 7

stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity.

Salary so fixed shall be deemed substituted for the Original Base Salary wherever the Original Base Salary is referred to in the immediately preceding paragraph hereof, and (ii) the base month for determining the Consumer Price Index adjustment shall be June of the calendar year in which the Contract Year to which such higher Base Salary is applicable begins (e.g., if the Board fixes a Base Salary for the Contract Year beginning August 1, 1997 which is higher than the Minimum Base Salary, then June 1997 would become the base month for the purposes of making the CPI adjustment to determine the Minimum Base Salary for subsequent Contract Years) . (b) Formula Bonus Compensation. With respect to each fiscal year of the Company falling in whole or in part within the Term of Employment beginning with the fiscal year in which the Term Commencement Date occurs, Executive shall be entitled to a bonus (in addition to his Base Salary) in such amount and computed in such manner as shall be determined by the Board of Directors but in no event shall the bonus payable to Executive under this Section 3(b) be less than an amount computed by applying to the fiscal year in question the following bonus formula: 6

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 2, 1997 will be the average of stockholders' equity as of August 3, 1996 and August 2, 1997) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equity adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earnings of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to 7

stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. For fiscal year 1997, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1997 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus 8

Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1997 Is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of

"Formula Bonus Compensation" means the amount, if any, payable to Executive under this Section 3(b) and "Bonus Compensation" means the total amount payable under Sections 3(b) and 3(c). "Average Equity" means the average of stockholders' equity as shown on the fiscal year-end consolidated balance sheet of the Company as of the end of the fiscal year with respect to which Formula Bonus Compensation is being computed hereunder and as of the end of the immediately preceding fiscal year (e.g., "Average Equity" to be used in computing Bonus Compensation for the fiscal year ending August 2, 1997 will be the average of stockholders' equity as of August 3, 1996 and August 2, 1997) except that the amount shown as the "equity adjustment from foreign currency translation" on each such consolidated balance sheet shall be disregarded and the amount of $3,744,000 shall be the equity adjustment (increase) from foreign currency translation used to determine stockholders' equity at each such year-end balance sheet date. "Net Earnings" means the after-tax consolidated net earnings of the Company and its subsidiaries as certified by its independent accountants for inclusion in the annual report to 7

stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. For fiscal year 1997, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1997 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus 8

Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1997 Is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary) . (c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in 9

July 1997 with respect to Bonus Compensation for the fiscal year ending August 2, 1997), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and

stockholders. "Return on Equity" means Net Earnings as a percentage of Average Equity. For fiscal year 1997, "Zero Bonus Percentage" shall mean a Return on Equity of 12.5% and "Maximum Bonus Percentage" shall mean a Return on Equity of 20.0%. For fiscal years after fiscal 1997 the Company shall determine the Zero Bonus Percentage and the Maximum Bonus Percentage, consistent in each case with expected results based upon the Company's normal projection procedures, or based on sound statistical or trend data, and the determination by the Company of such percentages shall be conclusive and binding on Executive. If Return on Equity for the fiscal year in question is the Zero Bonus Percentage or less, no Formula Bonus Compensation shall be payable. If Return on Equity equals or exceeds the Maximum Bonus Percentage, the Formula Bonus Compensation payable to Executive shall be 42% of his Base Salary. If Return on Equity is more than the Zero Bonus Percentage and less than the Maximum Bonus Percentage, the Formula Bonus Compensation shall be increased from zero percent of Base Salary towards 42% of Base Salary in the same proportion that Return on Equity increases from the Zero Bonus 8

Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1997 Is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary) . (c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in 9

July 1997 with respect to Bonus Compensation for the fiscal year ending August 2, 1997), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period . (e) Fringe Benefits and Perquisites. During the Term of Employment, Executive shall enjoy the customary perquisites of office, including but not limited to office space and furnishings, secretarial services, expense reimbursements, and any similar emoluments 10

Percentage to the Maximum Bonus Percentage. Thus, for example, if Return on Equity for fiscal 1997 Is 16.25% (the midpoint between 12.5% and 20.0%) the Formula Bonus Compensation shall be an amount equal to 21% of Executive's Base Salary (the midpoint between zero percent of Base Salary and 42% of Base Salary) . (c) Business Segment Bonus Compensation. Inasmuch as Executive's services for the Company relate primarily to the operations of a subsidiary, a division or other segment of the overall operations of the Company and its subsidiaries (a "Business Segment"), Executive shall be considered for additional bonus compensation for each fiscal year based on the results of operations of such Business Segment for such fiscal year. The amount of such additional bonus compensation, if any, shall be determined by the chief executive officer in his sole discretion but in no event shall such additional bonus compensation exceed 28% of Executive's Base Salary. (d) The Bonus Compensation shall be paid in installments as follows: (i) 50% of the estimated amount thereof in July of the fiscal year with respect to which the Bonus Compensation is payable (e.g., 50% in 9

July 1997 with respect to Bonus Compensation for the fiscal year ending August 2, 1997), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period . (e) Fringe Benefits and Perquisites. During the Term of Employment, Executive shall enjoy the customary perquisites of office, including but not limited to office space and furnishings, secretarial services, expense reimbursements, and any similar emoluments 10

customarily afforded to senior executive officers of the Company at the same level as Executive. Executive shall also be entitled to receive or participate in all "fringe benefits" and employee benefit plans provided or made available by the Company to its executives or management personnel generally, such as, but not limited to, group hospitalization, medical, life and disability insurance, and pension, retirement, profit-sharing and stock option or purchase plans. (d) Vacations. Executive shall be entitled each year to a vacation or vacations in accordance with the policies of the Company as determined by the Board or by an authorized senior officer of the Company from time to time. The Company shall not pay Executive any additional compensation for any vacation time not used by Executive. Section 4. Termination by Reason of Disability, Death, Retirement or Change of Control (a) Disability or Death. If, during the Term of Employment, Executive, by reason of physical or mental disability, is incapable of performing his principal duties hereunder for an aggregate of 130 working days out of any period of twelve consecutive months, the Company at its option may 11

terminate the Term of Employment effective immediately by notice to Executive given within 90 days after the end

July 1997 with respect to Bonus Compensation for the fiscal year ending August 2, 1997), based on the then current projections of Return on Equity and results of operations of Executive's Business Segment, and (ii) the balance thereof not later than January 15th next following the end of the fiscal year with respect to which the Bonus Compensation is payable. With respect to any fiscal year of the Company which falls in part but not in whole within the Term of Employment, the Bonus Compensation to which Executive is entitled under this Section 3(b) and Section 3(c) shall be prorated on the basis of the number of days of such fiscal year falling within the Term of Employment except that if the Term of Employment ends within five days before or after the end of a fiscal year, there shall be no proration and the Bonus Compensation shall be payable with respect to the full fiscal year ending within such five-day period . (e) Fringe Benefits and Perquisites. During the Term of Employment, Executive shall enjoy the customary perquisites of office, including but not limited to office space and furnishings, secretarial services, expense reimbursements, and any similar emoluments 10

customarily afforded to senior executive officers of the Company at the same level as Executive. Executive shall also be entitled to receive or participate in all "fringe benefits" and employee benefit plans provided or made available by the Company to its executives or management personnel generally, such as, but not limited to, group hospitalization, medical, life and disability insurance, and pension, retirement, profit-sharing and stock option or purchase plans. (d) Vacations. Executive shall be entitled each year to a vacation or vacations in accordance with the policies of the Company as determined by the Board or by an authorized senior officer of the Company from time to time. The Company shall not pay Executive any additional compensation for any vacation time not used by Executive. Section 4. Termination by Reason of Disability, Death, Retirement or Change of Control (a) Disability or Death. If, during the Term of Employment, Executive, by reason of physical or mental disability, is incapable of performing his principal duties hereunder for an aggregate of 130 working days out of any period of twelve consecutive months, the Company at its option may 11

terminate the Term of Employment effective immediately by notice to Executive given within 90 days after the end of such twelve-month period. If Executive shall die during the Term of Employment or if the Company terminates the Term of Employment pursuant to the immediately preceding sentence by reason of Executive's disability, the Company shall pay to Executive, or to Executive's legal representatives, or in accordance with a direction given by Executive to the Company in writing, the following: (i) Executive's Base Salary to the end of the month in which such death or termination for disability occurs and Executive's Bonus Compensation prorated to said last day of the month and (ii) for the period from the end of the month in which such death or termination for disability occurs until the earlier of (x) the first anniversary of the date of death or termination and (y) the date on which the Term of Employment would have ended but for such death or termination for disability, monthly payments at onehalf of the rate of Executive's Base Salary plus one-half of Executive's Bonus Compensation (prorated to the last day of such period) which would have been payable with respect to such period but for such death or termination. 12

(b) Retirement. (i) The Term of Employment shall end automatically, without action by either party, on Executive's 65th birthday unless, prior to such birthday, Executive and the Company have agreed in writing that the Term of Employment shall continue past such 65th birthday. In that event, unless the parties have agreed

customarily afforded to senior executive officers of the Company at the same level as Executive. Executive shall also be entitled to receive or participate in all "fringe benefits" and employee benefit plans provided or made available by the Company to its executives or management personnel generally, such as, but not limited to, group hospitalization, medical, life and disability insurance, and pension, retirement, profit-sharing and stock option or purchase plans. (d) Vacations. Executive shall be entitled each year to a vacation or vacations in accordance with the policies of the Company as determined by the Board or by an authorized senior officer of the Company from time to time. The Company shall not pay Executive any additional compensation for any vacation time not used by Executive. Section 4. Termination by Reason of Disability, Death, Retirement or Change of Control (a) Disability or Death. If, during the Term of Employment, Executive, by reason of physical or mental disability, is incapable of performing his principal duties hereunder for an aggregate of 130 working days out of any period of twelve consecutive months, the Company at its option may 11

terminate the Term of Employment effective immediately by notice to Executive given within 90 days after the end of such twelve-month period. If Executive shall die during the Term of Employment or if the Company terminates the Term of Employment pursuant to the immediately preceding sentence by reason of Executive's disability, the Company shall pay to Executive, or to Executive's legal representatives, or in accordance with a direction given by Executive to the Company in writing, the following: (i) Executive's Base Salary to the end of the month in which such death or termination for disability occurs and Executive's Bonus Compensation prorated to said last day of the month and (ii) for the period from the end of the month in which such death or termination for disability occurs until the earlier of (x) the first anniversary of the date of death or termination and (y) the date on which the Term of Employment would have ended but for such death or termination for disability, monthly payments at onehalf of the rate of Executive's Base Salary plus one-half of Executive's Bonus Compensation (prorated to the last day of such period) which would have been payable with respect to such period but for such death or termination. 12

(b) Retirement. (i) The Term of Employment shall end automatically, without action by either party, on Executive's 65th birthday unless, prior to such birthday, Executive and the Company have agreed in writing that the Term of Employment shall continue past such 65th birthday. In that event, unless the parties have agreed otherwise, the Term of Employment shall be automatically renewed and extended each year, as of Executive's birthday, for an additional one-year term, unless either party has given a Non-Renewal Notice. A Non-Renewal Notice shall be effective as of Executive's ensuing birthday only if given not less than 60 days before such birthday, and shall state that the party giving such notice elects that this Agreement shall not automatically renew itself further, with the result that the Term of Employment shall end on Executive's ensuing birthday. (ii) If the Term of Employment ends pursuant to this paragraph by reason of a notice given by either party as herein permitted or automatically at age 65 or any subsequent birthday, the Company shall pay to Executive, or to another payee specified by Executive to the Company in writing, Executive's Base Salary and Bonus Compensation prorated to the date on which the Term of Employment ends. (iii) 13

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

terminate the Term of Employment effective immediately by notice to Executive given within 90 days after the end of such twelve-month period. If Executive shall die during the Term of Employment or if the Company terminates the Term of Employment pursuant to the immediately preceding sentence by reason of Executive's disability, the Company shall pay to Executive, or to Executive's legal representatives, or in accordance with a direction given by Executive to the Company in writing, the following: (i) Executive's Base Salary to the end of the month in which such death or termination for disability occurs and Executive's Bonus Compensation prorated to said last day of the month and (ii) for the period from the end of the month in which such death or termination for disability occurs until the earlier of (x) the first anniversary of the date of death or termination and (y) the date on which the Term of Employment would have ended but for such death or termination for disability, monthly payments at onehalf of the rate of Executive's Base Salary plus one-half of Executive's Bonus Compensation (prorated to the last day of such period) which would have been payable with respect to such period but for such death or termination. 12

(b) Retirement. (i) The Term of Employment shall end automatically, without action by either party, on Executive's 65th birthday unless, prior to such birthday, Executive and the Company have agreed in writing that the Term of Employment shall continue past such 65th birthday. In that event, unless the parties have agreed otherwise, the Term of Employment shall be automatically renewed and extended each year, as of Executive's birthday, for an additional one-year term, unless either party has given a Non-Renewal Notice. A Non-Renewal Notice shall be effective as of Executive's ensuing birthday only if given not less than 60 days before such birthday, and shall state that the party giving such notice elects that this Agreement shall not automatically renew itself further, with the result that the Term of Employment shall end on Executive's ensuing birthday. (ii) If the Term of Employment ends pursuant to this paragraph by reason of a notice given by either party as herein permitted or automatically at age 65 or any subsequent birthday, the Company shall pay to Executive, or to another payee specified by Executive to the Company in writing, Executive's Base Salary and Bonus Compensation prorated to the date on which the Term of Employment ends. (iii) 13

Anything hereinabove to the contrary notwithstanding, if any provision of this paragraph violates federal or applicable state law relating to discrimination on account of age, such provision shall be deemed modified or suspended to the extent necessary to eliminate such violation of law. If at a later date, by reason of changed circumstances or otherwise, the enforcement of such provision as set forth herein would no longer constitute a violation of law, then it shall be enforced in accordance with its terms as set forth herein. (c) Change of Control. In event of a Change of Control (as hereinafter defined), Executive shall have the right to terminate the Term of Employment, by notice to the Company given at any time after such Change of Control, effective on the date specified in such notice, which date shall not be more than (but can be less than) one year after the giving of such notice. A Change of Control shall be deemed to have occurred at such time as a majority of the directors then in office are not Continuing Directors as defined in subparagraph (C) (6) of Article 12 of the Company's Restated Certificate of Incorporation dated November 23, 1993 and filed by the New York Department of State on December 7, 1993. 14

Section 5. Covenant Not to Compete For a period of eighteen months after the end of the Term of Employment if the Term of Employment is terminated by notice to the Company given by Executive under Section 1 or Section 4 hereof, or for a period of twelve months after the end of the Term of Employment if the Term of Employment is terminated by notice to Executive given by the Company under Section 1 or Section 4 hereof or terminates under Section 4 by reason of Executive attaining the age of 65, Executive shall not render services to any corporation, individual or other entity engaged in any activity, or himself engage directly or indirectly in any activity, which is competitive to any material extent with the business of the Company or any of

(b) Retirement. (i) The Term of Employment shall end automatically, without action by either party, on Executive's 65th birthday unless, prior to such birthday, Executive and the Company have agreed in writing that the Term of Employment shall continue past such 65th birthday. In that event, unless the parties have agreed otherwise, the Term of Employment shall be automatically renewed and extended each year, as of Executive's birthday, for an additional one-year term, unless either party has given a Non-Renewal Notice. A Non-Renewal Notice shall be effective as of Executive's ensuing birthday only if given not less than 60 days before such birthday, and shall state that the party giving such notice elects that this Agreement shall not automatically renew itself further, with the result that the Term of Employment shall end on Executive's ensuing birthday. (ii) If the Term of Employment ends pursuant to this paragraph by reason of a notice given by either party as herein permitted or automatically at age 65 or any subsequent birthday, the Company shall pay to Executive, or to another payee specified by Executive to the Company in writing, Executive's Base Salary and Bonus Compensation prorated to the date on which the Term of Employment ends. (iii) 13

Anything hereinabove to the contrary notwithstanding, if any provision of this paragraph violates federal or applicable state law relating to discrimination on account of age, such provision shall be deemed modified or suspended to the extent necessary to eliminate such violation of law. If at a later date, by reason of changed circumstances or otherwise, the enforcement of such provision as set forth herein would no longer constitute a violation of law, then it shall be enforced in accordance with its terms as set forth herein. (c) Change of Control. In event of a Change of Control (as hereinafter defined), Executive shall have the right to terminate the Term of Employment, by notice to the Company given at any time after such Change of Control, effective on the date specified in such notice, which date shall not be more than (but can be less than) one year after the giving of such notice. A Change of Control shall be deemed to have occurred at such time as a majority of the directors then in office are not Continuing Directors as defined in subparagraph (C) (6) of Article 12 of the Company's Restated Certificate of Incorporation dated November 23, 1993 and filed by the New York Department of State on December 7, 1993. 14

Section 5. Covenant Not to Compete For a period of eighteen months after the end of the Term of Employment if the Term of Employment is terminated by notice to the Company given by Executive under Section 1 or Section 4 hereof, or for a period of twelve months after the end of the Term of Employment if the Term of Employment is terminated by notice to Executive given by the Company under Section 1 or Section 4 hereof or terminates under Section 4 by reason of Executive attaining the age of 65, Executive shall not render services to any corporation, individual or other entity engaged in any activity, or himself engage directly or indirectly in any activity, which is competitive to any material extent with the business of the Company or any of its subsidiaries, provided, however, that if the Company terminates under Section 1 following a Change of Control (as defined in Section 4(c)), the foregoing covenant not to compete shall not apply. Section 6. Company's Right to Injunctive Relief Executive acknowledges that his services to the Company are of a unique character, which gives them a peculiar value to the Company, the loss of which cannot be reasonably or adequately compensated in damages in an action at law, and that therefore, in addition to any other remedy which the Company may have at law or in equity, the Company shall be 15

entitled to injunctive relief for a breach of this Agreement by Executive. Section 7. Inventions and Patents

Anything hereinabove to the contrary notwithstanding, if any provision of this paragraph violates federal or applicable state law relating to discrimination on account of age, such provision shall be deemed modified or suspended to the extent necessary to eliminate such violation of law. If at a later date, by reason of changed circumstances or otherwise, the enforcement of such provision as set forth herein would no longer constitute a violation of law, then it shall be enforced in accordance with its terms as set forth herein. (c) Change of Control. In event of a Change of Control (as hereinafter defined), Executive shall have the right to terminate the Term of Employment, by notice to the Company given at any time after such Change of Control, effective on the date specified in such notice, which date shall not be more than (but can be less than) one year after the giving of such notice. A Change of Control shall be deemed to have occurred at such time as a majority of the directors then in office are not Continuing Directors as defined in subparagraph (C) (6) of Article 12 of the Company's Restated Certificate of Incorporation dated November 23, 1993 and filed by the New York Department of State on December 7, 1993. 14

Section 5. Covenant Not to Compete For a period of eighteen months after the end of the Term of Employment if the Term of Employment is terminated by notice to the Company given by Executive under Section 1 or Section 4 hereof, or for a period of twelve months after the end of the Term of Employment if the Term of Employment is terminated by notice to Executive given by the Company under Section 1 or Section 4 hereof or terminates under Section 4 by reason of Executive attaining the age of 65, Executive shall not render services to any corporation, individual or other entity engaged in any activity, or himself engage directly or indirectly in any activity, which is competitive to any material extent with the business of the Company or any of its subsidiaries, provided, however, that if the Company terminates under Section 1 following a Change of Control (as defined in Section 4(c)), the foregoing covenant not to compete shall not apply. Section 6. Company's Right to Injunctive Relief Executive acknowledges that his services to the Company are of a unique character, which gives them a peculiar value to the Company, the loss of which cannot be reasonably or adequately compensated in damages in an action at law, and that therefore, in addition to any other remedy which the Company may have at law or in equity, the Company shall be 15

entitled to injunctive relief for a breach of this Agreement by Executive. Section 7. Inventions and Patents All inventions, ideas, concepts, processes, discoveries, improvements and trademarks (hereinafter collectively referred to as intangible rights), whether patentable or registrable or not, which are conceived, made, invented or suggested either by Executive alone or by Executive in collaboration with others during the Term of Employment, and whether or not during regular working hours, shall be disclosed to the Company and shall be the sole and exclusive property of the Company. If the Company deems that any of such intangible rights are patentable or otherwise registrable under any federal, state or foreign law, Executive, at the expense of the Company, shall execute all documents and do all things necessary or proper to obtain patents and/or registrations and to vest the Company with full title thereto. Section 8. Trade Secrets and Confidential Information Executive shall not, either directly or indirectly, except as required in the course of his employment by the Company, disclose or use at any time, whether during or subsequent to the Term of Employment, any information of a proprietary nature owned by the Company, including but not

Section 5. Covenant Not to Compete For a period of eighteen months after the end of the Term of Employment if the Term of Employment is terminated by notice to the Company given by Executive under Section 1 or Section 4 hereof, or for a period of twelve months after the end of the Term of Employment if the Term of Employment is terminated by notice to Executive given by the Company under Section 1 or Section 4 hereof or terminates under Section 4 by reason of Executive attaining the age of 65, Executive shall not render services to any corporation, individual or other entity engaged in any activity, or himself engage directly or indirectly in any activity, which is competitive to any material extent with the business of the Company or any of its subsidiaries, provided, however, that if the Company terminates under Section 1 following a Change of Control (as defined in Section 4(c)), the foregoing covenant not to compete shall not apply. Section 6. Company's Right to Injunctive Relief Executive acknowledges that his services to the Company are of a unique character, which gives them a peculiar value to the Company, the loss of which cannot be reasonably or adequately compensated in damages in an action at law, and that therefore, in addition to any other remedy which the Company may have at law or in equity, the Company shall be 15

entitled to injunctive relief for a breach of this Agreement by Executive. Section 7. Inventions and Patents All inventions, ideas, concepts, processes, discoveries, improvements and trademarks (hereinafter collectively referred to as intangible rights), whether patentable or registrable or not, which are conceived, made, invented or suggested either by Executive alone or by Executive in collaboration with others during the Term of Employment, and whether or not during regular working hours, shall be disclosed to the Company and shall be the sole and exclusive property of the Company. If the Company deems that any of such intangible rights are patentable or otherwise registrable under any federal, state or foreign law, Executive, at the expense of the Company, shall execute all documents and do all things necessary or proper to obtain patents and/or registrations and to vest the Company with full title thereto. Section 8. Trade Secrets and Confidential Information Executive shall not, either directly or indirectly, except as required in the course of his employment by the Company, disclose or use at any time, whether during or subsequent to the Term of Employment, any information of a proprietary nature owned by the Company, including but not 16

limited to, records, data, formulae, documents, specifications, inventions, processes, methods and intangible rights which are acquired by him in the performance of his duties for the Company and which are of a confidential information or trade-secret nature. All records, files, drawings, documents, equipment and the like, relating to the Company's business, which Executive shall prepare, use, construct or observe, shall be and remain the Company's sole property. Upon the termination of his employment or at any time prior thereto upon request by the Company, Executive shall return to the possession of the Company any materials or copies thereof involving any confidential information or trade secrets and shall not take any material or copies thereof from the possession of the Company. Section 9. Mergers and Consolidations; Assignability In the event that the Company, or any entity resulting from any merger or consolidation referred to in this Section 9 or which shall be a purchaser or transferee so referred to, shall at any time be merged or consolidated into or with any other entity or entities, or in the event that substantially all of the assets of the Company or any such

entitled to injunctive relief for a breach of this Agreement by Executive. Section 7. Inventions and Patents All inventions, ideas, concepts, processes, discoveries, improvements and trademarks (hereinafter collectively referred to as intangible rights), whether patentable or registrable or not, which are conceived, made, invented or suggested either by Executive alone or by Executive in collaboration with others during the Term of Employment, and whether or not during regular working hours, shall be disclosed to the Company and shall be the sole and exclusive property of the Company. If the Company deems that any of such intangible rights are patentable or otherwise registrable under any federal, state or foreign law, Executive, at the expense of the Company, shall execute all documents and do all things necessary or proper to obtain patents and/or registrations and to vest the Company with full title thereto. Section 8. Trade Secrets and Confidential Information Executive shall not, either directly or indirectly, except as required in the course of his employment by the Company, disclose or use at any time, whether during or subsequent to the Term of Employment, any information of a proprietary nature owned by the Company, including but not 16

limited to, records, data, formulae, documents, specifications, inventions, processes, methods and intangible rights which are acquired by him in the performance of his duties for the Company and which are of a confidential information or trade-secret nature. All records, files, drawings, documents, equipment and the like, relating to the Company's business, which Executive shall prepare, use, construct or observe, shall be and remain the Company's sole property. Upon the termination of his employment or at any time prior thereto upon request by the Company, Executive shall return to the possession of the Company any materials or copies thereof involving any confidential information or trade secrets and shall not take any material or copies thereof from the possession of the Company. Section 9. Mergers and Consolidations; Assignability In the event that the Company, or any entity resulting from any merger or consolidation referred to in this Section 9 or which shall be a purchaser or transferee so referred to, shall at any time be merged or consolidated into or with any other entity or entities, or in the event that substantially all of the assets of the Company or any such entity shall be sold or otherwise transferred to another entity, the provisions of this Agreement shall be binding upon and shall inure to the benefit of the continuing entity in or the entity resulting from such merger or consolidation or the 17

entity to which such assets shall be sold or transferred. Except as provided in the immediately preceding sentence of this Section 9, this Agreement shall not be assignable by the Company or by any entity referred to in such immediately preceding sentence. This Agreement shall not be assignable by Executive, but in the event of his death it shall be binding upon and inure to the benefit of his legal representatives to the extent required to effectuate the terms hereof. Section 10. Captions The captions in this Agreement are not part of the provisions hereof, are merely for the purpose of reference and shall have no force or effect for any purpose whatsoever, including the construction of the provisions of this Agreement, and if any caption is inconsistent with any provisions of this Agreement, said provisions shall govern. Section 11. Choice of Law This Agreement is made in, and shall be governed by and construed in accordance with the laws of, the State of

limited to, records, data, formulae, documents, specifications, inventions, processes, methods and intangible rights which are acquired by him in the performance of his duties for the Company and which are of a confidential information or trade-secret nature. All records, files, drawings, documents, equipment and the like, relating to the Company's business, which Executive shall prepare, use, construct or observe, shall be and remain the Company's sole property. Upon the termination of his employment or at any time prior thereto upon request by the Company, Executive shall return to the possession of the Company any materials or copies thereof involving any confidential information or trade secrets and shall not take any material or copies thereof from the possession of the Company. Section 9. Mergers and Consolidations; Assignability In the event that the Company, or any entity resulting from any merger or consolidation referred to in this Section 9 or which shall be a purchaser or transferee so referred to, shall at any time be merged or consolidated into or with any other entity or entities, or in the event that substantially all of the assets of the Company or any such entity shall be sold or otherwise transferred to another entity, the provisions of this Agreement shall be binding upon and shall inure to the benefit of the continuing entity in or the entity resulting from such merger or consolidation or the 17

entity to which such assets shall be sold or transferred. Except as provided in the immediately preceding sentence of this Section 9, this Agreement shall not be assignable by the Company or by any entity referred to in such immediately preceding sentence. This Agreement shall not be assignable by Executive, but in the event of his death it shall be binding upon and inure to the benefit of his legal representatives to the extent required to effectuate the terms hereof. Section 10. Captions The captions in this Agreement are not part of the provisions hereof, are merely for the purpose of reference and shall have no force or effect for any purpose whatsoever, including the construction of the provisions of this Agreement, and if any caption is inconsistent with any provisions of this Agreement, said provisions shall govern. Section 11. Choice of Law This Agreement is made in, and shall be governed by and construed in accordance with the laws of, the State of New York. Section 12. Entire contract This instrument contains the entire agreement of the parties on the subject matter hereof except that the rights 18

of the Company hereunder shall be deemed to be in addition to and not in substitution for its rights under the Company's standard printed form of "Employee's Secrecy and Invention Agreement" or "Employee Agreement" if heretofore or hereafter entered into between the parties hereto so that the making of this Agreement shall not be construed as depriving the Company of any of its rights or remedies under any such Secrecy and Invention Agreement or Employee Agreement. This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. Section 13. Notices All notices given hereunder shall be in writing and shall be sent by registered or certified mail or delivered by hand, and, if intended for the Company, shall be addressed to it (if sent by mail) or delivered to it (if delivered by hand) at its principal office for the attention of the Secretary of the Company, or at such other address and for the

entity to which such assets shall be sold or transferred. Except as provided in the immediately preceding sentence of this Section 9, this Agreement shall not be assignable by the Company or by any entity referred to in such immediately preceding sentence. This Agreement shall not be assignable by Executive, but in the event of his death it shall be binding upon and inure to the benefit of his legal representatives to the extent required to effectuate the terms hereof. Section 10. Captions The captions in this Agreement are not part of the provisions hereof, are merely for the purpose of reference and shall have no force or effect for any purpose whatsoever, including the construction of the provisions of this Agreement, and if any caption is inconsistent with any provisions of this Agreement, said provisions shall govern. Section 11. Choice of Law This Agreement is made in, and shall be governed by and construed in accordance with the laws of, the State of New York. Section 12. Entire contract This instrument contains the entire agreement of the parties on the subject matter hereof except that the rights 18

of the Company hereunder shall be deemed to be in addition to and not in substitution for its rights under the Company's standard printed form of "Employee's Secrecy and Invention Agreement" or "Employee Agreement" if heretofore or hereafter entered into between the parties hereto so that the making of this Agreement shall not be construed as depriving the Company of any of its rights or remedies under any such Secrecy and Invention Agreement or Employee Agreement. This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. Section 13. Notices All notices given hereunder shall be in writing and shall be sent by registered or certified mail or delivered by hand, and, if intended for the Company, shall be addressed to it (if sent by mail) or delivered to it (if delivered by hand) at its principal office for the attention of the Secretary of the Company, or at such other address and for the attention of such other person of which the Company shall have given notice to Executive in the manner herein provided, and, if intended for Executive, shall be delivered to him personally or shall be addressed to him (if sent by mail) at his most recent residence address shown in the Company's employment records or at such other address or to such 19

designee of which Executive shall have given notice to the Company in the manner herein provided. Each such notice shall be deemed to be given on the date of mailing thereof or, if delivered personally, on the date so delivered. Section 14. Termination of Any Prior Employment Agreement Any Employment Agreement in effect between the Company and Executive on the date hereof is hereby terminated by mutual consent effective August 4, 1996 and is superseded and replaced by this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. PALL CORPORATION

of the Company hereunder shall be deemed to be in addition to and not in substitution for its rights under the Company's standard printed form of "Employee's Secrecy and Invention Agreement" or "Employee Agreement" if heretofore or hereafter entered into between the parties hereto so that the making of this Agreement shall not be construed as depriving the Company of any of its rights or remedies under any such Secrecy and Invention Agreement or Employee Agreement. This Agreement may not be changed orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. Section 13. Notices All notices given hereunder shall be in writing and shall be sent by registered or certified mail or delivered by hand, and, if intended for the Company, shall be addressed to it (if sent by mail) or delivered to it (if delivered by hand) at its principal office for the attention of the Secretary of the Company, or at such other address and for the attention of such other person of which the Company shall have given notice to Executive in the manner herein provided, and, if intended for Executive, shall be delivered to him personally or shall be addressed to him (if sent by mail) at his most recent residence address shown in the Company's employment records or at such other address or to such 19

designee of which Executive shall have given notice to the Company in the manner herein provided. Each such notice shall be deemed to be given on the date of mailing thereof or, if delivered personally, on the date so delivered. Section 14. Termination of Any Prior Employment Agreement Any Employment Agreement in effect between the Company and Executive on the date hereof is hereby terminated by mutual consent effective August 4, 1996 and is superseded and replaced by this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. PALL CORPORATION By:_____________________________________ Jeremy Hayward-Surry President and Chief Financial Officer By:_____________________________________ Paul Kohn Executive 20

EXHIBIT 10.26 Revised Appendix C PALL CORPORATION SUPPLEMENTARY PROFIT-SHARING PLAN As amended and restated February 15, 1995

designee of which Executive shall have given notice to the Company in the manner herein provided. Each such notice shall be deemed to be given on the date of mailing thereof or, if delivered personally, on the date so delivered. Section 14. Termination of Any Prior Employment Agreement Any Employment Agreement in effect between the Company and Executive on the date hereof is hereby terminated by mutual consent effective August 4, 1996 and is superseded and replaced by this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. PALL CORPORATION By:_____________________________________ Jeremy Hayward-Surry President and Chief Financial Officer By:_____________________________________ Paul Kohn Executive 20

EXHIBIT 10.26 Revised Appendix C PALL CORPORATION SUPPLEMENTARY PROFIT-SHARING PLAN As amended and restated February 15, 1995

PALL CORPORATION SUPPLEMENTARY PROFIT-SHARING PLAN This document sets forth the Pall Corporation Supplementary Profit-Sharing Plan, as amended and restated February 15, 1995. The amendments reflected in this document are effective as of January 1, 1995. The Plan was previously amended and restated September 19, 1994, to reflect amendments effective as of August 1, 1993. The rights and entitlement to a benefit under the Plan of any person who terminated employment with any Employer prior to the effective date of a particular amendment to the Plan shall be determined solely under the terms of the Plan as in effect on the date of such termination of employment, without regard to such amendment. SECTION 1. PURPOSE. The purpose of this Plan is to provide participants in the Pall Corporation ProfitSharing Plan (the "Profit Sharing Plan") with benefits equivalent to those provided under the Profit Sharing Plan, with respect to that portion of their annual compensation which may not be taken into account under the Profit Sharing Plan because of the limitation on compensation contained in section 401 (a) (17) of the Internal Revenue Code.

EXHIBIT 10.26 Revised Appendix C PALL CORPORATION SUPPLEMENTARY PROFIT-SHARING PLAN As amended and restated February 15, 1995

PALL CORPORATION SUPPLEMENTARY PROFIT-SHARING PLAN This document sets forth the Pall Corporation Supplementary Profit-Sharing Plan, as amended and restated February 15, 1995. The amendments reflected in this document are effective as of January 1, 1995. The Plan was previously amended and restated September 19, 1994, to reflect amendments effective as of August 1, 1993. The rights and entitlement to a benefit under the Plan of any person who terminated employment with any Employer prior to the effective date of a particular amendment to the Plan shall be determined solely under the terms of the Plan as in effect on the date of such termination of employment, without regard to such amendment. SECTION 1. PURPOSE. The purpose of this Plan is to provide participants in the Pall Corporation ProfitSharing Plan (the "Profit Sharing Plan") with benefits equivalent to those provided under the Profit Sharing Plan, with respect to that portion of their annual compensation which may not be taken into account under the Profit Sharing Plan because of the limitation on compensation contained in section 401 (a) (17) of the Internal Revenue Code. 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"). SECTION 2. DEFINITIONS. When used herein, the following terms shall have the following meanings: (a) "Account" means the account established for a Participant hereunder. (b) "Board" means the Board of Directors of the Company. (c) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (d) "Committee" means the Committee appointed by the Board to administer the Plan. (e) "Company" means Pall Corporation, a New York corporation.

(f) "Compensation" means "Compensation", as defined in the Profit Sharing Plan for purposes of Section 3.4 of the Profit Sharing Plan. (g) "Corresponding PSP Plan Year" means, with respect to any Plan Year, the plan year of the Profit Sharing Plan that corresponds to such Plan Year. (h) "Corresponding Valuation Period" means, with respect to any Valuation Date, the period of time which starts on the day after the immediately preceding Valuation Date and ends on such Valuation Date.

PALL CORPORATION SUPPLEMENTARY PROFIT-SHARING PLAN This document sets forth the Pall Corporation Supplementary Profit-Sharing Plan, as amended and restated February 15, 1995. The amendments reflected in this document are effective as of January 1, 1995. The Plan was previously amended and restated September 19, 1994, to reflect amendments effective as of August 1, 1993. The rights and entitlement to a benefit under the Plan of any person who terminated employment with any Employer prior to the effective date of a particular amendment to the Plan shall be determined solely under the terms of the Plan as in effect on the date of such termination of employment, without regard to such amendment. SECTION 1. PURPOSE. The purpose of this Plan is to provide participants in the Pall Corporation ProfitSharing Plan (the "Profit Sharing Plan") with benefits equivalent to those provided under the Profit Sharing Plan, with respect to that portion of their annual compensation which may not be taken into account under the Profit Sharing Plan because of the limitation on compensation contained in section 401 (a) (17) of the Internal Revenue Code. 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"). SECTION 2. DEFINITIONS. When used herein, the following terms shall have the following meanings: (a) "Account" means the account established for a Participant hereunder. (b) "Board" means the Board of Directors of the Company. (c) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (d) "Committee" means the Committee appointed by the Board to administer the Plan. (e) "Company" means Pall Corporation, a New York corporation.

(f) "Compensation" means "Compensation", as defined in the Profit Sharing Plan for purposes of Section 3.4 of the Profit Sharing Plan. (g) "Corresponding PSP Plan Year" means, with respect to any Plan Year, the plan year of the Profit Sharing Plan that corresponds to such Plan Year. (h) "Corresponding Valuation Period" means, with respect to any Valuation Date, the period of time which starts on the day after the immediately preceding Valuation Date and ends on such Valuation Date. (i) "Employer" means the Company or any subsidiary of the Company that has adopted the Profit Sharing Plan. (j) "Employer Contribution" means "Employer Contribution", as defined in the Profit Sharing Plan. (k) "Employer Contribution Account" means the "Employer Contribution Account", as defined in the Profit Sharing Plan, maintained for a participant under the Profit Sharing Plan. (1) "Excess Compensation" means, for any Plan Year, the amount of a Participant's Compensation for the taxable year of the Employer which ends in such Plan Year that is in excess of the limitation on Compensation in effect for such Plan Year under section 401(a) (17) of the Code. It is provided, however, that for the Short Plan Year, "Excess Compensation" shall be the amount of a Participant's Compensation paid to the Participant during such Plan Year in excess of the limitation on

(f) "Compensation" means "Compensation", as defined in the Profit Sharing Plan for purposes of Section 3.4 of the Profit Sharing Plan. (g) "Corresponding PSP Plan Year" means, with respect to any Plan Year, the plan year of the Profit Sharing Plan that corresponds to such Plan Year. (h) "Corresponding Valuation Period" means, with respect to any Valuation Date, the period of time which starts on the day after the immediately preceding Valuation Date and ends on such Valuation Date. (i) "Employer" means the Company or any subsidiary of the Company that has adopted the Profit Sharing Plan. (j) "Employer Contribution" means "Employer Contribution", as defined in the Profit Sharing Plan. (k) "Employer Contribution Account" means the "Employer Contribution Account", as defined in the Profit Sharing Plan, maintained for a participant under the Profit Sharing Plan. (1) "Excess Compensation" means, for any Plan Year, the amount of a Participant's Compensation for the taxable year of the Employer which ends in such Plan Year that is in excess of the limitation on Compensation in effect for such Plan Year under section 401(a) (17) of the Code. It is provided, however, that for the Short Plan Year, "Excess Compensation" shall be the amount of a Participant's Compensation paid to the Participant during such Plan Year in excess of the limitation on Compensation in effect for such Plan Year under section 401(a) (17) of the Code. (m) "Participant" means any person (i) who, on or after August 1, 1993, is employed by an Employer and is a participant in the Profit Sharing Plan, and (ii) who has had Excess Compensation for any Plan Year beginning on or after August 1, 1993. (n) "Plan" means the Pall Corporation Supplementary Profit-Sharing Plan, as set forth herein and as amended from time to time. (o) "Plan Year" means, after July 31, 1993, the 5-consecutive month period beginning on August 1, 1993 and ending on December 31, 1993 (the "Short Plan Year"), and, thereafter, each calendar year. -2-

(p) "Profit Sharing Plan" means the Pall Corporation Profit-Sharing Plan, as amended from time to time. (q) "Termination of Service" means the termination of a Participant's employment with all Employers. (r) "Valuation Date" means (i) for the Short Plan Year, the last business day of October and December of such year and (ii) after December 31, 1993, the last business day of the third, sixth, ninth and twelfth months during a Plan Year. SECTION 3. SUPPLEMENTAL PROFIT SHARING BENEFIT. 3.1 The Benefit. As of the last day of each Plan Year beginning on or after August 1, 1993, each Participant's Account shall be credited with an amount equal to (a) the Participant's Excess Compensation for such year, multiplied by (b) a fraction, the numerator of which is the aggregate amount of Employer Contributions allocated to all Employer Contribution Accounts with respect to the Corresponding PSP Plan Year, and the denominator of which is the aggregate amount of Compensation taken into account in making such allocation. For the purpose of the preceding sentence, the aggregate amount of Employer Contributions so allocated shall be determined without regard to the reduction made from the Employer Contributions for amounts described in clause (b) (3) of the second paragraph of Section 3.4 of the Profit Sharing Plan. Notwithstanding the foregoing, no amount shall be allocated to the Account of a Participant for the Plan Year in which the Participant's Termination of Service occurs, unless the Participant is entitled to have a portion of the

(p) "Profit Sharing Plan" means the Pall Corporation Profit-Sharing Plan, as amended from time to time. (q) "Termination of Service" means the termination of a Participant's employment with all Employers. (r) "Valuation Date" means (i) for the Short Plan Year, the last business day of October and December of such year and (ii) after December 31, 1993, the last business day of the third, sixth, ninth and twelfth months during a Plan Year. SECTION 3. SUPPLEMENTAL PROFIT SHARING BENEFIT. 3.1 The Benefit. As of the last day of each Plan Year beginning on or after August 1, 1993, each Participant's Account shall be credited with an amount equal to (a) the Participant's Excess Compensation for such year, multiplied by (b) a fraction, the numerator of which is the aggregate amount of Employer Contributions allocated to all Employer Contribution Accounts with respect to the Corresponding PSP Plan Year, and the denominator of which is the aggregate amount of Compensation taken into account in making such allocation. For the purpose of the preceding sentence, the aggregate amount of Employer Contributions so allocated shall be determined without regard to the reduction made from the Employer Contributions for amounts described in clause (b) (3) of the second paragraph of Section 3.4 of the Profit Sharing Plan. Notwithstanding the foregoing, no amount shall be allocated to the Account of a Participant for the Plan Year in which the Participant's Termination of Service occurs, unless the Participant is entitled to have a portion of the Employer Contributions made to the Profit Sharing Plan for the Corresponding PSP Plan Year allocated to his or her Profit Sharing Plan Account for such year. SECTION 4. ACCOUNTS, EARNINGS AND VESTING. 4.1. Accounts. The Committee shall establish and maintain, or cause to be established and maintained, a separate memorandum Account for each Participant. A Participant's Account shall be adjusted from time to time to reflect the amounts to be credited to such Account under Section 3.1, the amounts to be credited or charged to such Account under Section 4.2, and amounts distributed to the Participant or his or her Beneficiary under Section 5.1. 4.2. Earnings. As of each Valuation Date occurring after August 1, 1993, each Participant's Account shall be credited, or charged, with an amount determined by multiplying (a) -3-

the balance of Buch Accounts as of the immediately preceding Valuation Date, by (b) the Earnings Adjustment Factor for such Valuation Date. The Earnings Adjustment Factor for any Valuation Date shall be a fraction. The numerator of such fraction shall be the amount of the earnings or losses that would have resulted during the Corresponding Valuation Period for such Valuation Date if, on the first day of such period, an amount equal to the balance of the Participant's Employer Contribution Account as of the immediately preceding Valuation Date had been invested in the Fidelity Asset Manager fund. The denominator of such fraction shall be the balance of the Participant's Employer Contribution Account as of the immediately preceding Valuation Date. If the numerator of the Earnings Adjustment Factor for any Valuation Date is a negative amount, the adjustment to be made to the Participant's Account pursuant to this Section 4.2 as of such Valuation Date shall be a charge to such Account. In the case of any Participant who had a balance to his credit in his Account as of July 31, 1993, such date shall be treated as the Valuation Date immediately preceding the Valuation Date occurring in October of 1993, for purposes of determining the amount to be credited or charged to such Participant's Account under this Section 4.2 as of the October, 1993 Valuation Date. 4.3. Vesting. As of any date of reference or upon the occurrence of any event, a Participant shall have a vested interest in the same percentage of his or her Account as the vested percentage the Participant has in his or her Employer Contribution Account on such date or by reason of the occurrence of such event.

the balance of Buch Accounts as of the immediately preceding Valuation Date, by (b) the Earnings Adjustment Factor for such Valuation Date. The Earnings Adjustment Factor for any Valuation Date shall be a fraction. The numerator of such fraction shall be the amount of the earnings or losses that would have resulted during the Corresponding Valuation Period for such Valuation Date if, on the first day of such period, an amount equal to the balance of the Participant's Employer Contribution Account as of the immediately preceding Valuation Date had been invested in the Fidelity Asset Manager fund. The denominator of such fraction shall be the balance of the Participant's Employer Contribution Account as of the immediately preceding Valuation Date. If the numerator of the Earnings Adjustment Factor for any Valuation Date is a negative amount, the adjustment to be made to the Participant's Account pursuant to this Section 4.2 as of such Valuation Date shall be a charge to such Account. In the case of any Participant who had a balance to his credit in his Account as of July 31, 1993, such date shall be treated as the Valuation Date immediately preceding the Valuation Date occurring in October of 1993, for purposes of determining the amount to be credited or charged to such Participant's Account under this Section 4.2 as of the October, 1993 Valuation Date. 4.3. Vesting. As of any date of reference or upon the occurrence of any event, a Participant shall have a vested interest in the same percentage of his or her Account as the vested percentage the Participant has in his or her Employer Contribution Account on such date or by reason of the occurrence of such event. Notwithstanding any other provision herein to the contrary, if a Participant does not have a 100% vested interest in his or her Account at the time of the Participant's Termination of Service (and does not acquire a 100% vested interest in his or her Account by reason of the circumstances of his or her Termination of Service), the nonvested portion of the Participant's Account shall be forfeited, and shall not be distributed to the Participant pursuant to Section 5. SECTION 5. PLAN DISTRIBUTIONS. 5.1 Distributions. A Participant's Account balance shall become distributable to the Participant or his or her Beneficiary, as the case may be, upon the Participant's Termination of Service, for any reason. Distribution shall be made in accordance with the following rules: -4-

(a) Commencement of Distributions. Distributions hereunder shall be made on the 60th day after the Valuation Date next following the Participant's Termination of Service. (b) Form and Amount of Distributions. Distributions hereunder shall be made in the form of a single lump-sum payment, in an amount equal to the Participant's vested percentage of the balance of his or her Account as of the Valuation Date immediately preceding the date as of which the distribution is to be made. (c) Participant's Death. If the Participant dies prior to his or her Termination of Service, or following his or her Termination Service but prior to the distribution of his or her Account, the Participant's Account shall be distributed to the Participant's Beneficiary. The Participant's "Beneficiary" shall be the person(s) designated by the Participant to receive any amount distributable hereunder by reason of his or her death, as indicated in the last written designation of a Beneficiary filed by such Participant with the Committee prior to such Participant's death. If a Participant has failed to designate a Beneficiary, or if no Beneficiary designated by the Participant survives to receive any amount distributable hereunder upon the Participant's death, the following will be deemed to be such Participant's Beneficiary with priority in the order named: (1) his or her spouse; and (2) his or her estate. (d) Special Rule for Amounts Credited to a Participant's Account After a Distribution. If a distribution is made to or on behalf of any Participant by the Plan pursuant to this Section 5, and if any amount is credited to such Participant's Account after such distribution has been made, then the portion of the amount so credited in which the Participant is vested shall be paid to the Participant, or, if the Participant has died, to his Beneficiary (as determined in subsection (c)), in a single lump-sum payment, within 30 days of the later of (1) the date as of which the amount is so credited, or (2) the date on which the Committee determines that such amount is to be so credited.

(a) Commencement of Distributions. Distributions hereunder shall be made on the 60th day after the Valuation Date next following the Participant's Termination of Service. (b) Form and Amount of Distributions. Distributions hereunder shall be made in the form of a single lump-sum payment, in an amount equal to the Participant's vested percentage of the balance of his or her Account as of the Valuation Date immediately preceding the date as of which the distribution is to be made. (c) Participant's Death. If the Participant dies prior to his or her Termination of Service, or following his or her Termination Service but prior to the distribution of his or her Account, the Participant's Account shall be distributed to the Participant's Beneficiary. The Participant's "Beneficiary" shall be the person(s) designated by the Participant to receive any amount distributable hereunder by reason of his or her death, as indicated in the last written designation of a Beneficiary filed by such Participant with the Committee prior to such Participant's death. If a Participant has failed to designate a Beneficiary, or if no Beneficiary designated by the Participant survives to receive any amount distributable hereunder upon the Participant's death, the following will be deemed to be such Participant's Beneficiary with priority in the order named: (1) his or her spouse; and (2) his or her estate. (d) Special Rule for Amounts Credited to a Participant's Account After a Distribution. If a distribution is made to or on behalf of any Participant by the Plan pursuant to this Section 5, and if any amount is credited to such Participant's Account after such distribution has been made, then the portion of the amount so credited in which the Participant is vested shall be paid to the Participant, or, if the Participant has died, to his Beneficiary (as determined in subsection (c)), in a single lump-sum payment, within 30 days of the later of (1) the date as of which the amount is so credited, or (2) the date on which the Committee determines that such amount is to be so credited. SECTION 6. SOURCE OF PAYMENT. All payments to be made hereunder shall be paid from the general assets of the Company, and no special or separate fund shall be established and no segregation of assets shall be made to assure such payments. Nothing contained in the Plan, and no action taken pursuant to the provisions of the Plan, shall create or be construed to create a trust of any kind, or as creating in any Participant or Beneficiary any right, title or beneficial ownership interest in or to any assets of the Company. The Plan constitutes a mere promise by the Company to make benefit payments in the future. It is the intention of the Company that the Plan be treated as -5-

unfunded for Federal income tax purposes and for purposes of Title I of ERISA. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. Notwithstanding the foregoing, the Company may establish a bookkeeping reserve to reflect its obligations hereunder, or may establish a "grantor" trust, within the meaning of sections 671 through 679 of the Code, to assist it in making the payments provided for hereunder; provided, however, that any bookkeeping reserve, and the assetS of any trust, so established shall not be deemed to constitute assets of this Plan, and the assets of any trust so established shall at all times prior to payment to Participants or their beneficiaries remain a part of the general assets of the Company and subject to the claims of the Company's general creditors. SECTION 7. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee, which shall have full power and authority to interpret and construe the Plan, to make all determinations considered necessary or advisable for the administration of the Plan and the calculation of the amounts creditable and payable thereunder, and to review claims for benefits under the Plan. The Committee's interpretations and constructions of the Plan and its decisions or actions thereunder shall be binding and conclusive on all persons for all purposes. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer, or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense

unfunded for Federal income tax purposes and for purposes of Title I of ERISA. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company. Notwithstanding the foregoing, the Company may establish a bookkeeping reserve to reflect its obligations hereunder, or may establish a "grantor" trust, within the meaning of sections 671 through 679 of the Code, to assist it in making the payments provided for hereunder; provided, however, that any bookkeeping reserve, and the assetS of any trust, so established shall not be deemed to constitute assets of this Plan, and the assets of any trust so established shall at all times prior to payment to Participants or their beneficiaries remain a part of the general assets of the Company and subject to the claims of the Company's general creditors. SECTION 7. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee, which shall have full power and authority to interpret and construe the Plan, to make all determinations considered necessary or advisable for the administration of the Plan and the calculation of the amounts creditable and payable thereunder, and to review claims for benefits under the Plan. The Committee's interpretations and constructions of the Plan and its decisions or actions thereunder shall be binding and conclusive on all persons for all purposes. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer, or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or bad faith. SECTION 8. AMENDMENT AND TERMINATION. The Plan may be amended, suspended or terminated, in whole or in part, by the Board without the consent of any Participant or any other person. The Committee may adopt any amendment that may be necessary or appropriate to facilitate the administration, management and interpretation of the Plan or to conform the Plan thereto, provided any such amendment does not have a material effect on the currently estimated cost to the Company of maintaining the Plan. No such amendment, suspension or termination shall retroactively -6-

impair or otherwise adversely affect the rights of any Participant or other person to benefits under the Plan that have accrued prior to the date of such action as determined by the Committee in its sole discretion. SECTION 9. GENERAL PROVISIONS. The following additional provisions shall be applicable with respect to the Plan. (a) The Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns, and Participants, beneficiaries, and their estates. The Plan shall also be binding upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company, but nothing in the Plan shall preclude the Company from merging or consolidating into or with, or transferring all or substantially all of its assets to, another corporation or organization that assumes the Plan and all obligations of the Company hereunder. The Company agrees that it will make appropriate provision for the preservation of Participants' rights under the Plan in any agreement or plan that it may enter into to effect any merger, consolidation, reorganization or transfer of assets. Upon such a merger, consolidation, reorganization or transfer of assets and assumption, the term "Company" shall refer to such other corporation or organization and the Plan shall continue in full force and effect. (b) Neither the Plan nor any action taken hereunder shall be construed as giving to any Participant the right to be retained in the employ of any Employer or as affecting the right of any Employer to dismiss any Participant. (c) The Company shall withhold from all amounts otherwise payable under the Plan all Federal, state, local or other taxes required pursuant to law to be withheld with respect to such payments.

impair or otherwise adversely affect the rights of any Participant or other person to benefits under the Plan that have accrued prior to the date of such action as determined by the Committee in its sole discretion. SECTION 9. GENERAL PROVISIONS. The following additional provisions shall be applicable with respect to the Plan. (a) The Plan shall be binding upon and inure to the benefit of the Company and its successors and assigns, and Participants, beneficiaries, and their estates. The Plan shall also be binding upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company, but nothing in the Plan shall preclude the Company from merging or consolidating into or with, or transferring all or substantially all of its assets to, another corporation or organization that assumes the Plan and all obligations of the Company hereunder. The Company agrees that it will make appropriate provision for the preservation of Participants' rights under the Plan in any agreement or plan that it may enter into to effect any merger, consolidation, reorganization or transfer of assets. Upon such a merger, consolidation, reorganization or transfer of assets and assumption, the term "Company" shall refer to such other corporation or organization and the Plan shall continue in full force and effect. (b) Neither the Plan nor any action taken hereunder shall be construed as giving to any Participant the right to be retained in the employ of any Employer or as affecting the right of any Employer to dismiss any Participant. (c) The Company shall withhold from all amounts otherwise payable under the Plan all Federal, state, local or other taxes required pursuant to law to be withheld with respect to such payments. (d) The rights or interests of any Participant under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Participant's creditors or beneficiary. (e) The Plan shall be governed by the laws of the State of New York from time to time in effect. -7-

EXHIBIT 10.28(a) PALL CORPORATION PROFIT-SHARING PLAN as amended and restated October 25, 1995 EXHIBIT A

TABLE OF CONTENTS
Page ---1 1 1 1 2 2 2 2 3 3 3 3

ARTICLE 1 1.1. 1.2. 1.3. 1.4. 1.5. 1.6. 1.7. 1.8. 1.9. 1.10. 1.11.

DEFINITIONS ........................................... "Accounts" or "Plan Accounts" ......................... "Beneficiary" ......................................... "Break in Service" .................................... "Code" ................................................ "Committee" ........................................... "Company" ............................................. "Compensation" ........................................ "Disabled" ............................................ "Earnings" ............................................ "Employee" ............................................ "Employer" ............................................

EXHIBIT 10.28(a) PALL CORPORATION PROFIT-SHARING PLAN as amended and restated October 25, 1995 EXHIBIT A

TABLE OF CONTENTS
Page ---1 1 1 1 2 2 2 2 3 3 3 3 3 3 3 4 4 4 4 4 7 7 7 7 7 7 9 9 9 9 9 9 9 9 9 11 11 11 11 11 11 12 12 12

ARTICLE 1 1.1. 1.2. 1.3. 1.4. 1.5. 1.6. 1.7. 1.8. 1.9. 1.10. 1.11. 1.12. 1.13. 1.14. 1.15. 1.16. 1.17. 1.18. 1.19. 1.20. 1.21. 1.22. 1.23. 1.24. 1.25. 1.26. 1.27. 1.28. 1.29. 1.30. 1.31. 1.32. 1.33. 1.34. 1.35. 1.36. 1.36.

DEFINITIONS ........................................... "Accounts" or "Plan Accounts" ......................... "Beneficiary" ......................................... "Break in Service" .................................... "Code" ................................................ "Committee" ........................................... "Company" ............................................. "Compensation" ........................................ "Disabled" ............................................ "Earnings" ............................................ "Employee" ............................................ "Employer" ............................................ "Employer Contribution Account" ....................... "Employer Contributions" .............................. "Employment Commencement Date" ........................ "ERISA" ............................................... "401(k) Contribution Account" ......................... "401(k) Contributions" ................................ "Highly Compensated Employee" ......................... "Hours of Service" .................................... "Leave" ............................................... "Member" .............................................. "Mutual Fund" ......................................... "Normal Retirement Age" ............................... "Plan". . ............................................. "Plan Year" ........................................... "Reemployment Commencement Date" ...................... "Rollover Account" .................................... "Service" ............................................. "Termination of Service" .............................. "Trust" ............................................... "Trust Agreement" ..................................... "Trust Fund" .......................................... "Trustee" . . ......................................... "Vested Portion" ...................................... "Voluntary Contribution Account" ...................... "Voluntary Contributions" ............................. "Years of Service" ....................................

ARTICLE 2 - PURPOSE, ELIGIBILITY AND PARTICIPATION ................ 2.1. Purpose ............................................... 2.2. Eligibility ........................................... 2.3. Commencement of Membership ............................ 2.4. Membership After Reemployment ......................... 2.5. Asset and Stock Acquisitions ..........................

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TABLE OF CONTENTS
Page ---1 1 1 1 2 2 2 2 3 3 3 3 3 3 3 4 4 4 4 4 7 7 7 7 7 7 9 9 9 9 9 9 9 9 9 11 11 11 11 11 11 12 12 12

ARTICLE 1 1.1. 1.2. 1.3. 1.4. 1.5. 1.6. 1.7. 1.8. 1.9. 1.10. 1.11. 1.12. 1.13. 1.14. 1.15. 1.16. 1.17. 1.18. 1.19. 1.20. 1.21. 1.22. 1.23. 1.24. 1.25. 1.26. 1.27. 1.28. 1.29. 1.30. 1.31. 1.32. 1.33. 1.34. 1.35. 1.36. 1.36.

DEFINITIONS ........................................... "Accounts" or "Plan Accounts" ......................... "Beneficiary" ......................................... "Break in Service" .................................... "Code" ................................................ "Committee" ........................................... "Company" ............................................. "Compensation" ........................................ "Disabled" ............................................ "Earnings" ............................................ "Employee" ............................................ "Employer" ............................................ "Employer Contribution Account" ....................... "Employer Contributions" .............................. "Employment Commencement Date" ........................ "ERISA" ............................................... "401(k) Contribution Account" ......................... "401(k) Contributions" ................................ "Highly Compensated Employee" ......................... "Hours of Service" .................................... "Leave" ............................................... "Member" .............................................. "Mutual Fund" ......................................... "Normal Retirement Age" ............................... "Plan". . ............................................. "Plan Year" ........................................... "Reemployment Commencement Date" ...................... "Rollover Account" .................................... "Service" ............................................. "Termination of Service" .............................. "Trust" ............................................... "Trust Agreement" ..................................... "Trust Fund" .......................................... "Trustee" . . ......................................... "Vested Portion" ...................................... "Voluntary Contribution Account" ...................... "Voluntary Contributions" ............................. "Years of Service" ....................................

ARTICLE 2 - PURPOSE, ELIGIBILITY AND PARTICIPATION ................ 2.1. Purpose ............................................... 2.2. Eligibility ........................................... 2.3. Commencement of Membership ............................ 2.4. Membership After Reemployment ......................... 2.5. Asset and Stock Acquisitions ..........................

-i-

ARTICLE 3 - CONTRIBUTIONS AND ROLLOVERS ........................... 12 3.1. 401(k) Contributions .................................. 12 3.2. Voluntary Contributions ............................... 13 3.3. Elections ............................................. 13 3.4. Employer Contributions ................................ 14 3.5. Time and Manner ....................................... 15 3.6. Rollovers ............................................. 16 ARTICLE 4 - LIMITATIONS ON CONTRIBUTIONS .......................... 17 4.1. Dollar Limit for 401(k) Contributions ................. 17 4.2. Nondiscrimination Test for 401(k) Contributions ....... 17 4.3. Nondiscrimination Test for Voluntary Contributions .... 18 4.4. Special Rules for Nondiscrimination Tests. ............ 19 4.5. Deduction Limit ....................................... 20

ARTICLE 3 - CONTRIBUTIONS AND ROLLOVERS ........................... 12 3.1. 401(k) Contributions .................................. 12 3.2. Voluntary Contributions ............................... 13 3.3. Elections ............................................. 13 3.4. Employer Contributions ................................ 14 3.5. Time and Manner ....................................... 15 3.6. Rollovers ............................................. 16 ARTICLE 4 - LIMITATIONS ON CONTRIBUTIONS .......................... 17 4.1. Dollar Limit for 401(k) Contributions ................. 17 4.2. Nondiscrimination Test for 401(k) Contributions ....... 17 4.3. Nondiscrimination Test for Voluntary Contributions .... 18 4.4. Special Rules for Nondiscrimination Tests. ............ 19 4.5. Deduction Limit ....................................... 20 4.6. Section 415 Limits .................................... 20 4.7. Adjustments ........................................... 22 4.8. Corrective Distributions .............................. 22 ARTICLE S - PLAN ACCOUNTS, ALLOCATIONS AND FORFEITURES ............ 26 5.1. Plan Accounts ......................................... 26 5.2. Forfeitures. .......................................... 27 ARTICLE 6 - INVESTMENTS AND EARNINGS .............................. 28 6.1. Investment of Accounts ................................ 28 6.2. Investment Elections .................................. 29 6.3. Determination of Earnings ............................. 31 6.4. Voting Rights ......................................... 32 ARTICLE 7 - DISTRIBUTIONS, WITHDRAWALS AND LOANS .................. 32 7.1. Distributions ......................................... 32 7.2. Hardship Withdrawals .................................. 38 7.3. In-Service Withdrawals ................................ 40 7.4. Direct Rollovers ...................................... 41 7.5. Loans ................................................. 41 ARTICLE 8 - PLAN ADMINISTRATION ................................... 45
8.1. 8.2. 8.3. 8.4. 8.5. 8.6. 8.7. 8.8. 8.9. Responsibility for Administering the Plan. ............ Responsibilities of the Committee ..................... Duties and Powers of the Committee .................... Reimbursement and Indemnification of the Committee ............................................. Responsibilities of the Trustee ....................... Responsibilities of the Company's Board of Directors ............................................. Claims Procedure ...................................... Agent for Service of Process .......................... Expenses .............................................. 45 46 47 49 49 50 50 51 51

ARTICLE 9 - AMENDMENT, MERGER AND TERMINATION ..................... 51 9.1. Amendment ............................................. 51 -ii-

9.2. Merger or Consolidation . ............................. 51 9.3. Termination . ......................................... 52 9.4. Termination of An Employer's Participation in the Plan .......................................... 54

9.2. Merger or Consolidation . ............................. 51 9.3. Termination . ......................................... 52 9.4. Termination of An Employer's Participation in the Plan .......................................... 54 ARTICLE 10 - TOP-HEAVY PROVISIONS ................................. 54
10.1. 10.2. 10.3. 10.4. 10.5. 10.6. 10.7. General ............................................... Minimum Benefit ....................................... Minimum Vesting ....................................... Maximum Compensation .................................. Section 415 Limits .................................... Definitions ........................................... Applicability ......................................... 54 54 55 56 56 56 58 58 58 59 59 59 59 59 59

ARTICLE 11 - MISCELLANEOUS ........................................ 11.1. Plan Assets to be Held for Exclusive Benefit of Members ............................................... 11.2. Nonassignability of Rights ............................ 11.3. Qualified Domestic Relations Orders ................... 11.4. Trust Fund as Sole Source of Benefit Payments ......... 11.5. Right to Employment ................................... 11.6. Gender and Number ..................................... 11.7. Titles ................................................

-iii-

PALL CORPORATION PROFIT-SHARING PLAN Foreword This document sets forth the Pall Corporation Profit-Sharing Plan, as amended and restated October 25, 1995. The amendments to the Plan reflected in this document are effective as of January 1, 1995, except as otherwise indicated in the text of the Plan. The Plan was previously amended and restated September 19, 1994 (the "Prior Document"). The amendments to the Plan reflected in the Prior Document are effective as of August 1, 1993, except as otherwise indicated in the text of the Plan. The Plan was also previously amended and restated August 1, 1993 (the "Second Prior Document"). The amendments to the top-heavy provisions of the Plan reflected in Article 10 of the Second Prior Document are effective as of August 1, 1985. The amendment to the definition of "Code" reflected in Section 1.4 of the Second Prior Document, and the amendment adding a definition of "Highly Compensated Employees" to the Plan reflected in Section 1.18 of the Second Prior Document, are effective as of August 1, 1987. The amendments to the provisions setting forth the limitations of Section 415 of the Code reflected in Section 4.6 of the Second Prior Document are effective as of August 1, 1987. The amendments relating to the limitations on Voluntary Contributions, and the amendments which add to the Plan procedures to ensure compliance with such limitations, reflected in Sections 4.3, 4.4, 4.7 and 4.8 of the Second Prior Document are effective as of August 1, 1987. The amendment to the definition of the "Normal Retirement Age" reflected in Section 1.22 of the Second Prior Document is effective as of August 1, 1988, with respect to any Employee who earns at least one Hour of Service on or after that date. The amendment which requires that a Member be furnished with a notice describing his right to defer a distribution reflected in Section 7.1(d)(2) of the Second Prior Document is effective as of August 1, 1988. The amendments which eliminate the Committee's discretion as to the form and timing of distributions reflected in Article 7 of the Second Prior Document are effective as of August 1, 1989. Each of the other amendments to the Plan reflected in the Second Prior Document is effective as of August 1, 1993, except as otherwise indicated in the text of the Plan. The rights under the Plan of any person who retired or otherwise terminated employment with his or her employer

PALL CORPORATION PROFIT-SHARING PLAN Foreword This document sets forth the Pall Corporation Profit-Sharing Plan, as amended and restated October 25, 1995. The amendments to the Plan reflected in this document are effective as of January 1, 1995, except as otherwise indicated in the text of the Plan. The Plan was previously amended and restated September 19, 1994 (the "Prior Document"). The amendments to the Plan reflected in the Prior Document are effective as of August 1, 1993, except as otherwise indicated in the text of the Plan. The Plan was also previously amended and restated August 1, 1993 (the "Second Prior Document"). The amendments to the top-heavy provisions of the Plan reflected in Article 10 of the Second Prior Document are effective as of August 1, 1985. The amendment to the definition of "Code" reflected in Section 1.4 of the Second Prior Document, and the amendment adding a definition of "Highly Compensated Employees" to the Plan reflected in Section 1.18 of the Second Prior Document, are effective as of August 1, 1987. The amendments to the provisions setting forth the limitations of Section 415 of the Code reflected in Section 4.6 of the Second Prior Document are effective as of August 1, 1987. The amendments relating to the limitations on Voluntary Contributions, and the amendments which add to the Plan procedures to ensure compliance with such limitations, reflected in Sections 4.3, 4.4, 4.7 and 4.8 of the Second Prior Document are effective as of August 1, 1987. The amendment to the definition of the "Normal Retirement Age" reflected in Section 1.22 of the Second Prior Document is effective as of August 1, 1988, with respect to any Employee who earns at least one Hour of Service on or after that date. The amendment which requires that a Member be furnished with a notice describing his right to defer a distribution reflected in Section 7.1(d)(2) of the Second Prior Document is effective as of August 1, 1988. The amendments which eliminate the Committee's discretion as to the form and timing of distributions reflected in Article 7 of the Second Prior Document are effective as of August 1, 1989. Each of the other amendments to the Plan reflected in the Second Prior Document is effective as of August 1, 1993, except as otherwise indicated in the text of the Plan. The rights under the Plan of any person who retired or otherwise terminated employment with his or her employer before -iv-

the effective date of a particular amendment shall be determined solely under the terms of the Plan as in effect on the date of his or her retirement or other termination of employment, without regard to such amendment. -v-

ARTICLE 1 - DEFINITIONS As used herein, the following terms shall have the following meanings, unless a different meaning is required by the context: 1.1. "Accounts" or "Plan Accounts" - shall mean the separate accounts established and maintained for a Member pursuant to Section 5.1. 1.2. "Beneficiary" - shall mean the person or persons designated by a Member to receive any amount distributable under Section 7.1 by reason of his death, as indicated in the last written designation of a Beneficiary filed by such Member with the Committee, on a form furnished by the Committee for such purpose, prior to such Member's death. Notwithstanding the foregoing, if a Member who was married at the date of his death, and who had been married

the effective date of a particular amendment shall be determined solely under the terms of the Plan as in effect on the date of his or her retirement or other termination of employment, without regard to such amendment. -v-

ARTICLE 1 - DEFINITIONS As used herein, the following terms shall have the following meanings, unless a different meaning is required by the context: 1.1. "Accounts" or "Plan Accounts" - shall mean the separate accounts established and maintained for a Member pursuant to Section 5.1. 1.2. "Beneficiary" - shall mean the person or persons designated by a Member to receive any amount distributable under Section 7.1 by reason of his death, as indicated in the last written designation of a Beneficiary filed by such Member with the Committee, on a form furnished by the Committee for such purpose, prior to such Member's death. Notwithstanding the foregoing, if a Member who was married at the date of his death, and who had been married to his spouse throughout the one-year period ending on the date of his death, had designated any person other than such spouse as his Beneficiary, such Member shall be deemed to have failed to designate a Beneficiary unless such spouse consents to the designation of such non-spouse Beneficiary. Said spousal consent shall be made in writing, shall specifically identify the person designated as the Member's Beneficiary, and shall acknowledge the effect of the spouse's consent to such designation on her rights to benefits under the Plan. Further, such consent shall be signed by the spouse, witnessed by a notary public and filed with the Committee. The consent of a spouse to any designation of a non-spouse Beneficiary shall be irrevocable as to such designation, and shall be effective only with respect to that spouse. However, the consent of a Member's spouse to the Member's designation of a non-spouse Beneficiary shall not be required if it is established to the satisfaction of the Committee that such consent cannot be obtained because there is no spouse, because the spouse cannot be located, or because of such other circumstances as may be prescribed in the applicable Treasury regulations or in rulings or notices issued by the Internal Revenue Service. If a Member has failed (or is deemed above to have failed) to designate a Beneficiary, or if no Beneficiary designated by him survives to receive any amount distributable hereunder upon the Member's death, the following person or persons will be deemed to be such Member's Beneficiary with priority in the order named: (a) his spouse; and (b) his estate . 1.3. "Break in Service" - shall mean a period consisting of one or more consecutive Plan Years during each

of which an Employee has not completed more than 500 Hours of Service. A "5-year Break in Service" shall mean a Break in Service which includes five or more consecutive Plan Years during each of which the Employee has not completed more than 500 Hours of Service. 1.4. "Code" - shall mean the Internal Revenue Code of 1986, as amended from time to time. 1.5. "Committee" - shall mean the committee established by the Board of Directors of the Company under Section 8.6(b) to control and manage the operation and administration of the Plan. 1.6. "Company" - shall mean Pall Corporation. 1.7. "Compensation" - For any Plan year beginning after July 31, 1993, an Employee's Compensation shall mean the sum, for the Plan Year, of (a) the amount of the Employee's gross income reported on Form W-2 by the Employer and (b) the 401(k) Contributions made on behalf of the Employee by the Employer, and the amounts contributed by the Employer, at the Employee's election, on behalf of the Employee to a "cafeteria plan", within the meaning of Section 125 of the Code. Provided, however, that for purposes of Section 4.6(a)(2), for any such

ARTICLE 1 - DEFINITIONS As used herein, the following terms shall have the following meanings, unless a different meaning is required by the context: 1.1. "Accounts" or "Plan Accounts" - shall mean the separate accounts established and maintained for a Member pursuant to Section 5.1. 1.2. "Beneficiary" - shall mean the person or persons designated by a Member to receive any amount distributable under Section 7.1 by reason of his death, as indicated in the last written designation of a Beneficiary filed by such Member with the Committee, on a form furnished by the Committee for such purpose, prior to such Member's death. Notwithstanding the foregoing, if a Member who was married at the date of his death, and who had been married to his spouse throughout the one-year period ending on the date of his death, had designated any person other than such spouse as his Beneficiary, such Member shall be deemed to have failed to designate a Beneficiary unless such spouse consents to the designation of such non-spouse Beneficiary. Said spousal consent shall be made in writing, shall specifically identify the person designated as the Member's Beneficiary, and shall acknowledge the effect of the spouse's consent to such designation on her rights to benefits under the Plan. Further, such consent shall be signed by the spouse, witnessed by a notary public and filed with the Committee. The consent of a spouse to any designation of a non-spouse Beneficiary shall be irrevocable as to such designation, and shall be effective only with respect to that spouse. However, the consent of a Member's spouse to the Member's designation of a non-spouse Beneficiary shall not be required if it is established to the satisfaction of the Committee that such consent cannot be obtained because there is no spouse, because the spouse cannot be located, or because of such other circumstances as may be prescribed in the applicable Treasury regulations or in rulings or notices issued by the Internal Revenue Service. If a Member has failed (or is deemed above to have failed) to designate a Beneficiary, or if no Beneficiary designated by him survives to receive any amount distributable hereunder upon the Member's death, the following person or persons will be deemed to be such Member's Beneficiary with priority in the order named: (a) his spouse; and (b) his estate . 1.3. "Break in Service" - shall mean a period consisting of one or more consecutive Plan Years during each

of which an Employee has not completed more than 500 Hours of Service. A "5-year Break in Service" shall mean a Break in Service which includes five or more consecutive Plan Years during each of which the Employee has not completed more than 500 Hours of Service. 1.4. "Code" - shall mean the Internal Revenue Code of 1986, as amended from time to time. 1.5. "Committee" - shall mean the committee established by the Board of Directors of the Company under Section 8.6(b) to control and manage the operation and administration of the Plan. 1.6. "Company" - shall mean Pall Corporation. 1.7. "Compensation" - For any Plan year beginning after July 31, 1993, an Employee's Compensation shall mean the sum, for the Plan Year, of (a) the amount of the Employee's gross income reported on Form W-2 by the Employer and (b) the 401(k) Contributions made on behalf of the Employee by the Employer, and the amounts contributed by the Employer, at the Employee's election, on behalf of the Employee to a "cafeteria plan", within the meaning of Section 125 of the Code. Provided, however, that for purposes of Section 4.6(a)(2), for any such Plan year, Compensation shall be defined as under the preceding sentence except that amounts described in clause (b) thereof shall not be included in Compensation. Provided further, however, that for purposes of Section 3.4, for any such Plan year beginning after December 31, 1993, an Employee's Compensation shall mean the sum of the base pay, prior to reduction for the amounts described in clause (b) above, bonuses and overtime pay paid by the Employer to the Employee during the taxable year of the Employer which ends in such Plan Year. For the Plan Year ending December 31, 1993, for purposes of Section 3.4, an Employee's Compensation shall

of which an Employee has not completed more than 500 Hours of Service. A "5-year Break in Service" shall mean a Break in Service which includes five or more consecutive Plan Years during each of which the Employee has not completed more than 500 Hours of Service. 1.4. "Code" - shall mean the Internal Revenue Code of 1986, as amended from time to time. 1.5. "Committee" - shall mean the committee established by the Board of Directors of the Company under Section 8.6(b) to control and manage the operation and administration of the Plan. 1.6. "Company" - shall mean Pall Corporation. 1.7. "Compensation" - For any Plan year beginning after July 31, 1993, an Employee's Compensation shall mean the sum, for the Plan Year, of (a) the amount of the Employee's gross income reported on Form W-2 by the Employer and (b) the 401(k) Contributions made on behalf of the Employee by the Employer, and the amounts contributed by the Employer, at the Employee's election, on behalf of the Employee to a "cafeteria plan", within the meaning of Section 125 of the Code. Provided, however, that for purposes of Section 4.6(a)(2), for any such Plan year, Compensation shall be defined as under the preceding sentence except that amounts described in clause (b) thereof shall not be included in Compensation. Provided further, however, that for purposes of Section 3.4, for any such Plan year beginning after December 31, 1993, an Employee's Compensation shall mean the sum of the base pay, prior to reduction for the amounts described in clause (b) above, bonuses and overtime pay paid by the Employer to the Employee during the taxable year of the Employer which ends in such Plan Year. For the Plan Year ending December 31, 1993, for purposes of Section 3.4, an Employee's Compensation shall mean the sum described in the preceding sentence paid by the Employer to the Employee during such Plan Year. For any Plan Year beginning before August 1, 1993, an Employee's Compensation shall mean the amount paid by the Employer to the Employee during such Plan Year, without reduction for amounts contributed by the Employer on the Employee's behalf to a cafeteria plan (as defined above), including overtime pay and bonuses but excluding the value of stock options and contributions by the Employer to any employee benefit plan other than a cafeteria plan. Provided, however, that for the purposes of Sections 1.18, 4.3 and 4.6(a)(2), for Plan Years beginning before August 1, 1993, Compensation shall be defined as under Section 415(c)(3) of the Code, as in effect for such -2-

periods, modified, when determining Compensation for purposes of Section 1.18, as required by Section 414(q) (7) of the Code. For any Plan Year, the amount of Compensation taken into account under the Plan for any Employee shall not exceed the limitation on such amount imposed by Section 401 (a) (17) of the Code in effect for such Plan Year, determined in accordance with the applicable Treasury regulations. In determining the Compensation of an Employee for purposes of the Section 401 (a) (17) limitation, the rules of Section 414(q) (6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the Plan Year. If, as a result of the application of such rules, the Section 401 (a) (17) limitation is exceeded, then such limitation shall be prorated among each affected individual's Compensation in proportion to such individual's Compensation determined under this Section 1.7 prior to the application of such limitation. 1.8. "Disabled" - The term "Disabled" shall have the meaning assigned to it under Section 72(m) (7) of the Code. 1.9. "Earnings" - shall mean the Earnings attributable to the investment of a Member's 401(k) Contribution Account, Voluntary Contribution Account, Employer Contribution Account or Rollover Account, as determined under Section 6.3 hereof. 1.10. "Employee" - shall mean an individual who is employed as a common law employee by the Employer.

periods, modified, when determining Compensation for purposes of Section 1.18, as required by Section 414(q) (7) of the Code. For any Plan Year, the amount of Compensation taken into account under the Plan for any Employee shall not exceed the limitation on such amount imposed by Section 401 (a) (17) of the Code in effect for such Plan Year, determined in accordance with the applicable Treasury regulations. In determining the Compensation of an Employee for purposes of the Section 401 (a) (17) limitation, the rules of Section 414(q) (6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the Plan Year. If, as a result of the application of such rules, the Section 401 (a) (17) limitation is exceeded, then such limitation shall be prorated among each affected individual's Compensation in proportion to such individual's Compensation determined under this Section 1.7 prior to the application of such limitation. 1.8. "Disabled" - The term "Disabled" shall have the meaning assigned to it under Section 72(m) (7) of the Code. 1.9. "Earnings" - shall mean the Earnings attributable to the investment of a Member's 401(k) Contribution Account, Voluntary Contribution Account, Employer Contribution Account or Rollover Account, as determined under Section 6.3 hereof. 1.10. "Employee" - shall mean an individual who is employed as a common law employee by the Employer. The term "Employee" shall not include any individual who is a "leased employee" within the meaning of Section 414(n) (2) of the Code. 1.11. "Employer" - shall mean the Company or any other entity described in Section 1.19(f) (2), (3) or (4) which has adopted this Plan. 1.12. "Employer Contribution Account" - shall mean the separate account established and maintained for a Member under Section 5.1 to hold Employer Contributions and the Earnings thereon. 1.13. "Employer Contributions" - shall mean the contributions described in Section 3.4. 1.14. "Employment Commencement Date" - shall mean the date on which an Employee first performs an Hour of Service . -3-

1.15. "ERISA" - shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.16. "401(k) Contribution Account" - shall mean the separate account established and maintained for a Member under Section 5.1 to hold 401(k) Contributions and the Earnings thereon. 1.17. "401(k) Contributions" - shall mean the contributions described in Section 3.1. 1.18. "Highly Compensated Employee" - shall mean an individual who is described in Section 414(q) of the Code and the applicable Treasury regulations. In general, for any Plan Year, a Highly Compensated Employee is any Employee who is in Service during such Plan Year, and who, during such Plan Year or the immediately preceding Plan Year, either: (a) was, at any time, a five-percent owner, as defined in Section 416(i) (1) (B) (i) of the Code, (b) received Compensation in excess of $75,000, as adjusted for such year under Section 415(d) of the Code,

1.15. "ERISA" - shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.16. "401(k) Contribution Account" - shall mean the separate account established and maintained for a Member under Section 5.1 to hold 401(k) Contributions and the Earnings thereon. 1.17. "401(k) Contributions" - shall mean the contributions described in Section 3.1. 1.18. "Highly Compensated Employee" - shall mean an individual who is described in Section 414(q) of the Code and the applicable Treasury regulations. In general, for any Plan Year, a Highly Compensated Employee is any Employee who is in Service during such Plan Year, and who, during such Plan Year or the immediately preceding Plan Year, either: (a) was, at any time, a five-percent owner, as defined in Section 416(i) (1) (B) (i) of the Code, (b) received Compensation in excess of $75,000, as adjusted for such year under Section 415(d) of the Code, (c) received Compensation in excess of $50,000, as adjusted for such year under Section 415(d) of the Code, and was in the top-paid group of employees, as defined in Section 414(q) (4) of the Code, for such year, or (d) was, at any time, an officer, subject to the rules and limitations on the number of officers contained in Section 414(q) (5) of the Code, and received Compensation greater than 50 percent of the limitation in effect for such year under Section 415(b) (1) (A) of the Code. In applying the preceding sentence, if an Employee is not described in (b), (c) or (d) above for the Plan Year immediately preceding the Plan Year in question, such Employee shall not be treated as being described in (b), (c) or (d) for the Plan Year in question unless such Employee is a member of the group consisting of the 100 Employees with the highest Compensation for the Plan Year in question. 1.19. "Hours of Service" - an Employee shall be credited with Hours of Service in accordance with the following rules: (a) Work Performed. An Employee shall be cred- ited with one Hour of Service for each hour for which he is paid, or entitled to payment, by the Employer for the performance of duties for the Employer. -4-

(b) Paid Absences. An Employee shall be credited with one Hour of Service for each hour for which he is paid, or entitled to payment, by the Employer for a period of time during which no duties are performed by him (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including Disability), lay-off, jury duty or military duty. For this purpose, a payment shall be deemed to be made by or due from the Employer regardless of whether such payment is made by or due from the Employer directly, or indirectly through, among others, a trust fund, insurer, or other entity to which the Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate. However, no Hours of Service shall be credited hereunder with respect to (1) hours for which an Employee receives payment under a plan maintained solely for the purpose of complying with applicable workmen's compensation, unemployment compensation, or disability insurance laws, or (2) hours for which an Employee receives a payment which solely reimburses him for medical or medically-related expenses incurred by him. No more than 501 Hours of Service shall be credited hereunder to an Employee on account of any single continuous period during which he performs no duties whether or not such period occurs within a single Plan Year. (c) Back Pay. An Employee shall be credited with one Hour of Service for each hour for which back pay, irrespective of mitigation of damages, is awarded or agreed to by the Employer. However, no Hours of Service shall be credited hereunder if they are credited to the Employee under subsection (a) or (b) above. Furthermore, crediting of Hours of Service hereunder for periods described in subsection (b) above

(b) Paid Absences. An Employee shall be credited with one Hour of Service for each hour for which he is paid, or entitled to payment, by the Employer for a period of time during which no duties are performed by him (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including Disability), lay-off, jury duty or military duty. For this purpose, a payment shall be deemed to be made by or due from the Employer regardless of whether such payment is made by or due from the Employer directly, or indirectly through, among others, a trust fund, insurer, or other entity to which the Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer or other entity are for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate. However, no Hours of Service shall be credited hereunder with respect to (1) hours for which an Employee receives payment under a plan maintained solely for the purpose of complying with applicable workmen's compensation, unemployment compensation, or disability insurance laws, or (2) hours for which an Employee receives a payment which solely reimburses him for medical or medically-related expenses incurred by him. No more than 501 Hours of Service shall be credited hereunder to an Employee on account of any single continuous period during which he performs no duties whether or not such period occurs within a single Plan Year. (c) Back Pay. An Employee shall be credited with one Hour of Service for each hour for which back pay, irrespective of mitigation of damages, is awarded or agreed to by the Employer. However, no Hours of Service shall be credited hereunder if they are credited to the Employee under subsection (a) or (b) above. Furthermore, crediting of Hours of Service hereunder for periods described in subsection (b) above shall be subject to the limitations therein set forth. (d) Special Rules for Crediting Hours of Service. Hours of Service to be credited under subsection (b) above, and the periods to which Hours of Service are to be credited under subsections (a), (b) and (c) above, shall be determined under the rules set forth in Section 2530.200b-2(b) and (c) of the regulations issued by the U.S. Department of Labor, as the same may be amended from time to time. (e) Paid Leave. In the case of any Employee who incurs any paid Leave, the Employee shall be credited, for the period during which he is on such Leave, with the number of Hours of Service which otherwise normally would have been credited to such Employee for such period under the Plan but for such Leave, as determined by the Committee. However, no Hours of Service shall be credited under this subsection (e) -5-

if they are credited to the Employee under subsection (b) above. (f) Aggregation Requirement. For the purpose of counting Hours of Service, the term "Employer" shall mean (1) the Company; (2) any corporation which is treated, under Section 414(b) of the Code, as a member of a controlled group of corporations of which the Company is also a member; (3) any trade or business (whether or not incorporated) which is treated, under Section 414(c) of the Code, as belonging to a group of trades or businesses under common control, and which includes the Company; (4) any other entity which, under Section 414(m) or 414(o) of the Code, is included, along with the Company, in a group of employers, the employees of which are treated as employed by a single employer. (g) Employees Exempt From the Fair Labor Standards Act. In the case of any Employee who is not covered by the Fair Labor Standards Act, in lieu of being credited with Hours of Service in the amount and in the manner described in subsections (a) through (f) above, such Employee shall be credited with 45 Hours of Service for each week for which he would otherwise be credited with at least one Hour of Service under subsections (a) through (f) above. (h) Maternity or Paternity Absence. Solely for purposes of determining whether an Employee has incurred a Break in Service by reason of a Maternity or Paternity Absence, such Employee shall be credited, during such absence, with the same number of Hours of Service which otherwise normally would have been credited to such Employee but for such absence, as determined by the Committee. Notwithstanding the foregoing, the total number of hours so credited by reason of any such Maternity or Paternity Absence shall not exceed 501 hours. Hours to be credited hereunder shall be credited only in the Plan Year in which the Maternity or Paternity Absence begins, if the Employee would be prevented from incurring a Break in Service in such Plan Year solely because of the operation of this subsection (h); otherwise, such Hours of Service shall be credited in the

if they are credited to the Employee under subsection (b) above. (f) Aggregation Requirement. For the purpose of counting Hours of Service, the term "Employer" shall mean (1) the Company; (2) any corporation which is treated, under Section 414(b) of the Code, as a member of a controlled group of corporations of which the Company is also a member; (3) any trade or business (whether or not incorporated) which is treated, under Section 414(c) of the Code, as belonging to a group of trades or businesses under common control, and which includes the Company; (4) any other entity which, under Section 414(m) or 414(o) of the Code, is included, along with the Company, in a group of employers, the employees of which are treated as employed by a single employer. (g) Employees Exempt From the Fair Labor Standards Act. In the case of any Employee who is not covered by the Fair Labor Standards Act, in lieu of being credited with Hours of Service in the amount and in the manner described in subsections (a) through (f) above, such Employee shall be credited with 45 Hours of Service for each week for which he would otherwise be credited with at least one Hour of Service under subsections (a) through (f) above. (h) Maternity or Paternity Absence. Solely for purposes of determining whether an Employee has incurred a Break in Service by reason of a Maternity or Paternity Absence, such Employee shall be credited, during such absence, with the same number of Hours of Service which otherwise normally would have been credited to such Employee but for such absence, as determined by the Committee. Notwithstanding the foregoing, the total number of hours so credited by reason of any such Maternity or Paternity Absence shall not exceed 501 hours. Hours to be credited hereunder shall be credited only in the Plan Year in which the Maternity or Paternity Absence begins, if the Employee would be prevented from incurring a Break in Service in such Plan Year solely because of the operation of this subsection (h); otherwise, such Hours of Service shall be credited in the immediately following Plan Year. For purposes of this subsection (h), Maternity or Paternity Absence shall mean any period during which an Employee is absent from work by reason of the Employee's pregnancy, the birth of a child of the Employee, the placement of a child with the Employee in connection with the Employee's adoption of such child, or the Employee's providing care for such child for a period beginning immediately following such birth or placement. This subsection (h) shall not apply to any Maternity or Paternity absence which is a paid Leave. -6-

(i) FMLA Absence. Solely for purposes of determining whether an Employee has incurred a Break in Service by reason of a leave of absence taken under the Family Medical Leave Act of 1993 (an "FMLA Absence"), such Employee shall be credited, for the period during which he is taking the FMLA Absence, with the same number of Hours of Service which otherwise normally would have been credited to such Employee but for such absence, as determined by the Committee. This subsection (i) shall not apply to any FMLA Absence which is a paid Leave. 1.20. "Leave" - shall mean any period during which an Employee is absent pursuant to an authorized leave of absence, approved by the Employer on a non-discriminatory basis under rules uniformly applicable to all Employees. similarly situated, for a period not to exceed two years. 1.21. "Member" - shall mean (a) any Employee on August 1, 1987 who was participating in the Plan on July 31, 1987 and (b) any other Employee whose membership in the Plan commences, or resumes, on or after August 1, 1987. An Employee who is or becomes a Member, as so defined, shall cease to be a Member, as. that term is used herein, on the date which is the later of (1) the date on which he incurs a Termination of Service or (2) the date on which there is no balance to his. credit in his Plan Accounts. 1.22. "Mutual Fund" - shall mean any fund or portfolio maintained by any open-end investment company registered under the Investment Company Act of 1940. 1.23. "Normal Retirement Age" - shall mean age 65. 1.24. "Plan" - shall mean the Pall Corporation Profit-Sharing Plan, as. set forth in this document and as the same may be amended from time to time.

(i) FMLA Absence. Solely for purposes of determining whether an Employee has incurred a Break in Service by reason of a leave of absence taken under the Family Medical Leave Act of 1993 (an "FMLA Absence"), such Employee shall be credited, for the period during which he is taking the FMLA Absence, with the same number of Hours of Service which otherwise normally would have been credited to such Employee but for such absence, as determined by the Committee. This subsection (i) shall not apply to any FMLA Absence which is a paid Leave. 1.20. "Leave" - shall mean any period during which an Employee is absent pursuant to an authorized leave of absence, approved by the Employer on a non-discriminatory basis under rules uniformly applicable to all Employees. similarly situated, for a period not to exceed two years. 1.21. "Member" - shall mean (a) any Employee on August 1, 1987 who was participating in the Plan on July 31, 1987 and (b) any other Employee whose membership in the Plan commences, or resumes, on or after August 1, 1987. An Employee who is or becomes a Member, as so defined, shall cease to be a Member, as. that term is used herein, on the date which is the later of (1) the date on which he incurs a Termination of Service or (2) the date on which there is no balance to his. credit in his Plan Accounts. 1.22. "Mutual Fund" - shall mean any fund or portfolio maintained by any open-end investment company registered under the Investment Company Act of 1940. 1.23. "Normal Retirement Age" - shall mean age 65. 1.24. "Plan" - shall mean the Pall Corporation Profit-Sharing Plan, as. set forth in this document and as the same may be amended from time to time. 1.25. "Plan Year" - shall mean the calendar year. Notwithstanding the above, prior to August 1, 1993, the Plan Year shall be the 12-consecutive month period commencing on each August 1 and ending on the following July 31. In addition, there shall be a short Plan Year commencing on August 1, 1993 and ending on December 31, 1993. For purposes of the short Plan Year, the following special provisions shall apply: (a) "208 Hours of Service" shall be substituted for "500 Hours of Service" in Section 1.3, and "416 Hours -7-

of Service" shall be substituted for "1,000 Hours of Service" in Section 1.37(a). (b) "$83,333" shall be substituted for "$200,000" in Sections 1.7 and 10.6(e). (c) "12,500" shall be substituted for "$30,000" in Section 4.6(a) (1). (d) "20%" shall be substituted for "15%" wherever "15%" appears in Sections 3.1 and 3.2. (e) An Employee who completes at least 1,000 Hours of Service during both the period commencing on August 1, 1993 and ending on July 31, 1994 and the period commencing on January 1, 1994 and ending on December 31, 1994 shall be credited with at least two Years of Service with respect to his Service during those two periods. (f) For the short Plan Year, a Highly Compensated Employee is any Employee who is in Service during such year, and who either (1) is described in (a), (b), (c) or (d) in Section 1.18 for the 12-consecutive month period commencing on August 1, 1992 and ending on July 31, 1993 or (2) both (i) for the period commencing August 1, 1993 arid ending December 31, 1993 is an Employee described in (a), (b), (c) or (d) of Section 1.18, determined by multiplying the applicable dollar amounts set forth therein by 5/12 and (ii.) unless he is described in (a) of Section 1.18 for such period, belongs to the group consisting of the 100 Employees with the highest

of Service" shall be substituted for "1,000 Hours of Service" in Section 1.37(a). (b) "$83,333" shall be substituted for "$200,000" in Sections 1.7 and 10.6(e). (c) "12,500" shall be substituted for "$30,000" in Section 4.6(a) (1). (d) "20%" shall be substituted for "15%" wherever "15%" appears in Sections 3.1 and 3.2. (e) An Employee who completes at least 1,000 Hours of Service during both the period commencing on August 1, 1993 and ending on July 31, 1994 and the period commencing on January 1, 1994 and ending on December 31, 1994 shall be credited with at least two Years of Service with respect to his Service during those two periods. (f) For the short Plan Year, a Highly Compensated Employee is any Employee who is in Service during such year, and who either (1) is described in (a), (b), (c) or (d) in Section 1.18 for the 12-consecutive month period commencing on August 1, 1992 and ending on July 31, 1993 or (2) both (i) for the period commencing August 1, 1993 arid ending December 31, 1993 is an Employee described in (a), (b), (c) or (d) of Section 1.18, determined by multiplying the applicable dollar amounts set forth therein by 5/12 and (ii.) unless he is described in (a) of Section 1.18 for such period, belongs to the group consisting of the 100 Employees with the highest Compensation for such year . In addition to the foregoing, for the purpose of identifying the Highly Compensated Employees under Section 1.18 for the Plan Year beginning January 1, 1994, the calendar year beginning January 1, 1993 shall be treated as the "immediately preceding Plan Year", and "Compensation" for such calendar year shall be defined as under Section 414(q) (7) of the Code. (g) For the Plan Year beginning on January 1, 1994, a Member who was in Service on July 31, 1993 shall be treated as having satisfied the six consecutive month Service requirement of Section 3.4. (h) Any 401(k) Contributions to which the second paragraph of Section 3.3(b) applies shall be treated as being made for the short Plan Year. -8-

(i) Except as provided in (a) through (h) above, the short Plan Year shall be treated as any other Plan Year. 1.26. "Reemployment Commencement Date" - shall mean the date on which an Employee first performs an Hour of Service upon his return to Service after a Termination of Service . 1.27. "Rollover Account" - shall mean the separate account established and maintained for a Member under Section 5.1 to hold Rollover Contributions and the Earnings thereon. 1.28. "Service" - shall mean employment with the Employer or any other entity described in Section 1.19(f) (2), (3) or (4). 1.29. "Termination of Service" - An Employee shall be treated as having incurred a Termination of Service on the first date as of which he is no longer in the employ of the Employer or any other entity described in Section 1.19(f) (2), (3) or (4)d . An Employee shall not be treated as having incurred a Termination of Service as a result of his absence from work unless such absence is due to his resignation, discharge, retirement or death. However, an Employee who is on a Leave shall be treated as having incurred a Termination of Service (and as having ceased to be an Employee) (a) as of the expiration of such Leave, unless prior to such expiration he resumes his active employment with the Employer, or (b) at such earlier time as he notifies, in writing, the Employer that he does not intend to resume his active employment with the Employer at the expiration of such Leave. 1.30. "Trust" - shall mean the trust, created pursuant to a trust agreement between the Company and the Trustee,

(i) Except as provided in (a) through (h) above, the short Plan Year shall be treated as any other Plan Year. 1.26. "Reemployment Commencement Date" - shall mean the date on which an Employee first performs an Hour of Service upon his return to Service after a Termination of Service . 1.27. "Rollover Account" - shall mean the separate account established and maintained for a Member under Section 5.1 to hold Rollover Contributions and the Earnings thereon. 1.28. "Service" - shall mean employment with the Employer or any other entity described in Section 1.19(f) (2), (3) or (4). 1.29. "Termination of Service" - An Employee shall be treated as having incurred a Termination of Service on the first date as of which he is no longer in the employ of the Employer or any other entity described in Section 1.19(f) (2), (3) or (4)d . An Employee shall not be treated as having incurred a Termination of Service as a result of his absence from work unless such absence is due to his resignation, discharge, retirement or death. However, an Employee who is on a Leave shall be treated as having incurred a Termination of Service (and as having ceased to be an Employee) (a) as of the expiration of such Leave, unless prior to such expiration he resumes his active employment with the Employer, or (b) at such earlier time as he notifies, in writing, the Employer that he does not intend to resume his active employment with the Employer at the expiration of such Leave. 1.30. "Trust" - shall mean the trust, created pursuant to a trust agreement between the Company and the Trustee, which holds the assets of the Plan. 1.31. "Trust Agreement" - shall mean the agreement, between the Company and the person named as trustee therein, setting forth the provisions of the trust associated with this Plan. 1.32. "Trust Fund" - shall mean the assets of the Plan held in trust, pursuant to the Trust Agreement. 1.33. "Trustee" - shall mean the person named as trustee in the Trust Agreement. 1.34. "Vested Portion" - shall mean the portion of a Member's Account or Accounts in which the Member is vested, determined in accordance with the rules set forth below. -9-

(a) Employer Contribution Account. A Member shall become vested in his. Employer Contribution Account in accordance with the schedule below which applies to him: (1) For an individual who becomes a Member on or after August 1, 1989:
Years of Service ---------------less than 5 5 or more Vested Percentage ----------------0 100

(2) For an individual who became a Member prior to August 1, 1989 and who earns at least one Hour of Service on or after August 1, 1989:
Years of Service ---------------less than 2 2 3 4 5 or more Vested Percentage ----------------0 20 30 40 100

(a) Employer Contribution Account. A Member shall become vested in his. Employer Contribution Account in accordance with the schedule below which applies to him: (1) For an individual who becomes a Member on or after August 1, 1989:
Years of Service ---------------less than 5 5 or more Vested Percentage ----------------0 100

(2) For an individual who became a Member prior to August 1, 1989 and who earns at least one Hour of Service on or after August 1, 1989:
Years of Service ---------------less than 2 2 3 4 5 or more Vested Percentage ----------------0 20 30 40 100

(3) For a Member not described in (1) or (2) above:
Years of Service ---------------less than 2 2 3 4 S 6 7 8 9 10 or more Vested Percentage ----------------0 20 30 40 50 60 70 80 90 100

Notwithstanding the schedule above which applies to a Member, a Member shall be 100% vested in his Employer Contribution Account if (i) while he is in Service, he attains Normal Retirement Age or a higher age, dies or becomes Disabled, or (ii) he is employed at the Pall well technology division on July 27, 1995, and incurs a Termination of Service after such date . -10-

(b) Other Plan Accounts. A Member shall, at all times, be 100%. vested in his 401(k) Contribution Account, his Voluntary Contribution Account and his Rollover Account. 1.35. "Voluntary Contribution Account" - shall mean the separate account established and maintained for a Member under Section 5.1 to hold Voluntary Contributions and the Earnings thereon. 1.36. "Voluntary Contributions" - shall mean the contributions described in Section 3.2. 1.37. "Years of Service" - An Employee's Years of Service shall be determined in accordance with the following rules: (a) General Rule. An Employee's Years of Service shall mean the number of Plan Years in each of which the Employee has completed at least 1,000 Hours of Service.

(b) Other Plan Accounts. A Member shall, at all times, be 100%. vested in his 401(k) Contribution Account, his Voluntary Contribution Account and his Rollover Account. 1.35. "Voluntary Contribution Account" - shall mean the separate account established and maintained for a Member under Section 5.1 to hold Voluntary Contributions and the Earnings thereon. 1.36. "Voluntary Contributions" - shall mean the contributions described in Section 3.2. 1.37. "Years of Service" - An Employee's Years of Service shall be determined in accordance with the following rules: (a) General Rule. An Employee's Years of Service shall mean the number of Plan Years in each of which the Employee has completed at least 1,000 Hours of Service. (b) Break in Service. In determining an Employee's Years of Service under subsection (a) as of any date after he has returned to Service after incurring a Break in Service, his Years of Service prior to such break shall not be taken into account if (1) he did not have any balance to his credit in the Vested Portion of his Accounts at the time such break commenced and (2) such break was a 5-Year Break in Service . ARTICLE 2 - PURPOSE, ELIGIBILITY AND PARTICIPATION 2.1. Purpose. This Plan is intended to qualify as a cash or deferred defined contribution profit sharing plan under Sections . 401(a), 401(k) and 401(m) of the Code. Pursuant to Section 401(a) (27) of the Code, the Plan is intended to constitute a profit sharing plan under which contributions may be made by the Employer whether or not the Employer has current or accumulated profits. 2.2. Eligibility. An Employee shall be eligible for membership in the Plan if: (a) he is employed on a full-time basis, or he has completed, or is expected to complete, at least 1,000 Hours of Service during any 12-consecutive month period; (b) he has completed at least 30 consecutive days of Service; -11-

(c) his principal place of employment is not Puerto Rico; and (d) he is not covered under a collective bargaining agreement, unless such agreement specifically provides for his participation in this Plan. 2.3. Commencement of Membership. An Employee shall commence membership in the Plan on the first day of the month coincident with or next following the day on which he first meets each of the requirements of Section 2.2. 2.4. Membership After Reemployment. An Employee who incurs a Termination of Service, and who thereafter returns to Service, shall (a) if he had become a Member prior to such Termination of Service, resume membership in the Plan as of his Reemployment Commencement Date, or (b) if he is not described in clause (a), commence membership as of the first day of the month coincident with or next following the date on which he first meets each of the conditions. for eligibility set forth in Section 2.2 after his Reemployment Commencement Date . 2.5. Asset and Stock Acquisitions. If any person becomes an Employee in connection with the acquisition of the assets of his former employer by the Employer, or in connection with the acquisition of the stock of his former employer by, and the merger of his former employer with and into, the Employer or any similar transaction, then to the extent determined by the Committee, all service performed by such person as an employee of such former employer shall be taken into account under the Plan. ARTICLE 3 - CONTRIBUTIONS AND ROLLOVERS

(c) his principal place of employment is not Puerto Rico; and (d) he is not covered under a collective bargaining agreement, unless such agreement specifically provides for his participation in this Plan. 2.3. Commencement of Membership. An Employee shall commence membership in the Plan on the first day of the month coincident with or next following the day on which he first meets each of the requirements of Section 2.2. 2.4. Membership After Reemployment. An Employee who incurs a Termination of Service, and who thereafter returns to Service, shall (a) if he had become a Member prior to such Termination of Service, resume membership in the Plan as of his Reemployment Commencement Date, or (b) if he is not described in clause (a), commence membership as of the first day of the month coincident with or next following the date on which he first meets each of the conditions. for eligibility set forth in Section 2.2 after his Reemployment Commencement Date . 2.5. Asset and Stock Acquisitions. If any person becomes an Employee in connection with the acquisition of the assets of his former employer by the Employer, or in connection with the acquisition of the stock of his former employer by, and the merger of his former employer with and into, the Employer or any similar transaction, then to the extent determined by the Committee, all service performed by such person as an employee of such former employer shall be taken into account under the Plan. ARTICLE 3 - CONTRIBUTIONS AND ROLLOVERS 3.1. 401(k) Contributions. Subject to the limitations contained in Article 4, a Member may elect to (1) have his Compensation for each pay period within the Plan Year reduced by an amount equal to (i) any percentage thereof which is not less than 1% or greater than 15%, and which is an integral multiple of 1% or (ii) a specific dollar amount which, when aggregated with all other amounts by which Compensation is reduced under this Section 3.1 during such Plan Year, is riot greater than 15% of his Compensation for such Plan Year, and (2) have such amount contributed by the Employer to the Plan on his behalf. The contributions made to the Plan on behalf of a Member under this Section 3.1 shall be referred to herein as "401(k) Contributions". -12-

3.2. Voluntary Contributions. Subject to the limitations contained in Article 4, a Member may elect to contribute to the Plan, by payroll deduction, for each pay period within the Plan Year an amount equal to (a) any percentage of his Compensation, after reduction for 401(k) Contributions, for the pay period which is not less. than 1% or greater than 10%, and which is an integral multiple of 1% or (b) a specific dollar amount which, when aggregated with all other amounts contributed by the Member under this Section 3.2 during such Plan Year, is not greater than 10% of his Compensation, after reduction for 401(k) Contributions, for such Plan Year. However, the percentage of Compensation the Member elects to contribute to the Plan for any pay period under clause (a) of the preceding sentence, when aggregated with the percentage of Compensation the Member elects to have contributed to the Plan on his behalf for such pay period under clause (1) (i) of Section 3.1, cannot exceed 15% of Compensation for such pay period; and the specific dollar amount the Member elects to contribute to the Plan for any Plan Year pursuant to clause (b) of the preceding sentence, when aggregated with his 401(k) Contributions for such Plan Year, cannot exceed 15% of Compensation for such Plan Year. The contributions that a Member elects to make to the Plan under this Section shall be referred to herein as "Voluntary Contributions" . 3.3. Elections. The elections that a Member may make under Sections 3.1 and 3.2, and any change in or termination of such elections, shall be made in accordance with the following rules: (a) Any election, and any change in or termination of any election, shall be made in writing, on a form provided by the Committee for such purpose, and filed with the Committee or with any person designated by the Committee to receive such filings. (b) A Member's initial election under Section 3.1 or 3.2 shall become effective as soon as practicable after the form containing such election is filed. Any election, or change therein, shall remain in effect until such election is

3.2. Voluntary Contributions. Subject to the limitations contained in Article 4, a Member may elect to contribute to the Plan, by payroll deduction, for each pay period within the Plan Year an amount equal to (a) any percentage of his Compensation, after reduction for 401(k) Contributions, for the pay period which is not less. than 1% or greater than 10%, and which is an integral multiple of 1% or (b) a specific dollar amount which, when aggregated with all other amounts contributed by the Member under this Section 3.2 during such Plan Year, is not greater than 10% of his Compensation, after reduction for 401(k) Contributions, for such Plan Year. However, the percentage of Compensation the Member elects to contribute to the Plan for any pay period under clause (a) of the preceding sentence, when aggregated with the percentage of Compensation the Member elects to have contributed to the Plan on his behalf for such pay period under clause (1) (i) of Section 3.1, cannot exceed 15% of Compensation for such pay period; and the specific dollar amount the Member elects to contribute to the Plan for any Plan Year pursuant to clause (b) of the preceding sentence, when aggregated with his 401(k) Contributions for such Plan Year, cannot exceed 15% of Compensation for such Plan Year. The contributions that a Member elects to make to the Plan under this Section shall be referred to herein as "Voluntary Contributions" . 3.3. Elections. The elections that a Member may make under Sections 3.1 and 3.2, and any change in or termination of such elections, shall be made in accordance with the following rules: (a) Any election, and any change in or termination of any election, shall be made in writing, on a form provided by the Committee for such purpose, and filed with the Committee or with any person designated by the Committee to receive such filings. (b) A Member's initial election under Section 3.1 or 3.2 shall become effective as soon as practicable after the form containing such election is filed. Any election, or change therein, shall remain in effect until such election is changed or terminated as hereinafter provided . Notwithstanding the above, in the case of any Member who files his initial election under Section 3.1 or 3.2 prior to July 28, 1993, such Member's initial election or elections shall apply to any paychecks he receives during the period beginning on July 28, 1993 and ending on July 30, 1993 with respect to any pay periods beginning on and after August 1, 1993. -13-

(c) A Member may, at any time, change his election so as to increase or decrease the amount of 401(k) Contributions or Voluntary Contributions, as applicable, to be contributed to the Plan by him or on his behalf. Any such change in election shall become effective as soon as practicable after the form containing such change in election is filed. (d) A Member may terminate his election under Section 3.1 or 3.2 at any time. Such termination of election shall become effective as soon as practicable after the form containing such termination of election is filed. A Member who terminates an election under Section 3.1 or 3.2 may thereafter make a new election under Section 3.1 or 3.2 at any time. Such new election shall become effective as soon as. practicable after the form containing such new election is filed. (e) A Member's elections under Sections 3.1 and 3.2 shall cease to be effective upon, and no contribution shall be made by or on behalf of a Member after, the close of the pay period in which he incurs a Termination of Service. 3.4. Employer Contributions. Subject to the limitations contained in Article 4, for each Plan Year, the Employers shall contribute to the Plan, in addition to the 401(k) Contributions, an amount determined below. For each Plan Year, the Employers shall contribute to the Plan under this Section 3.4 an amount which is equal to (a) the excess, if any, of (1) 7-1/2% of the combined "Net Earnings" for such Plan Year of all Employers over (2) $500,000, less (b) the sum of (1) all forfeitures arising under Section 5.2(a) during such Plan Year, other than those applied to restore any forfeitures under Section 5.2(b), (2) the expenses of administering the Plan and Trust for such Plan Year, other than those paid out of the Trust Fund

(c) A Member may, at any time, change his election so as to increase or decrease the amount of 401(k) Contributions or Voluntary Contributions, as applicable, to be contributed to the Plan by him or on his behalf. Any such change in election shall become effective as soon as practicable after the form containing such change in election is filed. (d) A Member may terminate his election under Section 3.1 or 3.2 at any time. Such termination of election shall become effective as soon as practicable after the form containing such termination of election is filed. A Member who terminates an election under Section 3.1 or 3.2 may thereafter make a new election under Section 3.1 or 3.2 at any time. Such new election shall become effective as soon as. practicable after the form containing such new election is filed. (e) A Member's elections under Sections 3.1 and 3.2 shall cease to be effective upon, and no contribution shall be made by or on behalf of a Member after, the close of the pay period in which he incurs a Termination of Service. 3.4. Employer Contributions. Subject to the limitations contained in Article 4, for each Plan Year, the Employers shall contribute to the Plan, in addition to the 401(k) Contributions, an amount determined below. For each Plan Year, the Employers shall contribute to the Plan under this Section 3.4 an amount which is equal to (a) the excess, if any, of (1) 7-1/2% of the combined "Net Earnings" for such Plan Year of all Employers over (2) $500,000, less (b) the sum of (1) all forfeitures arising under Section 5.2(a) during such Plan Year, other than those applied to restore any forfeitures under Section 5.2(b), (2) the expenses of administering the Plan and Trust for such Plan Year, other than those paid out of the Trust Fund in accordance with Section 8.9 and (3) any amounts set aside, and any payments. made, by the Employers, for such Plan Year, under the Pall Corporation Supplementary Profit-Sharing Plan. Notwithstanding the preceding paragraph, the Board of Directors of the Company reserves the right with respect to any Plan Year to direct the Employers, by action taken no later than five and one-half months after the close of such Plan Year, to make to the Plan under this Section 3.4 (i) no contribution, (ii) a contribution in any amount less than the amount required to be contributed under the preceding paragraph, or (iii) a contribution in any amount greater than the -14-

excess of 7-1/2% of the combined Net Earnings for such Plan Year of all Employers over $500,000. For purposes. of this Section 3.4, the "Net Earnings" of an Employer for any Plan Year shall be the net earnings and profits of such Employer for its taxable year ending within such Plan Year, as determined by the accountants employed by the Employer in accordance with generally accepted accounting principles, before deducting any contributions to the Plan, any capital losses and any taxes upon or with respect to income, but after deducting capital gains, income from investments and any contributions to any employee benefit plan other than the Plan. Solely for the purpose of determining the combined Net Earnings of all Employers, each subsidiary of the Company which was incorporated in the United States, and which is not otherwise an Employer, shall be treated as an Employer. A Member shall be entitled to share in the allocation of the Employers' contribution under this Section 3.4 for a Plan Year if (A) as of the first day of such year, he had been in Service for at least six consecutive months and had attained age 20 1/2 and (B) either (x) he is employed by any Employer on the last day of such year, (y) during such year, he incurred a Termination of Service after attaining Normal Retirement Age or by reason of death or disability or (z) he incurred a Termination of Service after July 31 of such year, and the reason for such termination, as indicated on the Employer's records, is "retirement" (Code 12). The Employers' contribution for a Plan Year under this Section 3.4 shall be allocated to each Member entitled to share therein in the proportion that each such Member's Compensation for such Plan Year bears. to the aggregate amount of Compensation of all such Members for such Plan Year. Contributions made to the Plan under this Section 3.4 shall be referred to

excess of 7-1/2% of the combined Net Earnings for such Plan Year of all Employers over $500,000. For purposes. of this Section 3.4, the "Net Earnings" of an Employer for any Plan Year shall be the net earnings and profits of such Employer for its taxable year ending within such Plan Year, as determined by the accountants employed by the Employer in accordance with generally accepted accounting principles, before deducting any contributions to the Plan, any capital losses and any taxes upon or with respect to income, but after deducting capital gains, income from investments and any contributions to any employee benefit plan other than the Plan. Solely for the purpose of determining the combined Net Earnings of all Employers, each subsidiary of the Company which was incorporated in the United States, and which is not otherwise an Employer, shall be treated as an Employer. A Member shall be entitled to share in the allocation of the Employers' contribution under this Section 3.4 for a Plan Year if (A) as of the first day of such year, he had been in Service for at least six consecutive months and had attained age 20 1/2 and (B) either (x) he is employed by any Employer on the last day of such year, (y) during such year, he incurred a Termination of Service after attaining Normal Retirement Age or by reason of death or disability or (z) he incurred a Termination of Service after July 31 of such year, and the reason for such termination, as indicated on the Employer's records, is "retirement" (Code 12). The Employers' contribution for a Plan Year under this Section 3.4 shall be allocated to each Member entitled to share therein in the proportion that each such Member's Compensation for such Plan Year bears. to the aggregate amount of Compensation of all such Members for such Plan Year. Contributions made to the Plan under this Section 3.4 shall be referred to herein as "Employer Contributions" . 3.5. Time and Manner. All contributions to be made under Sections 3.1, 3.2 and 3.4 of the Plan shall be made in the form of cash payments by the Company to the Trustee. 401(k) Contributions and Voluntary Contributions shall be made as soon as possible after the date on which such contributions would have been paid to the Employee but for his elections under Sections 3.1 and 3.2, but in all events within 90 days of such date. The Employer Contribution to be made for any Plan Year shall be made no later than by the due date of the tax return (with extensions) for the Employer's taxable year that ends during the Plan Year to which such contribution relates . In respect of the contributions the company pays to the Trustee under the preceding paragraph for each Plan Year, -15-

each other Employer shall reimburse the Company for (1) a portion of the Employer Contribution so paid by the Company to the Trustee for such year, based on the ratio of (i) the aggregate Compensation for such year of the Members employed by such Employer who shared in the allocation of such Employer Contribution to (ii) the aggregate Compensation for such year of all Members who shared in the allocation of such Employer Contribution, and (2) the amount of the 401(k) Contributions and Voluntary Contributions so paid by the Company to the Trustee for such year which are attributable to the Members employed by such Employer. 3.6. Rollovers. A Member, with the prior approval of the Committee, may roll over into this Plan amounts that meet each of the following requirements: (a) The amount to be rolled over must represent either (1) part or all of an "eligible rollover distribution", within the meaning of Section 402(c) (4) of the Code, from a trust qualified under Section 401(a) of the Code or from an employee annuity plan qualified under Section 403 (a) of the Code (such a trust or plan shall be referred to below as a "Qualified Plan") or (2) the entire amount of a distribution to the Member from an individual retirement account or individual retirement annuity, as defined in Section 408(a) or Section 408(b) of the Code, provided that no amount in such account, or no part of the value of such annuity (such an account or annuity shall be referred to below as an "IRA"), at the time of distribution to the Member, was attributable to any source other than a "rollover contribution", as defined in Section 402 of the Code, from a Qualified Plan. (b) The amount to be rolled over must be (1) an amount which the Member elected to have paid directly from a Qualified Plan to this Plan in accordance with Section 401 (a) (31) of the Code or (2) an amount distributed, or

each other Employer shall reimburse the Company for (1) a portion of the Employer Contribution so paid by the Company to the Trustee for such year, based on the ratio of (i) the aggregate Compensation for such year of the Members employed by such Employer who shared in the allocation of such Employer Contribution to (ii) the aggregate Compensation for such year of all Members who shared in the allocation of such Employer Contribution, and (2) the amount of the 401(k) Contributions and Voluntary Contributions so paid by the Company to the Trustee for such year which are attributable to the Members employed by such Employer. 3.6. Rollovers. A Member, with the prior approval of the Committee, may roll over into this Plan amounts that meet each of the following requirements: (a) The amount to be rolled over must represent either (1) part or all of an "eligible rollover distribution", within the meaning of Section 402(c) (4) of the Code, from a trust qualified under Section 401(a) of the Code or from an employee annuity plan qualified under Section 403 (a) of the Code (such a trust or plan shall be referred to below as a "Qualified Plan") or (2) the entire amount of a distribution to the Member from an individual retirement account or individual retirement annuity, as defined in Section 408(a) or Section 408(b) of the Code, provided that no amount in such account, or no part of the value of such annuity (such an account or annuity shall be referred to below as an "IRA"), at the time of distribution to the Member, was attributable to any source other than a "rollover contribution", as defined in Section 402 of the Code, from a Qualified Plan. (b) The amount to be rolled over must be (1) an amount which the Member elected to have paid directly from a Qualified Plan to this Plan in accordance with Section 401 (a) (31) of the Code or (2) an amount distributed, or deemed distributed, to the Member from a Qualified Plan, or from an IRA, not more than 60 days prior to the date on which such amount is transferred to this Plan, including any such amount representing (i) any portion of the Member's account in a Qualified Plan that was applied to offset any outstanding balance of a loan to the Member from such plan or (ii) income taxes withheld on a distribution to the Member from a Qualified Plan. (c) The amount to be rolled over must not represent all or part of (1) a distribution that is required to be made to the Member under Section 401 (a) (9), Section 408(a) (6) or Section 408(b) (3) of the Code, or (2) an amount distributed to the Member in the Member's capacity as a beneficiary of another individual. -16-

(d) The amount to be rolled over may not include (1) any part of a distribution to the Member that would not be includible in the Member's gross income for Federal income tax purposes, even if it were not rolled over or (2) any "accumulated deductible employee contributions" within the meaning of Section 72(0) (5) (B) of the Code. (e) The amount to be rolled over must consist entirely of cash, and shall be paid to the Plan only by means of a check made payable to, or endorsed over to, the Trustee. The Committee may adopt such procedures, and may require a Member to furnish such information or documentation, as the Committee, in its sole discretion, deems necessary to ensure that the amount the Member requests to roll over to this Plan will meet all the foregoing requirements. ARTICLE 4 - LIMITATIONS ON CONTRIBUTIONS 4.1. Dollar Limit for 401(k) Contributions. For any Plan Year, the total amount of 401(k) Contributions to be made on behalf of any Member, when aggregated with the total amount deferred by such Member under other plans or arrangements described in Code Section 401(k), 408(k) or 403(b) maintained by the Employer or by any other entity described in Section 1.19(f)(2), (3) or (4), shall not exceed $7,000, as increased by the cost-of-living adjustment, if any, in effect for such year under regulations, rulings or notices issued under Section 402(g) (5) of the Code. 4.2. Nondiscrimination Test for 401(k) Contributions. For any Plan Year, the 401(k) Contributions made on behalf of the group of Members who are Highly Compensated Employees shall not exceed the maximum amount that may be contributed to the Plan on their behalf for such year under either one of the following tests:

(d) The amount to be rolled over may not include (1) any part of a distribution to the Member that would not be includible in the Member's gross income for Federal income tax purposes, even if it were not rolled over or (2) any "accumulated deductible employee contributions" within the meaning of Section 72(0) (5) (B) of the Code. (e) The amount to be rolled over must consist entirely of cash, and shall be paid to the Plan only by means of a check made payable to, or endorsed over to, the Trustee. The Committee may adopt such procedures, and may require a Member to furnish such information or documentation, as the Committee, in its sole discretion, deems necessary to ensure that the amount the Member requests to roll over to this Plan will meet all the foregoing requirements. ARTICLE 4 - LIMITATIONS ON CONTRIBUTIONS 4.1. Dollar Limit for 401(k) Contributions. For any Plan Year, the total amount of 401(k) Contributions to be made on behalf of any Member, when aggregated with the total amount deferred by such Member under other plans or arrangements described in Code Section 401(k), 408(k) or 403(b) maintained by the Employer or by any other entity described in Section 1.19(f)(2), (3) or (4), shall not exceed $7,000, as increased by the cost-of-living adjustment, if any, in effect for such year under regulations, rulings or notices issued under Section 402(g) (5) of the Code. 4.2. Nondiscrimination Test for 401(k) Contributions. For any Plan Year, the 401(k) Contributions made on behalf of the group of Members who are Highly Compensated Employees shall not exceed the maximum amount that may be contributed to the Plan on their behalf for such year under either one of the following tests: (a) the Actual Deferral Percentage for the group of Members who are Highly Compensated Employees may not be more than the Actual Deferral Percentage for the group of all other Members multiplied by 1.25; or (b) the excess of the Actual Deferral Percentage for the group of Members who are Highly Compensated Employees over the Actual Deferral Percentage for the group of all other Members may not be more than 2 percentage points, and the Actual Deferral Percentage for the -17-

group of Members who are Highly Compensated Employees may not be more than the Actual Deferral Percentage for the group of all others Members multiplied by 2. For these purposes, the term "Actual Deferral Percentage", for any group of Members for any Plan Year, shall mean the average of the ratios, calculated separately for each Member in such group, of (1) the 401(k) Contributions made on behalf of such Member for such year to (2) such Member's Compensation for such year. In determining the Actual Deferral Percentage for any Plan Year, 401(k) Contributions in excess of the limitation in Section 4.1 made on behalf of any Member who is not a Highly Compensated Employee shall be disregarded. 4.3. Nondiscrimination Test for Voluntary Contributions. For any Plan year, the Voluntary Contributions made by the group of Members who are Highly Compensated Employees shall not exceed the maximum amount that may be contributed to the Plan by them for such year under either one of the following tests: (a) the Contribution Percentage for the group of Members who are Highly Compensated Employees may not be more than the Contribution Percentage for the group of all other Members multiplied by 1.25; or (b) the excess of the Contribution Percentage for the group of Members who are Highly Compensated Employees over the Contribution Percentage for the group of all other Members may not be more than 2 percentage points, and the Contribution Percentage for the group of Members who are Highly Compensated Employees may not be more than the Contribution Percentage for the group of all other Members multiplied by 2.

group of Members who are Highly Compensated Employees may not be more than the Actual Deferral Percentage for the group of all others Members multiplied by 2. For these purposes, the term "Actual Deferral Percentage", for any group of Members for any Plan Year, shall mean the average of the ratios, calculated separately for each Member in such group, of (1) the 401(k) Contributions made on behalf of such Member for such year to (2) such Member's Compensation for such year. In determining the Actual Deferral Percentage for any Plan Year, 401(k) Contributions in excess of the limitation in Section 4.1 made on behalf of any Member who is not a Highly Compensated Employee shall be disregarded. 4.3. Nondiscrimination Test for Voluntary Contributions. For any Plan year, the Voluntary Contributions made by the group of Members who are Highly Compensated Employees shall not exceed the maximum amount that may be contributed to the Plan by them for such year under either one of the following tests: (a) the Contribution Percentage for the group of Members who are Highly Compensated Employees may not be more than the Contribution Percentage for the group of all other Members multiplied by 1.25; or (b) the excess of the Contribution Percentage for the group of Members who are Highly Compensated Employees over the Contribution Percentage for the group of all other Members may not be more than 2 percentage points, and the Contribution Percentage for the group of Members who are Highly Compensated Employees may not be more than the Contribution Percentage for the group of all other Members multiplied by 2. For these purposes, the term "Contribution Percentage", for any group of Members for any Plan Year, shall mean the average of the ratios, calculated separately for each Member in such group, of (1) the Voluntary Contributions credited to such Member's Voluntary Contribution Account during such year to (2) such Member's Compensation for such year. For purposes of determining the Contribution Percentage, all or a portion of the 401(k) Contributions for the Plan Year may be treated as. Voluntary Contributions for such year provided: (i) all 401(k) Contributions for such year satisfy the limitation of Section 4.2, and -18-

(ii) the 401(k) Contributions for such year, excluding those treated as Voluntary Contributions under this Section for such year, satisfy the limitation of Section 4.2. 4.4. Special Rules for Nondiscrimination Tests. For purposes of the nondiscrimination tests set forth in Sections 4.2 and 4.3, the following rules shall apply: (a) Alternative Limitation. The alternative test set forth in Sections 4.2(b) and 4.3(b) may be utilized only to the extent permitted under Section 401(m) (9) of the Code and the Treasury regulations and rulings and notices issued thereunder . (b) Calculations. The Actual Deferral Percentage and the Contribution Percentage shall be calculated to the nearest one-hundredth of 1%. (c) Family Aggregation Requirement. For any Plan Year, in the case of a Member who is a Highly Compensated Employee, and who is either a 5-percent owner, within the meaning of Section 416(i) (1) (B) (i) of the Code, or one of the ten most highly compensated employees based on Compensation during such year, such Member's Compensation and 401(k) Contributions and Voluntary Contributions shall be aggregated with the Compensation and 401(k) Contributions and Voluntary Contributions of the members of his family, within the meaning of Section 414(q) (6) (B) of the Code, who are eligible to participate in the Plan. The Compensation and 401(k) Contributions and Voluntary Contributions of such Member and such members of his family shall, as so aggregated, be treated as the Compensation and 401(k) Contributions and Voluntary Contributions of a single

(ii) the 401(k) Contributions for such year, excluding those treated as Voluntary Contributions under this Section for such year, satisfy the limitation of Section 4.2. 4.4. Special Rules for Nondiscrimination Tests. For purposes of the nondiscrimination tests set forth in Sections 4.2 and 4.3, the following rules shall apply: (a) Alternative Limitation. The alternative test set forth in Sections 4.2(b) and 4.3(b) may be utilized only to the extent permitted under Section 401(m) (9) of the Code and the Treasury regulations and rulings and notices issued thereunder . (b) Calculations. The Actual Deferral Percentage and the Contribution Percentage shall be calculated to the nearest one-hundredth of 1%. (c) Family Aggregation Requirement. For any Plan Year, in the case of a Member who is a Highly Compensated Employee, and who is either a 5-percent owner, within the meaning of Section 416(i) (1) (B) (i) of the Code, or one of the ten most highly compensated employees based on Compensation during such year, such Member's Compensation and 401(k) Contributions and Voluntary Contributions shall be aggregated with the Compensation and 401(k) Contributions and Voluntary Contributions of the members of his family, within the meaning of Section 414(q) (6) (B) of the Code, who are eligible to participate in the Plan. The Compensation and 401(k) Contributions and Voluntary Contributions of such Member and such members of his family shall, as so aggregated, be treated as the Compensation and 401(k) Contributions and Voluntary Contributions of a single Member who is a Highly Compensated Employee in applying the nondiscrimination tests. of Sections 4.2 and 4.3 for such Plan Year, and shall not otherwise be taken into account in applying such tests. (d) Plan Aggregation Requirements. Any qualified plans which are aggregated with this Plan in any Plan Year for the purpose of satisfying Section 401(a) (4) or 410(b) of the Code (other than solely for the purpose of satisfying the average benefit percentage test) shall, for such Plan Year, be aggregated with this Plan and the elective contributions made under the 401(k) provisions of, and any voluntary after-tax contributions made to, any such qualified plans and this Plan shall be treated as if they had been made under a single plan, for the purpose of applying the nondiscrimination tests of Section 4.2 and 4.3. In addition, for any Plan Year, to the extent permitted by the Code and the applicable Treasury regulations, any other qualified plan of the Employer or of any -19-

other entity described in Section 1.19(f)(2), (3) or (4) may be aggregated with this Plan, and the elective contributions made under the 401(k) provisions of, and any voluntary after-tax contributions made to, such qualified plan and this Plan may be treated as if they had been made under a single plan, for the purpose of applying the nondiscrimination tests in Sections . 4.2 and 4.3, provided that any such qualified plan and this Plan, when aggregated and treated as a single plan, satisfy others. requirements of Sections 401(a) (4) and 410 (b)of the Coders. (e) Records. The committee shall maintain or cause to be maintained records sufficient to demonstrate the satisfaction of the nondiscrimination tests in Sections 4.2 and 4.3, and to show the amount of 401(k) Contributions, if any, used to satisfy the nondiscrimination test in Section 4.3. 4.5. Deduction Limit. The total amount of contributions made hereunder by the Employer, considering the amount of such contributions both with and without aggregating such contributions with the contributions. made by the Employer under each other qualified plan the Employer maintains, for any taxable year of the Employer may not exceed the maximum amount allowable as a deduction for the contributions made to this Plan by the Employer for such taxable year. 4.6. Section 415 Limits. (a) General. For any Plan Year, the total amount contributed by or on behalf of any Member, or allocated to such Member, under the Plan, when aggregated with all other amounts treated as "annual additions" under this

other entity described in Section 1.19(f)(2), (3) or (4) may be aggregated with this Plan, and the elective contributions made under the 401(k) provisions of, and any voluntary after-tax contributions made to, such qualified plan and this Plan may be treated as if they had been made under a single plan, for the purpose of applying the nondiscrimination tests in Sections . 4.2 and 4.3, provided that any such qualified plan and this Plan, when aggregated and treated as a single plan, satisfy others. requirements of Sections 401(a) (4) and 410 (b)of the Coders. (e) Records. The committee shall maintain or cause to be maintained records sufficient to demonstrate the satisfaction of the nondiscrimination tests in Sections 4.2 and 4.3, and to show the amount of 401(k) Contributions, if any, used to satisfy the nondiscrimination test in Section 4.3. 4.5. Deduction Limit. The total amount of contributions made hereunder by the Employer, considering the amount of such contributions both with and without aggregating such contributions with the contributions. made by the Employer under each other qualified plan the Employer maintains, for any taxable year of the Employer may not exceed the maximum amount allowable as a deduction for the contributions made to this Plan by the Employer for such taxable year. 4.6. Section 415 Limits. (a) General. For any Plan Year, the total amount contributed by or on behalf of any Member, or allocated to such Member, under the Plan, when aggregated with all other amounts treated as "annual additions" under this Plan under Sections 415(c) (2), 415(1) (1) and 419A(d) (2) of the Code, and the applicable Treasury regulations, with respect to such Member for such Plan Year, shall not exceed the lesser of (1) $30,000 (as adjusted by the Internal Revenue Service for cost-of-living increases under Section 415(d) of the Code) as in effect for the Plan Year or (2) 25% of the Participant's Compensation for such Plan Year. In applying the preceding sentence, (i) amounts treated as annual additions by Section 415(1) (1) and 419A(d) (2) of the Code shall not be taken into account in determining whether the limitation set forth in clause (2) thereof is satisfied and (ii) 401(k) Contributions. shall not be taken into account to the extent such contributions are distributed to Members under Section 4.8(a) or (b). (b) 415(e) Limit. In addition to the above, the amounts contributed under the Plan by or on behalf of, or allocated under the Plan to, any Member for any Plan Year shall -20-

not exceed the amount permissible under the overall limitation applicable to such Member for such year under Section 415(e) of the Code. In calculating the defined benefit plan fraction and the defined contribution plan fraction, as defined in Section 415(e) of the Code, for the purpose of determining the aforesaid Code Section 415(e) limitation, an amount shall, to the extent permitted under Section 1106(i) (4) of P.L. 99-514, be subtracted from the numerator of the defined contribution plan fraction (not exceeding such numerator) as prescribed by the Secretary of the Treasury so that the sum of the defined benefit plan fraction and the defined contribution plan fraction does not exceed 1.0 for the Plan Year. In no event shall the amount to be subtracted from the numerator of the defined contribution plan fraction be less than the amount permitted to be so subtracted under Section 235(g) (3) of P.L. 97-248. In addition, the aforesaid Code Section 415(e) limitation shall, to the extent permitted under Section 1106(i) (3) of P.L. 99-514, be calculated by using the Member's Current Accrued Benefit. The "Current Accrued Benefit" is a Member's accrued benefit under any qualified defined benefit plan which is, or ever was, maintained by the Employer, determined as if the Member had separated from service as of the close of the last limitation year of such plan beginning before August 1, 1987, when expressed as an annual benefit within the meaning of Section 415(b) (2) of the Code. In determining the amount of a Member's Current Accrued Benefit, the following shall be disregarded: (1) any change in the terms and conditions of such plan after May 5, 1986, and (2) any cost of living adjustment occurring after May 5, 1986. In no event shall the amount of the Current Accrued Benefit be less than the Current Accrued Benefit as defined and determined under Section 235(g)(4) of P.L. 97- 248. If the limitation applicable to a Member under Section 415(e) of the Code is exceeded, the Member's benefit

not exceed the amount permissible under the overall limitation applicable to such Member for such year under Section 415(e) of the Code. In calculating the defined benefit plan fraction and the defined contribution plan fraction, as defined in Section 415(e) of the Code, for the purpose of determining the aforesaid Code Section 415(e) limitation, an amount shall, to the extent permitted under Section 1106(i) (4) of P.L. 99-514, be subtracted from the numerator of the defined contribution plan fraction (not exceeding such numerator) as prescribed by the Secretary of the Treasury so that the sum of the defined benefit plan fraction and the defined contribution plan fraction does not exceed 1.0 for the Plan Year. In no event shall the amount to be subtracted from the numerator of the defined contribution plan fraction be less than the amount permitted to be so subtracted under Section 235(g) (3) of P.L. 97-248. In addition, the aforesaid Code Section 415(e) limitation shall, to the extent permitted under Section 1106(i) (3) of P.L. 99-514, be calculated by using the Member's Current Accrued Benefit. The "Current Accrued Benefit" is a Member's accrued benefit under any qualified defined benefit plan which is, or ever was, maintained by the Employer, determined as if the Member had separated from service as of the close of the last limitation year of such plan beginning before August 1, 1987, when expressed as an annual benefit within the meaning of Section 415(b) (2) of the Code. In determining the amount of a Member's Current Accrued Benefit, the following shall be disregarded: (1) any change in the terms and conditions of such plan after May 5, 1986, and (2) any cost of living adjustment occurring after May 5, 1986. In no event shall the amount of the Current Accrued Benefit be less than the Current Accrued Benefit as defined and determined under Section 235(g)(4) of P.L. 97- 248. If the limitation applicable to a Member under Section 415(e) of the Code is exceeded, the Member's benefit under a qualified defined benefit plan maintained by the Employer shall be reduced to the extent necessary to meet such limitation, before any reduction is made with respect to the Member's annual additions under this Plan. (c) Plan Aggregation. In addition to the foregoing provisions, this Section 4.6 shall be applied by treating each qualified defined contribution plan, and each qualified defined benefit plan, maintained, or ever maintained, by the Employer or another entity described in Section 1.19(f)(2), (3) or (4) (modified for this purpose as required under Code Section 415(h)) as a single qualified defined contribution plan and a single qualified defined benefit plan. (d) Reduction of Contributions. In the event that the amount of the contributions which, without regard to -21-

this Section 4.6, would be made by or on behalf of, or allocated to, a Member under the Plan in respect of any Plan Year must be reduced by reason of the limitations of this Section 4.6, such reductions shall be made in the following order of priority, but only to the extent necessary: (1) the amount of the Member's Voluntary Contributions shall be reduced, or, if already paid to the Trustee, shall (with the Trust Fund earnings thereon) be refunded to the Member; then (2) the amount of the Member's 401(k) Contributions shall be reduced, or, if already paid to the Trustee, shall (with the Trust Fund earnings thereon) be refunded to the Member; then (3) any Employer Contributions that would otherwise be allocated to such Member in respect of such Plan Year shall, instead, be allocated to each other Member entitled to share in such contributions (subject to the limitations of this Section 4.6 as applied to each such Member) in the same proportion that each such Member's Compensation for such Plan Year bears to the aggregate of the Compensation for such Plan Year of all such Members . 4.7. Adjustments. Notwithstanding any other provision in the Plan to the contrary, at any time during the Plan Year, the Committee may make such adjustments to or impose such restrictions on the amounts of contributions that otherwise may be made to the Plan by or on behalf of, or allocated to, any Member or group of Members during the balance of such Plan Year, as the Committee deems necessary in order for such contributions or allocations not to exceed any of the limitations set forth in this Article 4, or in order for the Plan to meet any other requirement for the Plan's continued qualification under Sections 401(a), 401(k) and 401(m) of the Code . 4.8. Corrective Distributions. If for any Plan Year the 401(k) Contributions or Voluntary Contributions made by or on behalf of a Member for such year exceed the limitation applicable to such contributions under Section 4.1, 4.2 or 4.3, or if for any Plan Year any amount of the 401(k) Contributions made on behalf of a Member during such year is designated as an excess deferral attributable to this Plan under subsection (b) below, the excess of the contributions over the limitation, or the amount so designated, shall be distributed to the Member in accordance with the following rules:

this Section 4.6, would be made by or on behalf of, or allocated to, a Member under the Plan in respect of any Plan Year must be reduced by reason of the limitations of this Section 4.6, such reductions shall be made in the following order of priority, but only to the extent necessary: (1) the amount of the Member's Voluntary Contributions shall be reduced, or, if already paid to the Trustee, shall (with the Trust Fund earnings thereon) be refunded to the Member; then (2) the amount of the Member's 401(k) Contributions shall be reduced, or, if already paid to the Trustee, shall (with the Trust Fund earnings thereon) be refunded to the Member; then (3) any Employer Contributions that would otherwise be allocated to such Member in respect of such Plan Year shall, instead, be allocated to each other Member entitled to share in such contributions (subject to the limitations of this Section 4.6 as applied to each such Member) in the same proportion that each such Member's Compensation for such Plan Year bears to the aggregate of the Compensation for such Plan Year of all such Members . 4.7. Adjustments. Notwithstanding any other provision in the Plan to the contrary, at any time during the Plan Year, the Committee may make such adjustments to or impose such restrictions on the amounts of contributions that otherwise may be made to the Plan by or on behalf of, or allocated to, any Member or group of Members during the balance of such Plan Year, as the Committee deems necessary in order for such contributions or allocations not to exceed any of the limitations set forth in this Article 4, or in order for the Plan to meet any other requirement for the Plan's continued qualification under Sections 401(a), 401(k) and 401(m) of the Code . 4.8. Corrective Distributions. If for any Plan Year the 401(k) Contributions or Voluntary Contributions made by or on behalf of a Member for such year exceed the limitation applicable to such contributions under Section 4.1, 4.2 or 4.3, or if for any Plan Year any amount of the 401(k) Contributions made on behalf of a Member during such year is designated as an excess deferral attributable to this Plan under subsection (b) below, the excess of the contributions over the limitation, or the amount so designated, shall be distributed to the Member in accordance with the following rules: (a) If the aggregate amount of the 401(k) Contributions made on behalf of a Member for any Plan Year exceeds the dollar limit for such contributions under Section 4.1 for such year, the excess amount so contributed, as adjusted for income or loss allocable thereto, shall be (1) designated by the Committee as an excess -22-

amount of 401(k) Contributions (and earnings), and (2) distributed to the Member from his 401(k) Contribution Account after the end of such year but by no later than April 15 next following the close of such year. The 401(k) Contributions to be distributed under this subsection (a) for any Plan Year shall be so distributed prior to any distribution of 401(k) Contributions under subsection (b) for such Plan Year, and shall be reduced by the 401(k) Contributions previously distributed to the Member under subsection (c) for such Plan Year. (b) If the aggregate amount of the 401(k) Contributions made on behalf of a Member under this Plan for any Plan Year, when added to the total amount deferred by such Member in such year under other plans or arrangements described in Section 401(k), 408(k) or 403(b) of the Code, exceeds the limit under Section 402(g) of the Code for such year, the Member may designate a portion of such excess deferrals as allocable to the 401(k) Contributions made on the Member's behalf under this Plan for such year. Such designation shall be made by filing with the Committee a written notice that specifies the amount so designated, and which contains a certification by the Member that if the amount so designated is not distributed, such amount, when added to his remaining 401(k) Contributions and the total amount deferred under other plans or arrangements described in Section 401 (k), 408(k) or 403(b) of the Code, will exceed the limit under Section 402(g) of the Code for the Plan Year in question. Such written notice shall be filed with the Committee no later than by March 1 next following the close of such Plan Year. The amount so designated, as adjusted for income or loss allocable thereto, shall be (1) designated by the Committee as an excess deferral (and earnings), and (2) distributed to the Member from his 401(k) Contribution Account after the end of such year but by no later than April 15 next following the close of such year. The 401(k) Contributions to be distributed under this subsection

amount of 401(k) Contributions (and earnings), and (2) distributed to the Member from his 401(k) Contribution Account after the end of such year but by no later than April 15 next following the close of such year. The 401(k) Contributions to be distributed under this subsection (a) for any Plan Year shall be so distributed prior to any distribution of 401(k) Contributions under subsection (b) for such Plan Year, and shall be reduced by the 401(k) Contributions previously distributed to the Member under subsection (c) for such Plan Year. (b) If the aggregate amount of the 401(k) Contributions made on behalf of a Member under this Plan for any Plan Year, when added to the total amount deferred by such Member in such year under other plans or arrangements described in Section 401(k), 408(k) or 403(b) of the Code, exceeds the limit under Section 402(g) of the Code for such year, the Member may designate a portion of such excess deferrals as allocable to the 401(k) Contributions made on the Member's behalf under this Plan for such year. Such designation shall be made by filing with the Committee a written notice that specifies the amount so designated, and which contains a certification by the Member that if the amount so designated is not distributed, such amount, when added to his remaining 401(k) Contributions and the total amount deferred under other plans or arrangements described in Section 401 (k), 408(k) or 403(b) of the Code, will exceed the limit under Section 402(g) of the Code for the Plan Year in question. Such written notice shall be filed with the Committee no later than by March 1 next following the close of such Plan Year. The amount so designated, as adjusted for income or loss allocable thereto, shall be (1) designated by the Committee as an excess deferral (and earnings), and (2) distributed to the Member from his 401(k) Contribution Account after the end of such year but by no later than April 15 next following the close of such year. The 401(k) Contributions to be distributed under this subsection (b) for a Plan Year shall be reduced by any 401(k) Contributions that were previously distributed to the Member under subsection (a) or (c) for the same Plan Year. In no event shall a distribution of 401(k) Contributions pursuant to this subsection (b) for a Plan Year exceed the amount of the Member's 401(k) Contributions under this Plan for such year. (c) If for any Plan Year the aggregate amount of 401(k) Contributions made on behalf of Members who are -23-

Highly Compensated Employees exceeds the limit for such contributions under Section 4.2 (such excess is referred to herein as "Excess Contributions"), the Excess Contributions, as adjusted for income or loss allocable thereto,. shall be distributed as follows. The amount of Excess Contributions to be distributed to any Member under this subsection (c) shall be determined by reducing the Actual Deferral Percentages of the Members who are Highly Compensated Employees in the order of their Actual Deferral Percentages, beginning with those Highly Compensated Employees with the highest Actual Deferral Percentages, until the aggregate amount of 401(k) Contributions for Members who are Highly Compensated Employees has been reduced to the amount permissible under Section 4.2. The Excess Contributions so determined shall be distributed to those Highly Compensated Employees for whom a reduction is made under the preceding sentence. Distributions of Excess Contributions and the income or loss allocable thereto shall be (1) designated by the Committee as Excess Contributions (and earnings) and (2) distributed to the Member from his 401(k) Contribution Account after the end of the Plan Year but no later than by March 15 next following the close of such year. Excess Contributions to be distributed to a Member in accordance with the preceding sentence for any Plan Year shall be so distributed prior to any distributions of 401(k) Contributions under subsection (a) or (b) for such Plan Year. In no event shall a distribution of Excess Contributions to a Member for a Plan Year exceed the amount of 401(k) Contributions made on the Member's behalf for such year. (d) If for any Plan Year the aggregate amount of Voluntary Contributions, when added to the total amount of 401 (k) Contributions treated as Voluntary Contributions under Section 4.3, made by or on behalf of Members who are Highly Compensated Employees exceeds the limit for such contributions under

Highly Compensated Employees exceeds the limit for such contributions under Section 4.2 (such excess is referred to herein as "Excess Contributions"), the Excess Contributions, as adjusted for income or loss allocable thereto,. shall be distributed as follows. The amount of Excess Contributions to be distributed to any Member under this subsection (c) shall be determined by reducing the Actual Deferral Percentages of the Members who are Highly Compensated Employees in the order of their Actual Deferral Percentages, beginning with those Highly Compensated Employees with the highest Actual Deferral Percentages, until the aggregate amount of 401(k) Contributions for Members who are Highly Compensated Employees has been reduced to the amount permissible under Section 4.2. The Excess Contributions so determined shall be distributed to those Highly Compensated Employees for whom a reduction is made under the preceding sentence. Distributions of Excess Contributions and the income or loss allocable thereto shall be (1) designated by the Committee as Excess Contributions (and earnings) and (2) distributed to the Member from his 401(k) Contribution Account after the end of the Plan Year but no later than by March 15 next following the close of such year. Excess Contributions to be distributed to a Member in accordance with the preceding sentence for any Plan Year shall be so distributed prior to any distributions of 401(k) Contributions under subsection (a) or (b) for such Plan Year. In no event shall a distribution of Excess Contributions to a Member for a Plan Year exceed the amount of 401(k) Contributions made on the Member's behalf for such year. (d) If for any Plan Year the aggregate amount of Voluntary Contributions, when added to the total amount of 401 (k) Contributions treated as Voluntary Contributions under Section 4.3, made by or on behalf of Members who are Highly Compensated Employees exceeds the limit for such contributions under Section 4.3 (such excess is referred to herein as "Excess Aggregate Contributions"), the Excess Aggregate Contributions, as adjusted for income or loss allocable thereto, shall be distributed as follows. The amount of Excess Aggregate Contributions to be distributed to any Member under this subsection (d) shall be determined by reducing the Contribution Percentages of the Members who are Highly Compensated Employees in the order of their Contribution Percentages, beginning with those Highly Compensated Employees with the highest Contribution Percentages, until the aggregate amount of Voluntary Contributions (including 401 (k) Contributions treated as such) for Members who are Highly Compensated -24-

Employees has been reduced to the amount permissible under section 4.3. The Excess Aggregate Contributions so determined shall be distributed to those Highly Compensated Employees for whom a reduction is made under the preceding sentence. Distributions of Excess Aggregate Contributions and the income or loss allocable thereto shall be (1) designated by the Committee as Excess Aggregate Contributions (and earnings) and (2) distributed to the Member, first, from his voluntary Contribution Account and, second, to the extent that 401(k) Contributions were treated as voluntary Contributions for the Plan Year in question under Section 4.3, from his 401(k) Contribution Account after the end of the Plan Year but no later than by March 15 next following the close of such year. In no event shall a distribution of Excess Aggregate Contributions to a Member for a Plan Year exceed the amount of Voluntary Contributions made by the Member for such year. (e) The amount of income or loss allocable to 401(k) Contributions or voluntary Contributions to be distributed to any Member under subsection (a), (b), (c) or (d) above shall be determined in accordance with the applicable provisions of the regulations issued under Sections 401(k), 401(m) and 402(g) of the Code. (f) Notwithstanding anything to the contrary in subsections (c) or (d), the determination of the Excess Contributions or the Excess Aggregate Contributions under subsections (c) or (d) attributable to any Member who is a Highly Compensated Employee and who is subject to the family aggregation rules of Section 414(q) (6) of the Code shall be made by (1) ascertaining the single Actual Deferral Percentage or Contribution Percentage for such Member and the members of his family (the "Family Group"), which was determined in applying the nondiscrimination test in Section 4.2 or Section 4.3 in accordance with the rules set forth in Section 4.4(c), (2) reducing such single Actual Deferral Percentage or such single Contribution Percentage in the manner prescribed in subsection (c) or (d) as if the Family Group was a single Highly Compensated Employee and (3) allocating the resulting Excess Contributions or Excess Aggregate Contributions to each member of the Family Group, including

Employees has been reduced to the amount permissible under section 4.3. The Excess Aggregate Contributions so determined shall be distributed to those Highly Compensated Employees for whom a reduction is made under the preceding sentence. Distributions of Excess Aggregate Contributions and the income or loss allocable thereto shall be (1) designated by the Committee as Excess Aggregate Contributions (and earnings) and (2) distributed to the Member, first, from his voluntary Contribution Account and, second, to the extent that 401(k) Contributions were treated as voluntary Contributions for the Plan Year in question under Section 4.3, from his 401(k) Contribution Account after the end of the Plan Year but no later than by March 15 next following the close of such year. In no event shall a distribution of Excess Aggregate Contributions to a Member for a Plan Year exceed the amount of Voluntary Contributions made by the Member for such year. (e) The amount of income or loss allocable to 401(k) Contributions or voluntary Contributions to be distributed to any Member under subsection (a), (b), (c) or (d) above shall be determined in accordance with the applicable provisions of the regulations issued under Sections 401(k), 401(m) and 402(g) of the Code. (f) Notwithstanding anything to the contrary in subsections (c) or (d), the determination of the Excess Contributions or the Excess Aggregate Contributions under subsections (c) or (d) attributable to any Member who is a Highly Compensated Employee and who is subject to the family aggregation rules of Section 414(q) (6) of the Code shall be made by (1) ascertaining the single Actual Deferral Percentage or Contribution Percentage for such Member and the members of his family (the "Family Group"), which was determined in applying the nondiscrimination test in Section 4.2 or Section 4.3 in accordance with the rules set forth in Section 4.4(c), (2) reducing such single Actual Deferral Percentage or such single Contribution Percentage in the manner prescribed in subsection (c) or (d) as if the Family Group was a single Highly Compensated Employee and (3) allocating the resulting Excess Contributions or Excess Aggregate Contributions to each member of the Family Group, including the Member in question, in proportion to the amount of the 401(k) Contributions or voluntary Contributions of each such member that was taken into account, prior to the application of this Section 4.8, for the purpose of computing such single Actual Deferral Percentage or such single Contribution Percentage. -25-

(g) Any amounts required to be distributed to a Member pursuant to subsection (a), (b), (c) or (d) above shall be so distributed, notwithstanding any other provision in the Plan to the contrary. ARTICLE S - PLAN ACCOUNTS, ALLOCATIONS AND FORFEITURES 5.1. Plan Accounts. For each Member, the Committee shall establish and maintain, or caused to be established and maintained, a separate Plan Account with respect to the 401(k) Contributions made on behalf of the Member under Section 3.1, the Voluntary Contributions made by the Member under Section 3.2, the Employer Contributions allocated to the Member under Section 3.4 and the amounts rolled over to the Plan by the Member under Section 3.6. Such Accounts shall be referred to herein, respectively, as the Member's "401(k) Contribution Account", his "Voluntary Contribution Account", his "Employer Contribution Account", and his "Rollover Account". The Committee shall also establish and maintain, or cause to be established and maintained, such other Accounts as may be necessary or desirable to comply with the requirements of the Code or to otherwise effect the purposes of the Plan. Each such Account shall be adjusted from time to time as follows: (a) Such Account shall be credited, as hereinafter provided, with the amounts contributed to the Plan by or on behalf of the Member, allocated to the Member, or rolled over to the Plan by the Member under Section 3.1, 3.2, 3.4 or 3.6, as the case may be, and with any payments of principal and interest made by the Member pursuant to Section 7.5 on any loan to him. 401(k) Contributions shall be credited to a Member's 401(k) Contribution Account at the time such contributions are made to the Plan, but no later than by the final day of the Plan Year to which such contributions relate. Voluntary Contributions, Employer Contributions and amounts rolled over to the Plan by the Member shall be credited to a Member's Voluntary Contribution Account, Employer Contribution Account and Rollover Account, respectively, at the time such contributions are made to the Plan or at the time such rolled over amounts are transferred to or received by the Plan. Any payment on a loan under Section 7.5,

(g) Any amounts required to be distributed to a Member pursuant to subsection (a), (b), (c) or (d) above shall be so distributed, notwithstanding any other provision in the Plan to the contrary. ARTICLE S - PLAN ACCOUNTS, ALLOCATIONS AND FORFEITURES 5.1. Plan Accounts. For each Member, the Committee shall establish and maintain, or caused to be established and maintained, a separate Plan Account with respect to the 401(k) Contributions made on behalf of the Member under Section 3.1, the Voluntary Contributions made by the Member under Section 3.2, the Employer Contributions allocated to the Member under Section 3.4 and the amounts rolled over to the Plan by the Member under Section 3.6. Such Accounts shall be referred to herein, respectively, as the Member's "401(k) Contribution Account", his "Voluntary Contribution Account", his "Employer Contribution Account", and his "Rollover Account". The Committee shall also establish and maintain, or cause to be established and maintained, such other Accounts as may be necessary or desirable to comply with the requirements of the Code or to otherwise effect the purposes of the Plan. Each such Account shall be adjusted from time to time as follows: (a) Such Account shall be credited, as hereinafter provided, with the amounts contributed to the Plan by or on behalf of the Member, allocated to the Member, or rolled over to the Plan by the Member under Section 3.1, 3.2, 3.4 or 3.6, as the case may be, and with any payments of principal and interest made by the Member pursuant to Section 7.5 on any loan to him. 401(k) Contributions shall be credited to a Member's 401(k) Contribution Account at the time such contributions are made to the Plan, but no later than by the final day of the Plan Year to which such contributions relate. Voluntary Contributions, Employer Contributions and amounts rolled over to the Plan by the Member shall be credited to a Member's Voluntary Contribution Account, Employer Contribution Account and Rollover Account, respectively, at the time such contributions are made to the Plan or at the time such rolled over amounts are transferred to or received by the Plan. Any payment on a loan under Section 7.5, which is credited to a Member's Account as described therein, shall be so credited to such Account as of the date on which such payment is received by the Plan. -26-

(b) Such Account shall be credited or charged, as the case may be, with the Earnings attributable to the investment of such Account under Section 6.3. (c) Such Account shall be charged with the amount of any distributions, withdrawals or loans made therefrom, pursuant to Section 4.8 or Article 7. A distribution, withdrawal or loan shall be so charged as of the date on which the amount thereof is paid to the Member. (d) In addition to (a), (b) and (c) above, such Account shall be credited or charged as required by other provisions of the Plan, in the manner and as of the date set forth therein, or, where such manner or date is not expressly set forth, as the Committee shall determine. (e) Such Account shall also reflect the number of shares of any Mutual Fund in which the balance of such Account is invested. The number of shares to be so reflected shall include fractions of a unit of a share, as well as whole units of shares. 5.2. Forfeitures. (a) Incurrence and Application of Forfeitures. The portion of the Member's Employer Contribution Account which is not a Vested Portion shall be forfeited, and the amount so forfeited shall be charged to his Employer Contribution Account, as of the close of the Plan Year in which he incurs a Termination of Service. Any forfeiture shall be applied, first, to restore other forfeitures under subsection (b) below, and, second, to reduce Employer Contributions made to the Plan after the date such forfeiture arises. Prior to such application, a forfeiture shall be held in a separate account established and maintained solely for forfeitures under the Trust Fund; and such account shall be invested in the Fidelity Retirement Money Market Portfolio described in Section 6.1(e).

(b) Such Account shall be credited or charged, as the case may be, with the Earnings attributable to the investment of such Account under Section 6.3. (c) Such Account shall be charged with the amount of any distributions, withdrawals or loans made therefrom, pursuant to Section 4.8 or Article 7. A distribution, withdrawal or loan shall be so charged as of the date on which the amount thereof is paid to the Member. (d) In addition to (a), (b) and (c) above, such Account shall be credited or charged as required by other provisions of the Plan, in the manner and as of the date set forth therein, or, where such manner or date is not expressly set forth, as the Committee shall determine. (e) Such Account shall also reflect the number of shares of any Mutual Fund in which the balance of such Account is invested. The number of shares to be so reflected shall include fractions of a unit of a share, as well as whole units of shares. 5.2. Forfeitures. (a) Incurrence and Application of Forfeitures. The portion of the Member's Employer Contribution Account which is not a Vested Portion shall be forfeited, and the amount so forfeited shall be charged to his Employer Contribution Account, as of the close of the Plan Year in which he incurs a Termination of Service. Any forfeiture shall be applied, first, to restore other forfeitures under subsection (b) below, and, second, to reduce Employer Contributions made to the Plan after the date such forfeiture arises. Prior to such application, a forfeiture shall be held in a separate account established and maintained solely for forfeitures under the Trust Fund; and such account shall be invested in the Fidelity Retirement Money Market Portfolio described in Section 6.1(e). (b) Restoration of a Forfeiture. If any portion of a Member's Employer Contribution Account was forfeited upon his Termination of Service, and such Member thereafter returns to Service, any amount that was forfeited shall be restored to his Employer Contribution Account, as of his Reemployment Commencement Date, unless: (1) the Member failed to return to Service prior to incurring a 5-Year Break in Service after such Termination of Service, or (2) the Member had previously received from the Plan a distribution described in subsection (c) below, and, as of his Reemployment Commencement Date, has failed to repay such distribution in accordance with subsection (c) below. In the event that the restoration of a for-27-

feiture is prevented by reason of clause (2) in the preceding sentence, and the Member subsequently repays the distribution referred to in clause (2) in accordance with subsection (c) below, the amount forfeited shall be restored to the Member's Employer Contribution Account as of the date on which such repayment is made to the Plan. Any amount so restored to such Account shall be invested in accordance with the Member's investment election with respect to New Money to be credited to such Account then in effect under Section 6.2. Funds to restore a forfeiture to a Member's Employer Contribution Account shall come, first, from other forfeitures as provided in subsection (a) above, and, second, from contributions made to the Plan by the Company for such purpose. The Company shall make such additional contributions to the Plan as are necessary to restore any forfeitures in accordance with the preceding sentence. If the Company makes any such contributions with respect to a Member who is employed by an Employer other than the Company, such Employer shall reimburse the Company for the amount of any such contributions so made. The amount of any forfeiture to be restored to a Member hereunder shall, to the extent required by Section 411 of the Code, include earnings on the amounts that were forfeited by the Member under subsection (a) above. (c) Repayment of Distributions. A Member who has incurred a Termination of Service and, in connection therewith, has received from the Plan a distribution of the entire Vested Portion of the balance of his Plan Accounts, and thereafter returns to Service, may repay such distribution to the Plan. Any such repayment shall consist of the full amount of such distribution. Further, such repayment must be made before the fifth anniversary of the Member's Reemployment Commencement Date. A repaid distribution shall be credited pro rata to the Member's Accounts from which such distribution was made, shall be so credited as of the date received by the

feiture is prevented by reason of clause (2) in the preceding sentence, and the Member subsequently repays the distribution referred to in clause (2) in accordance with subsection (c) below, the amount forfeited shall be restored to the Member's Employer Contribution Account as of the date on which such repayment is made to the Plan. Any amount so restored to such Account shall be invested in accordance with the Member's investment election with respect to New Money to be credited to such Account then in effect under Section 6.2. Funds to restore a forfeiture to a Member's Employer Contribution Account shall come, first, from other forfeitures as provided in subsection (a) above, and, second, from contributions made to the Plan by the Company for such purpose. The Company shall make such additional contributions to the Plan as are necessary to restore any forfeitures in accordance with the preceding sentence. If the Company makes any such contributions with respect to a Member who is employed by an Employer other than the Company, such Employer shall reimburse the Company for the amount of any such contributions so made. The amount of any forfeiture to be restored to a Member hereunder shall, to the extent required by Section 411 of the Code, include earnings on the amounts that were forfeited by the Member under subsection (a) above. (c) Repayment of Distributions. A Member who has incurred a Termination of Service and, in connection therewith, has received from the Plan a distribution of the entire Vested Portion of the balance of his Plan Accounts, and thereafter returns to Service, may repay such distribution to the Plan. Any such repayment shall consist of the full amount of such distribution. Further, such repayment must be made before the fifth anniversary of the Member's Reemployment Commencement Date. A repaid distribution shall be credited pro rata to the Member's Accounts from which such distribution was made, shall be so credited as of the date received by the Plan, and shall be invested in accordance with the Member's investment election with respect to New Money to be credited to such Accounts then in effect under Section 6.2. ARTICLE 6 - INVESTMENTS AND EARNINGS 6.1. Investment of Accounts. The balance of each Plan Account maintained for a Member hereunder shall be invested, as the Member shall from time to time elect in accordance with Section 6.2, in shares of any one or more of the Mutual Funds selected by the Committee for investment. As of April 10, 1995, the Committee has selected the following Mutual Funds for investment: -28-

(a) Fidelity U.S. Bond Index Portfolio; (b) Fidelity Asset Manager; (c) Fidelity Puritan Fund; (d) Fidelity Equity-Income Fund; (e) Fidelity Magellan Fund; and (f) Fidelity Retirement Money Market Portfolio. The Committee may, at any time and in its sole discretion, eliminate or add any Mutual Fund to the above list. Except to the extent that the Committee otherwise directs, all dividends and other distributions payable with respect to the shares of any Mutual Fund in which any Plan Account is invested shall be reinvested in additional shares of such Mutual Fund; and the number of additional shares acquired as a result of such reinvestment shall be credited to such Plan Account. To the fullest extent permissible under Section 404(c) of ERISA, the Trustee, the members of the Committee, and any other fiduciary of the Plan shall not be liable for any loss, or by reason of any breach of duty, that results from any election made, or deemed to have been made, by a Member under Section 6.2 with respect to the investment of his Plan Account balances.

(a) Fidelity U.S. Bond Index Portfolio; (b) Fidelity Asset Manager; (c) Fidelity Puritan Fund; (d) Fidelity Equity-Income Fund; (e) Fidelity Magellan Fund; and (f) Fidelity Retirement Money Market Portfolio. The Committee may, at any time and in its sole discretion, eliminate or add any Mutual Fund to the above list. Except to the extent that the Committee otherwise directs, all dividends and other distributions payable with respect to the shares of any Mutual Fund in which any Plan Account is invested shall be reinvested in additional shares of such Mutual Fund; and the number of additional shares acquired as a result of such reinvestment shall be credited to such Plan Account. To the fullest extent permissible under Section 404(c) of ERISA, the Trustee, the members of the Committee, and any other fiduciary of the Plan shall not be liable for any loss, or by reason of any breach of duty, that results from any election made, or deemed to have been made, by a Member under Section 6.2 with respect to the investment of his Plan Account balances. 6.2. Investment Elections. Elections with respect to the investment of a Member's Plan Accounts shall be made in accordance with the following rules: (a) Initial Investment Election. Each Member shall make an initial investment election with respect to each Plan Account that is established for him hereunder by the later of (1) the close of the last business day immediately preceding the date on which an amount is first credited to such Account pursuant to Section S.l or (2) July 31, 1993. Such election shall be made in the manner set forth in subsection (c) below. (b) Investment Election Changes. Subject to the limitations set forth below, a Member may change his investment election with respect to any of his Plan Accounts, by making a new investment election with respect to such Account in accordance with the provisions of subsection (c) below. A Member may so change his investment election just with respect to the existing balance of any Plan Account ("Current -29-

Balance"); or just with respect to contributions and repayments of principal and interest on any loan from the Plan ("New Money") that are to be credited to any Plan Account on or after the effective date of such change; or with respect to both the Current Balance of, and New Money to be credited to, any Plan Account. (c) Procedure for Making Elections. An investment election under subsection (a) above shall be made by filing with the Committee a form furnished by the Committee or this purpose, on which the Member shall indicate, by percentage (which shall be an integral multiple of 1%) or dollar amount, the portion of the Member's Plan Account balance to be invested in shares of each Mutual Fund. The Member shall designate his investment choices, in the manner described in the preceding sentence, separately for each of his Plan Accounts. Any change in a Member's investment election under subsection (b) above shall be made in the same manner as herein described in the case of an election under subsection (a) above; provided, however, that if the Committee so permits (and subject to such rules as the Committee may have promulgated) any Member may use the telephone service made available by the Trustee to communicate directly to the Trustee any change in the Member's investment election. A Member shall be provided with a written confirmation of any investment election made under subsection (a), or any change in investment election made under subsection (b), in the manner provided in the Trust Agreement or in any administrative services agreement between the Committee and the Trustee. (d) Effect of Election. An investment election made by a Member with respect to any of his Plan Accounts under

Balance"); or just with respect to contributions and repayments of principal and interest on any loan from the Plan ("New Money") that are to be credited to any Plan Account on or after the effective date of such change; or with respect to both the Current Balance of, and New Money to be credited to, any Plan Account. (c) Procedure for Making Elections. An investment election under subsection (a) above shall be made by filing with the Committee a form furnished by the Committee or this purpose, on which the Member shall indicate, by percentage (which shall be an integral multiple of 1%) or dollar amount, the portion of the Member's Plan Account balance to be invested in shares of each Mutual Fund. The Member shall designate his investment choices, in the manner described in the preceding sentence, separately for each of his Plan Accounts. Any change in a Member's investment election under subsection (b) above shall be made in the same manner as herein described in the case of an election under subsection (a) above; provided, however, that if the Committee so permits (and subject to such rules as the Committee may have promulgated) any Member may use the telephone service made available by the Trustee to communicate directly to the Trustee any change in the Member's investment election. A Member shall be provided with a written confirmation of any investment election made under subsection (a), or any change in investment election made under subsection (b), in the manner provided in the Trust Agreement or in any administrative services agreement between the Committee and the Trustee. (d) Effect of Election. An investment election made by a Member with respect to any of his Plan Accounts under subsection (a) above shall remain in effect until the Member changes his investment election with respect to such Plan Account in accordance with subsection (b) above. Any investment election change made by a Member under subsection (b) above with respect to any Plan Account shall remain in effect until the Member again changes his investment election with respect to such Plan Account in accordance with subsection (b) above. (e) Implementation. All transactions necessary to implement any investment elections and changes therein that are made by Members pursuant to this Section 6.2 shall be executed at such times, and in such manner, as provided in the Trust Agreement or in any administrative services agreement between the Committee and the Trustee. (f) Restrictions. Notwithstanding any provision to the contrary in subsections (a) to (e) above, between August 1, 1993 and December 31, 1993, the following restric-30-

tions shall apply to a Member's investment elections under this Section 6.2: (1) Prior to attaining age 55, a Member may not invest any of his Plan Accounts in shares of the Fidelity Retirement Money Market Portfolio; (2) A Member may not invest any portion of his Employer Contribution Account in shares of the Fidelity EquityIncome Fund or the Fidelity Magellan Fund; (3) A Member may not invest the portion of his Employer Contribution Account which is not a Vested Portion in shares of the Fidelity U.S. Bond Index Portfolio; and (4) Before a Member attains age 55, the portion of the Member's Employer Contribution Account which is not a Vested Portion shall be invested in shares of the Fidelity Asset Manager fund, and such portion of such Account shall not be subject to investment direction by the Member. The above restrictions shall not apply after December 31, 1993. On and after January 1, 1994, and prior to April 10, 1995, the following restriction shall apply to a Member's investment elections under this Section 6.2: A Member may not invest any portion of his Employer Contribution Account in shares of the Fidelity Magellan Fund. The Committee may, at any time and in its sole discretion, eliminate or modify any of the foregoing restrictions, or impose additional restrictions on Members' investment elections. To the extent that any such restriction ceases to apply with respect to the Current Balance of, or the New Money to be credited to, any Plan Account of a

tions shall apply to a Member's investment elections under this Section 6.2: (1) Prior to attaining age 55, a Member may not invest any of his Plan Accounts in shares of the Fidelity Retirement Money Market Portfolio; (2) A Member may not invest any portion of his Employer Contribution Account in shares of the Fidelity EquityIncome Fund or the Fidelity Magellan Fund; (3) A Member may not invest the portion of his Employer Contribution Account which is not a Vested Portion in shares of the Fidelity U.S. Bond Index Portfolio; and (4) Before a Member attains age 55, the portion of the Member's Employer Contribution Account which is not a Vested Portion shall be invested in shares of the Fidelity Asset Manager fund, and such portion of such Account shall not be subject to investment direction by the Member. The above restrictions shall not apply after December 31, 1993. On and after January 1, 1994, and prior to April 10, 1995, the following restriction shall apply to a Member's investment elections under this Section 6.2: A Member may not invest any portion of his Employer Contribution Account in shares of the Fidelity Magellan Fund. The Committee may, at any time and in its sole discretion, eliminate or modify any of the foregoing restrictions, or impose additional restrictions on Members' investment elections. To the extent that any such restriction ceases to apply with respect to the Current Balance of, or the New Money to be credited to, any Plan Account of a Member, the Member may elect to invest all or any portion of such Current Balance, or of such New Money, of such Account in shares of any Mutual Fund listed in Section 6.1, subject to any such restrictions which remain, by making a change in investment election under subsection (b) above. 6.3. Determination of Earnings. The Earnings attributable to the investment of any Plan Account for any period shall mean the amount (positive or negative) by which (a) the aggregate value, as of the close of the last business day of such period, of all shares of Mutual Funds in which such Account is then invested, plus the unpaid principal amount of any loan made to the Member from such Account that -31-

is outstanding at the close of such day, and any cash amount standing to the Member's credit in such Account as of the close of such day, as reduced by (b) the amount of all contributions, loan repayments and amounts rolled over to the Plan, that were credited to such Account during the period, and as increased by (c) the amount of all distributions, withdrawals and loans charged to such Account during the period, exceeds, or is less than, (d) the aggregate value, as of the close of the last business day immediately preceding the start of such period, of all shares of Mutual Funds in which such Account was then invested, plus the unpaid principal amount of any loan made to the Member from such Account that was outstanding at the close of such day, and any cash amount standing to the Member's credit in such Account as of the close of such day. 6.4 Voting Rights. In accordance with the applicable rules set forth in the Trust Agreement, each Member shall have the right to direct the Trustee as to how to vote the shares of any Mutual Fund credited to his Plan Accounts, and the right to direct the Trustee as to how to exercise all other rights pertaining to such shares. A Member shall be treated as a "named fiduciary", within the meaning of Section 402 (a) (2) of ERISA, for the purpose of giving such directions to the Trustee. ARTICLE 7 - DISTRIBUTIONS, WITHDRAWALS AND LOANS 7.1. Distributions. Distributions shall be made in accordance with the following rules: (a) Termination of Service After Age 55 or Due to Disability. In the case of a Member who incurs a Termination of Service, for any reason other than death, after he has attained age 55, or who incurs a Termination of Service

is outstanding at the close of such day, and any cash amount standing to the Member's credit in such Account as of the close of such day, as reduced by (b) the amount of all contributions, loan repayments and amounts rolled over to the Plan, that were credited to such Account during the period, and as increased by (c) the amount of all distributions, withdrawals and loans charged to such Account during the period, exceeds, or is less than, (d) the aggregate value, as of the close of the last business day immediately preceding the start of such period, of all shares of Mutual Funds in which such Account was then invested, plus the unpaid principal amount of any loan made to the Member from such Account that was outstanding at the close of such day, and any cash amount standing to the Member's credit in such Account as of the close of such day. 6.4 Voting Rights. In accordance with the applicable rules set forth in the Trust Agreement, each Member shall have the right to direct the Trustee as to how to vote the shares of any Mutual Fund credited to his Plan Accounts, and the right to direct the Trustee as to how to exercise all other rights pertaining to such shares. A Member shall be treated as a "named fiduciary", within the meaning of Section 402 (a) (2) of ERISA, for the purpose of giving such directions to the Trustee. ARTICLE 7 - DISTRIBUTIONS, WITHDRAWALS AND LOANS 7.1. Distributions. Distributions shall be made in accordance with the following rules: (a) Termination of Service After Age 55 or Due to Disability. In the case of a Member who incurs a Termination of Service, for any reason other than death, after he has attained age 55, or who incurs a Termination of Service due to Disability prior to attaining age 55, the Vested Portion of the balance of the Member's Plan Accounts shall be distributed to him, in the form of a single lump sum payment. The distribution shall be made as soon as practicable after the Member's Termination of Service. The amount of the distribution shall be the Vested Portion of the balance of the Member's Plan Accounts determined as of the close of the last business day immediately preceding the time such distribution is made. (b) Termination of Service Prior to Age 55. In the case of a Member who incurs a Termination of Service, for any reason other than Death or Disability, before he has attained age 55, the distribution of his Plan Account balances shall be made as follows: -32-

(1) 401(k) Contribution Account, Voluntary Contribution Account and Rollover Account. The balances of the Member's 401(k) Contribution Account, Voluntary Contribution Account and Rollover Account shall be distributed to the Member, in the form of a single lump sum payment, as soon as practicable after such Member's Termination of Service. However, if, under subsection (b) (2) below, the Member has an Excess Portion in his Employer Contribution Account, the Member may elect in writing, within 60 days after the date of his Termination of Service, to have the balances of his 401(k) Contribution Account, Voluntary Contribution Account and Rollover Account remain invested in the Trust Fund. A Member who so elects may, at any time thereafter, elect to receive a distribution, in the form of a single lump sum payment, of the balances of such Accounts, by delivering a written election to such effect to the Committee, on which he specifies the date on which such distribution is to be made; but, in any event, the balances of such Accounts shall be distributed to the Member, in the form of a single lump sum payment, no later than by the date on which the Excess Portion of his Employer Contribution Account is distributed to him under subsection (b) (2) below. (2) Employer Contribution Account. The Vested Portion of the balance of the Member's Employer Contribution Account, up to the greater of (i) $37,500 or (ii) one-half of the Vested Portion of such balance, shall be distributed to the Member, in the form of a single lump sum payment, as soon as practicable after his Termination of Service. The portion of the Vested Portion of the balance of the Member's Employer Contribution Account that is not immediately distributed due to the restriction in clause (i) or (ii) of the preceding sentence shall remain invested in the Trust Fund, and shall be referred to herein as the "Excess Portion". For each Plan Year beginning after December 31, 1993, the $37,500 amount referred to above shall be adjusted, as of the first day of each such year, for cost-of-living increases by the same percentage by which the Internal Revenue Service has increased the limitation under Section 402(g) of the Code, effective as of such day, pursuant to Section 415(d) of the Code.

(1) 401(k) Contribution Account, Voluntary Contribution Account and Rollover Account. The balances of the Member's 401(k) Contribution Account, Voluntary Contribution Account and Rollover Account shall be distributed to the Member, in the form of a single lump sum payment, as soon as practicable after such Member's Termination of Service. However, if, under subsection (b) (2) below, the Member has an Excess Portion in his Employer Contribution Account, the Member may elect in writing, within 60 days after the date of his Termination of Service, to have the balances of his 401(k) Contribution Account, Voluntary Contribution Account and Rollover Account remain invested in the Trust Fund. A Member who so elects may, at any time thereafter, elect to receive a distribution, in the form of a single lump sum payment, of the balances of such Accounts, by delivering a written election to such effect to the Committee, on which he specifies the date on which such distribution is to be made; but, in any event, the balances of such Accounts shall be distributed to the Member, in the form of a single lump sum payment, no later than by the date on which the Excess Portion of his Employer Contribution Account is distributed to him under subsection (b) (2) below. (2) Employer Contribution Account. The Vested Portion of the balance of the Member's Employer Contribution Account, up to the greater of (i) $37,500 or (ii) one-half of the Vested Portion of such balance, shall be distributed to the Member, in the form of a single lump sum payment, as soon as practicable after his Termination of Service. The portion of the Vested Portion of the balance of the Member's Employer Contribution Account that is not immediately distributed due to the restriction in clause (i) or (ii) of the preceding sentence shall remain invested in the Trust Fund, and shall be referred to herein as the "Excess Portion". For each Plan Year beginning after December 31, 1993, the $37,500 amount referred to above shall be adjusted, as of the first day of each such year, for cost-of-living increases by the same percentage by which the Internal Revenue Service has increased the limitation under Section 402(g) of the Code, effective as of such day, pursuant to Section 415(d) of the Code. After a Member who has an Excess Portion in his Employer Contribution Account invested in the Trust Fund attains age 55, he may, at any time, elect to receive a distribution, in the form of single lump sum payment, of such Excess Portion, by delivering a written election to such effect to the Committee, on which he specifies the -33-

date on which such distribution is to be made; but, in any event, the Member's Excess Portion shall be distributed to him, in the form of a single lump sum payment, when he attains age 65. Notwithstanding the above, in the case of a Member who returns to Service with the Employer after incurring a Termination of Service, the foregoing provisions of this subsection (b) (2) shall cease to apply to the Member's Excess Portion, and such Excess Portion shall be distributed to the Member, along with any additional balances in his Plan Accounts, in accordance with the provisions of this Section 7.1 after he again incurs a Termination of Service. (3) Valuation and Investment. For the purposes of this subsection (b), the balance of the Member's 401(k) Contribution Account, Voluntary Contribution Account, Rollover Account or Employer Contribution Account (including the Vested Portion of the balance of the Employer Contribution Account or the amount of any Excess Portion of the Employer Contribution Account) shall be determined as of the close of the last business day immediately preceding the time the distribution in question is made. Account balances which remain invested in the Trust Fund under subsection (b) (1) above, and the Excess Portion which remains invested in the Trust Fund under subsection (b) (2) above, shall, while so invested, be invested by the Member as provided in Sections 6.1 and 6.2, and shall be credited or charged with Earnings, as provided in Section 5.1. (c) Corporate Events. Notwithstanding subsection (b) above, if a Member is affected by an event described in Section 401(k) (10) (A) (ii) or (iii) of the Code, then, upon such Member's written request, the entire Vested Portion of the balance of his Plan Accounts (including any Excess Portion described in subsection (b) above), determined as under the first sentence of subsection (b) (3) above, shall be distributed to the Member in a single lump sum payment. (d) Special Rules. (1) General. Notwithstanding any other provision of subsection

date on which such distribution is to be made; but, in any event, the Member's Excess Portion shall be distributed to him, in the form of a single lump sum payment, when he attains age 65. Notwithstanding the above, in the case of a Member who returns to Service with the Employer after incurring a Termination of Service, the foregoing provisions of this subsection (b) (2) shall cease to apply to the Member's Excess Portion, and such Excess Portion shall be distributed to the Member, along with any additional balances in his Plan Accounts, in accordance with the provisions of this Section 7.1 after he again incurs a Termination of Service. (3) Valuation and Investment. For the purposes of this subsection (b), the balance of the Member's 401(k) Contribution Account, Voluntary Contribution Account, Rollover Account or Employer Contribution Account (including the Vested Portion of the balance of the Employer Contribution Account or the amount of any Excess Portion of the Employer Contribution Account) shall be determined as of the close of the last business day immediately preceding the time the distribution in question is made. Account balances which remain invested in the Trust Fund under subsection (b) (1) above, and the Excess Portion which remains invested in the Trust Fund under subsection (b) (2) above, shall, while so invested, be invested by the Member as provided in Sections 6.1 and 6.2, and shall be credited or charged with Earnings, as provided in Section 5.1. (c) Corporate Events. Notwithstanding subsection (b) above, if a Member is affected by an event described in Section 401(k) (10) (A) (ii) or (iii) of the Code, then, upon such Member's written request, the entire Vested Portion of the balance of his Plan Accounts (including any Excess Portion described in subsection (b) above), determined as under the first sentence of subsection (b) (3) above, shall be distributed to the Member in a single lump sum payment. (d) Special Rules. (1) General. Notwithstanding any other provision of subsection (a), (b) or (c) above to the contrary, payment of the Member's Plan Account balances shall be made in accordance with the provisions of this subsection (d) . (2) Member's Consent. No distribution to the Member with respect to any of his Plan Accounts shall be made prior to his attaining Normal Retirement Age unless -34-

either (i) the Vested Portion of the balance of the Member's Plan Accounts at the close of the last business day immediately preceding the time the distribution is made does not exceed $3,500 or (ii) the Member consents, in writing, within the 90-day period ending on the date of distribution and after receipt of the explanation described in the paragraph below, to the immediate payment of such distribution. For purposes of clause (ii) of the preceding paragraph, the Committee shall furnish the Member with a written explanation of the Member's right to defer his distribution until he has attained age 65 and the effect of such deferral. Such explanation shall be furnished no less than 30 days (or such shorter period as may be permitted by Treasury regulations) and no more than 90 days before the distribution is made to the Member. If an immediate distribution with respect to any of the Member's Plan Accounts cannot be made to the Member by reason of his failure to consent to such distribution, distribution with respect to such Account shall be made as soon as practicable after the earliest to occur of the following: the date on which the Member attains age 65, the date of the Member's death, or the date on which the Committee receives written notice from the Member requesting, and consenting to, an immediate distribution from such Account. Any distribution made pursuant to the preceding sentence shall be made in the form of a single lump sum payment, and the amount of such distribution shall be the Vested Portion of the balance of such Account, determined as of the close of the last business day immediately preceding the time such distribution is made; provided, however, that in the case of a Member who has not attained age 55 and who is alive and not Disabled, any such distribution from such Member's Employer Contribution Account cannot exceed the greater of (A) $37,500 (adjusted as provided in subsection (b) (2) above) or (B) one-half of the Vested Portion of the balance of such Account, determined as of the close of such business day, and the portion, if any, of the Vested Portion of the Member's Employer

either (i) the Vested Portion of the balance of the Member's Plan Accounts at the close of the last business day immediately preceding the time the distribution is made does not exceed $3,500 or (ii) the Member consents, in writing, within the 90-day period ending on the date of distribution and after receipt of the explanation described in the paragraph below, to the immediate payment of such distribution. For purposes of clause (ii) of the preceding paragraph, the Committee shall furnish the Member with a written explanation of the Member's right to defer his distribution until he has attained age 65 and the effect of such deferral. Such explanation shall be furnished no less than 30 days (or such shorter period as may be permitted by Treasury regulations) and no more than 90 days before the distribution is made to the Member. If an immediate distribution with respect to any of the Member's Plan Accounts cannot be made to the Member by reason of his failure to consent to such distribution, distribution with respect to such Account shall be made as soon as practicable after the earliest to occur of the following: the date on which the Member attains age 65, the date of the Member's death, or the date on which the Committee receives written notice from the Member requesting, and consenting to, an immediate distribution from such Account. Any distribution made pursuant to the preceding sentence shall be made in the form of a single lump sum payment, and the amount of such distribution shall be the Vested Portion of the balance of such Account, determined as of the close of the last business day immediately preceding the time such distribution is made; provided, however, that in the case of a Member who has not attained age 55 and who is alive and not Disabled, any such distribution from such Member's Employer Contribution Account cannot exceed the greater of (A) $37,500 (adjusted as provided in subsection (b) (2) above) or (B) one-half of the Vested Portion of the balance of such Account, determined as of the close of such business day, and the portion, if any, of the Vested Portion of the Member's Employer Contribution Account that is not distributed due to the foregoing restriction shall thereafter be treated as the "Excess Portion" under subsection (b) (2) above. Any request for and consent to a distribution made by a Member under the second preceding sentence must apply to the entire Vested Portion of the balance of all of his Plan Accounts, or to so much of the Vested Portion of such balance as may be distributed under the preceding sentence. -35-

(3) Distributions after Termination of Service. Distribution to the Member with respect to his Plan Account balances shall be made no later than 60 days after the close of the Plan Year in which occurs the latest of the date on which the Member attains age 65, the 10th anniversary of the date as of which the Member commenced participation in the Plan, or the date of the Member's Termination of Service . (4) Age 70 1/2 Distributions. The distribution of a Member's Plan Account balances shall be made or commence not later than: (i) in the case of a Member who is a 5-percent owner, as defined under Section 416(i) of the Code and the Treasury regulations thereunder, the April 1st following the calendar year in which he attains age 70 1/2; (ii) in the case of a Member who is not a 5-percent owner, as so defined in (i), and who attains age 70 1/2 prior to January 1, 1988, the April 1st following the later of (A) the calendar year in which he attains age 70 1/2, or (B) the calendar year ending December 31, 1990; or (iii) in the case of a Member not described in (i) or (ii), the later of (A) the April 1st following the calendar year in which he attains age 70 1/2 or (B) April 1, 1990. Clause (iii) (B) above shall not apply to a Member who both attains age 70 1/2 in 1988 and incurs a Termination of Service in 1988. The date by which the distribution of a Member's Account balances must be made or commence under (i), (ii) or (iii) above, as applicable, shall be referred to herein as the Member's "Required Commencement Date" . A Member who attains age 70 1/2 may elect to have his Account balances distributed pursuant to one of the following options: (I) the balance of his Plan Accounts shall be distributed to him annually in a single lump sum payment or (II) his Account balances shall be paid to him in 10 annual installments. The election must be made no later than by the June 30 of the calendar year preceding the calendar year in which the Member's Required

(3) Distributions after Termination of Service. Distribution to the Member with respect to his Plan Account balances shall be made no later than 60 days after the close of the Plan Year in which occurs the latest of the date on which the Member attains age 65, the 10th anniversary of the date as of which the Member commenced participation in the Plan, or the date of the Member's Termination of Service . (4) Age 70 1/2 Distributions. The distribution of a Member's Plan Account balances shall be made or commence not later than: (i) in the case of a Member who is a 5-percent owner, as defined under Section 416(i) of the Code and the Treasury regulations thereunder, the April 1st following the calendar year in which he attains age 70 1/2; (ii) in the case of a Member who is not a 5-percent owner, as so defined in (i), and who attains age 70 1/2 prior to January 1, 1988, the April 1st following the later of (A) the calendar year in which he attains age 70 1/2, or (B) the calendar year ending December 31, 1990; or (iii) in the case of a Member not described in (i) or (ii), the later of (A) the April 1st following the calendar year in which he attains age 70 1/2 or (B) April 1, 1990. Clause (iii) (B) above shall not apply to a Member who both attains age 70 1/2 in 1988 and incurs a Termination of Service in 1988. The date by which the distribution of a Member's Account balances must be made or commence under (i), (ii) or (iii) above, as applicable, shall be referred to herein as the Member's "Required Commencement Date" . A Member who attains age 70 1/2 may elect to have his Account balances distributed pursuant to one of the following options: (I) the balance of his Plan Accounts shall be distributed to him annually in a single lump sum payment or (II) his Account balances shall be paid to him in 10 annual installments. The election must be made no later than by the June 30 of the calendar year preceding the calendar year in which the Member's Required Commencement Date falls, or by such later date permitted by the Committee. If the Member fails to make an election by such date, the Member's Account balances shall be distributed under option (I). -36-

If the Member's Account balances are to be distributed under option (I), the initial lump sum payment shall be made no earlier than by the November 1 of the calendar year preceding the calendar year in which the Member's Required Commencement Date falls and no later than by the Member's Required Commencement Date, and the amount of such payment shall be determined at the close of the last business day immediately preceding the time the payment is made. Thereafter, pursuant to option (I), a lump sum payment shall be made once each calendar year, beginning with the calendar year in which the Member's Required Commencement Date falls, on or after August 1 of the year. The amount of each such payment shall be determined at the close of the last business day immediately preceding the time the payment is made. If the Member's Account balances are to be distributed under option (II), the initial installment payment shall be made no earlier than by the November 1 of the calendar year preceding the calendar year in which the Member's Required Commencement Date falls and no later than by the Member's Required Commencement Date, and with respect to the remaining installment payments, one installment payment shall be made each calendar year, beginning with the calendar year in which the Member's Required Commencement Date falls, on or after August 1 of the year. The amount of the initial installment payment shall be equal to the balance of the Member's Plan Accounts, determined at the close of the last business day immediately preceding the time the payment is made, divided by 10, and the amount of each other installment payment shall be equal to the balance of the Member's Plan Accounts, determined at the close of the last business day immediately preceding the time the payment is made, divided by the excess of (x) 10 over (y) the number of installment payments previously made. Any amounts credited to the Member's Plan Accounts after the date on which the 10th installment payment is made shall be distributed in one lump sum payment for each calendar year, beginning with the calendar year following the calendar year in which the 10th installment is made, on or after the August 1 of such year. Notwithstanding any provision in the Plan to the contrary, the amount of any payment made pursuant to this subsection (d) (4) shall be increased to the extent necessary to satisfy the requirements of Code Section

If the Member's Account balances are to be distributed under option (I), the initial lump sum payment shall be made no earlier than by the November 1 of the calendar year preceding the calendar year in which the Member's Required Commencement Date falls and no later than by the Member's Required Commencement Date, and the amount of such payment shall be determined at the close of the last business day immediately preceding the time the payment is made. Thereafter, pursuant to option (I), a lump sum payment shall be made once each calendar year, beginning with the calendar year in which the Member's Required Commencement Date falls, on or after August 1 of the year. The amount of each such payment shall be determined at the close of the last business day immediately preceding the time the payment is made. If the Member's Account balances are to be distributed under option (II), the initial installment payment shall be made no earlier than by the November 1 of the calendar year preceding the calendar year in which the Member's Required Commencement Date falls and no later than by the Member's Required Commencement Date, and with respect to the remaining installment payments, one installment payment shall be made each calendar year, beginning with the calendar year in which the Member's Required Commencement Date falls, on or after August 1 of the year. The amount of the initial installment payment shall be equal to the balance of the Member's Plan Accounts, determined at the close of the last business day immediately preceding the time the payment is made, divided by 10, and the amount of each other installment payment shall be equal to the balance of the Member's Plan Accounts, determined at the close of the last business day immediately preceding the time the payment is made, divided by the excess of (x) 10 over (y) the number of installment payments previously made. Any amounts credited to the Member's Plan Accounts after the date on which the 10th installment payment is made shall be distributed in one lump sum payment for each calendar year, beginning with the calendar year following the calendar year in which the 10th installment is made, on or after the August 1 of such year. Notwithstanding any provision in the Plan to the contrary, the amount of any payment made pursuant to this subsection (d) (4) shall be increased to the extent necessary to satisfy the requirements of Code Section 401 (a) (9), including the incidental death benefit requirements of Code Section 401 (a) (9) (G}, and the regulations, rulings or notices issued thereunder. -37-

(e) The Member's Death. In the case of a Member who dies and, immediately following his death, has a balance to his credit in the Vested Portion of his Plan Accounts, such balance shall be distributed to his Beneficiary, in a single lump sum payment, as soon as practicable after his death. For this purpose, such balance shall be determined as of the close of the last business day immediately preceding the time such distribution is made. In all events, such distribution shall be made not later than by the final day of the Plan Year next following the Plan Year in which the Member died. (f) Cash Payments. All distributions under this Section 7.1 shall be made in cash. 7.2. Hardship Withdrawals. A Member who is in Service, and who has not attained age 59 1/2, may make a hardship withdrawal from his 401(k) Contribution Account subject to the following conditions: (a) The withdrawal must be for: (1) expenses for "medical care", as defined in Section 213(d) of the Code, incurred by the Member, the Member's spouse or any "dependent" of the Member, as defined in Section 152 of the Code; (2) costs directly related to the purchase of the Member's principal residence (excluding mortgage payments}; (3) payments necessary to prevent the eviction of the Member from, or the foreclosure of the mortgage on, his principal residence; or (4) payment of tuition and related educational fees for the next 12 months of post-secondary education for the Member, or for the Member's spouse, children or dependents (as defined in (1) above) . In addition to the above, the Committee may, in its sole discretion, permit a Member to make a withdrawal in any

(e) The Member's Death. In the case of a Member who dies and, immediately following his death, has a balance to his credit in the Vested Portion of his Plan Accounts, such balance shall be distributed to his Beneficiary, in a single lump sum payment, as soon as practicable after his death. For this purpose, such balance shall be determined as of the close of the last business day immediately preceding the time such distribution is made. In all events, such distribution shall be made not later than by the final day of the Plan Year next following the Plan Year in which the Member died. (f) Cash Payments. All distributions under this Section 7.1 shall be made in cash. 7.2. Hardship Withdrawals. A Member who is in Service, and who has not attained age 59 1/2, may make a hardship withdrawal from his 401(k) Contribution Account subject to the following conditions: (a) The withdrawal must be for: (1) expenses for "medical care", as defined in Section 213(d) of the Code, incurred by the Member, the Member's spouse or any "dependent" of the Member, as defined in Section 152 of the Code; (2) costs directly related to the purchase of the Member's principal residence (excluding mortgage payments}; (3) payments necessary to prevent the eviction of the Member from, or the foreclosure of the mortgage on, his principal residence; or (4) payment of tuition and related educational fees for the next 12 months of post-secondary education for the Member, or for the Member's spouse, children or dependents (as defined in (1) above) . In addition to the above, the Committee may, in its sole discretion, permit a Member to make a withdrawal in any circumstance which the Committee determines to be an "immediate and heavy financial need", within the meaning of Section 1.401(k)-1(d) (2) (iii) of the Treasury regulations. (b) The amount withdrawn may not exceed the lesser of (1) the amount of the Member's immediate and heavy financial need, determined in accordance with Section 1.401(k)- 1(d) (2) (iv) (B) (1) of the Treasury regulations, attributable to the matter for which the hardship withdrawal is requested or (2) the aggregate amount of 401(k) Contribu-38-

tions that have been contributed to the Plan on the Member's behalf as of the day of the withdrawal, less the aggregate amount of 401(k) Contributions that were previously withdrawn by the Member under this Section 7.2. (c) The Member must have obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under this Plan and all other plans maintained by the Employer or any other entity described in Section 1.19(f) (2), (3) or (4), to the extent obtaining such distributions or loans is required under Section 401(k) of the Code and the regulations, rulings or notices issued thereunder. (d) Notwithstanding any other provision in Article 3 to the contrary, no 401(k) Contributions or Voluntary Contributions may be made to the Plan, and no elective contributions or employee contributions may be made to any other plan (qualified or nonqualified) of deferred compensation maintained by the Employer or any other entity described in Section 1.19(f) (2), (3) or (4), by or on behalf of the Member for a period of 12 months following the day of the Member's receipt of a hardship withdrawal hereunder. (e) Notwithstanding the provisions of Section 4.1, the maximum amount of 401(k) Contributions that may be made to the Plan on the Member's behalf for the Plan Year next following the Plan Year in which the Member receives a hardship withdrawal shall not exceed the dollar limit applicable to 401(k) Contributions under Section 402(g) of the Code for such next following year, less the amount of the 401(k) Contributions made on the

tions that have been contributed to the Plan on the Member's behalf as of the day of the withdrawal, less the aggregate amount of 401(k) Contributions that were previously withdrawn by the Member under this Section 7.2. (c) The Member must have obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under this Plan and all other plans maintained by the Employer or any other entity described in Section 1.19(f) (2), (3) or (4), to the extent obtaining such distributions or loans is required under Section 401(k) of the Code and the regulations, rulings or notices issued thereunder. (d) Notwithstanding any other provision in Article 3 to the contrary, no 401(k) Contributions or Voluntary Contributions may be made to the Plan, and no elective contributions or employee contributions may be made to any other plan (qualified or nonqualified) of deferred compensation maintained by the Employer or any other entity described in Section 1.19(f) (2), (3) or (4), by or on behalf of the Member for a period of 12 months following the day of the Member's receipt of a hardship withdrawal hereunder. (e) Notwithstanding the provisions of Section 4.1, the maximum amount of 401(k) Contributions that may be made to the Plan on the Member's behalf for the Plan Year next following the Plan Year in which the Member receives a hardship withdrawal shall not exceed the dollar limit applicable to 401(k) Contributions under Section 402(g) of the Code for such next following year, less the amount of the 401(k) Contributions made on the Member's behalf for the Plan Year in which such hardship withdrawal is received . (f) A Member who wishes to make a withdrawal hereunder shall file a written request with the Committee setting forth the amount he wishes to withdraw. The Member's request shall include such information as to the amount needed by the Member, the reason for the withdrawal and the Member's financial need for such withdrawal as required to enable the Committee to make a determination as to whether or not the conditions set forth herein for a hardship withdrawal will be met in the Member's case. However, if the Committee so permits, and subject to such rules and guidelines as the Committee may have promulgated, a Member may use the telephone service made available by the Trustee to communicate the foregoing information directly to the Trustee in request -39-

for a withdrawal. A Member requesting a withdrawal shall complete such forms as are prescribed by the Committee and/or the Trustee in support of his request. A withdrawal cannot be made from the Member's 401(k) Contribution Account to the extent there is an unpaid amount outstanding on any loan to the Member from such Account. Amounts withdrawn from the Member's 401 (k) Contribution Account shall be deemed to have been withdrawn, pro rata, from each Mutual Fund in which such Account was invested at the time of the withdrawal. Any withdrawal hereunder shall be paid in the form of a lump sum cash payment. 7.3. In-Service Withdrawals. A Member who is in Service shall be permitted to make withdrawals from his Plan Accounts as follows: (a) Voluntary Contribution and Rollover Account. A Member may, at any time, make a withdrawal of all or any portion of the balance of his Voluntary Contribution Account or Rollover Account. (b) Attainment of Age 59 1/2. A Member who has attained age 59 1/2 may, at any time and in addition to the withdrawals permitted under subsection(a) above, make a withdrawal of all or any portion of the balance of his 401(k) Contribution Account . (c) Rules of Application. Withdrawals made pursuant to this Section 7.3 shall be made in accordance with the following rules. A Member who wishes to make a withdrawal hereunder shall file a written request with the Committee, setting forth the amount he wishes to withdraw and specifying the Account or Accounts from which such withdrawal is to be made. However, if the Committee so permits, and subject to such rules and guidelines as the Committee may have promulgated, a Member may use the telephone service made available by the Trustee to communicate the foregoing information directly to the

for a withdrawal. A Member requesting a withdrawal shall complete such forms as are prescribed by the Committee and/or the Trustee in support of his request. A withdrawal cannot be made from the Member's 401(k) Contribution Account to the extent there is an unpaid amount outstanding on any loan to the Member from such Account. Amounts withdrawn from the Member's 401 (k) Contribution Account shall be deemed to have been withdrawn, pro rata, from each Mutual Fund in which such Account was invested at the time of the withdrawal. Any withdrawal hereunder shall be paid in the form of a lump sum cash payment. 7.3. In-Service Withdrawals. A Member who is in Service shall be permitted to make withdrawals from his Plan Accounts as follows: (a) Voluntary Contribution and Rollover Account. A Member may, at any time, make a withdrawal of all or any portion of the balance of his Voluntary Contribution Account or Rollover Account. (b) Attainment of Age 59 1/2. A Member who has attained age 59 1/2 may, at any time and in addition to the withdrawals permitted under subsection(a) above, make a withdrawal of all or any portion of the balance of his 401(k) Contribution Account . (c) Rules of Application. Withdrawals made pursuant to this Section 7.3 shall be made in accordance with the following rules. A Member who wishes to make a withdrawal hereunder shall file a written request with the Committee, setting forth the amount he wishes to withdraw and specifying the Account or Accounts from which such withdrawal is to be made. However, if the Committee so permits, and subject to such rules and guidelines as the Committee may have promulgated, a Member may use the telephone service made available by the Trustee to communicate the foregoing information directly to the Trustee in request for a withdrawal. A Member requesting a withdrawal shall complete such forms as are prescribed by the Committee and/or the Trustee in support of his request. A withdrawal cannot be made from an Account to the extent there is an unpaid amount outstanding on any loan to the Member from such Account. Amounts withdrawn from any Account shall be deemed to have been withdrawn, pro rata, from each Mutual Fund in which such Account was invested at the time of the withdrawal. For the purpose of this Section 7.3, the balance of any Account shall be determined as of the close -40-

of the last business day immediately preceding the time the withdrawal is made. Any withdrawal hereunder shall be made in the form of a lump sum cash payment. 7.4. Direct Rollovers. This Section 7.4 applies to any distribution made under Section 7.1, 7.2 or 7.3 on or after January 1, 1993, to the extent that such distribution is an "Eligible Rollover Distribution". Notwithstanding any provision of the Plan to the contrary, the "Payee" of any Eligible Rollover Distribution made under Section 7.1, 7.2 or 7.3 may elect, at the time and in the manner prescribed by the Committee, to have all or any portion of such distribution paid as a "Direct Rollover" to an "Eligible Retirement Plan" specified by the Payee. For the purpose of this Section 7.4, the following definitions shall apply. An "Eligible Rollover Distribution" is defined as under Section 402 (c) (4) of the Code and the applicable Treasury regulations. An "Eligible Retirement Plan" is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, a qualified annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that will accept a Direct Rollover of the Payee's distribution. However, if the Payee is the surviving spouse of a Member, only an individual retirement account or individual retirement annuity described above may be an Eligible Retirement Plan. A "Payee" is any person.who is entitled to receive a distribution from the Plan, and who is a Member, the surviving spouse of a Member, or the spouse or former spouse of a Member who is entitled to receive the distribution as the alternate payee under a "qualified domestic relations order", as defined in Section 414(p) of the Code. A "Direct Rollover" is a direct payment of a distribution by the Plan to the Eligible Retirement Plan specified by the Payee, made in accordance with Section 401 (a) (31) of the Code and the

of the last business day immediately preceding the time the withdrawal is made. Any withdrawal hereunder shall be made in the form of a lump sum cash payment. 7.4. Direct Rollovers. This Section 7.4 applies to any distribution made under Section 7.1, 7.2 or 7.3 on or after January 1, 1993, to the extent that such distribution is an "Eligible Rollover Distribution". Notwithstanding any provision of the Plan to the contrary, the "Payee" of any Eligible Rollover Distribution made under Section 7.1, 7.2 or 7.3 may elect, at the time and in the manner prescribed by the Committee, to have all or any portion of such distribution paid as a "Direct Rollover" to an "Eligible Retirement Plan" specified by the Payee. For the purpose of this Section 7.4, the following definitions shall apply. An "Eligible Rollover Distribution" is defined as under Section 402 (c) (4) of the Code and the applicable Treasury regulations. An "Eligible Retirement Plan" is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, a qualified annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that will accept a Direct Rollover of the Payee's distribution. However, if the Payee is the surviving spouse of a Member, only an individual retirement account or individual retirement annuity described above may be an Eligible Retirement Plan. A "Payee" is any person.who is entitled to receive a distribution from the Plan, and who is a Member, the surviving spouse of a Member, or the spouse or former spouse of a Member who is entitled to receive the distribution as the alternate payee under a "qualified domestic relations order", as defined in Section 414(p) of the Code. A "Direct Rollover" is a direct payment of a distribution by the Plan to the Eligible Retirement Plan specified by the Payee, made in accordance with Section 401 (a) (31) of the Code and the Treasury regulations, and the rulings and notices issued by the Internal Revenue Service, thereunder, and made in such manner as prescribed by the Committee . 7.5. Loans. The Committee shall establish and administer a loan program for Members. Loans shall be made to a Member by the Trustee pursuant to said program in accordance with the following rules: (a) Generally, loans under the Plan shall: (1) be available to all Members on a reasonably equivalent basis, (2) not be made available to Highly Compensated Employees in an amount greater than the amount made available to other Employees, (3) be made in accordance -41-

with the specific provisions herein, (4) bear a reasonable rate of interest, and (5) be adequately secured. (b) A loan may be made to a Member only while such Member is in Service. A loan may be made only from a Member's 401(k) Contribution Account, Rollover Account or Employer Contribution Account. A loan may not be taken from an Account while there is any outstanding balance on a loan previously taken from that Account. A loan may be made from a Member's 401(k) Contribution Account or Rollover Account for any purpose. A loan may be made from a Member's Employer Contribution Account to pay one or more of the following: (1) expenses for "medical care", as defined in Section 213 (d) of the Code, incurred by the Member, the Member's spouse or any "dependent" of the Member, as defined in Section 152 of the Code; (2) costs directly related to the purchase or repair of the Member's principal residence (excluding mortgage payments); (3) payments necessary to prevent the eviction of the Member from, or the foreclosure of the Mortgage on, his principal residence; (4) costs directly related to the purchase or repair of any vehicle needed by the Member in connection with his employment by the Employer; (5) expenses for a funeral of any member of the Member's family;

with the specific provisions herein, (4) bear a reasonable rate of interest, and (5) be adequately secured. (b) A loan may be made to a Member only while such Member is in Service. A loan may be made only from a Member's 401(k) Contribution Account, Rollover Account or Employer Contribution Account. A loan may not be taken from an Account while there is any outstanding balance on a loan previously taken from that Account. A loan may be made from a Member's 401(k) Contribution Account or Rollover Account for any purpose. A loan may be made from a Member's Employer Contribution Account to pay one or more of the following: (1) expenses for "medical care", as defined in Section 213 (d) of the Code, incurred by the Member, the Member's spouse or any "dependent" of the Member, as defined in Section 152 of the Code; (2) costs directly related to the purchase or repair of the Member's principal residence (excluding mortgage payments); (3) payments necessary to prevent the eviction of the Member from, or the foreclosure of the Mortgage on, his principal residence; (4) costs directly related to the purchase or repair of any vehicle needed by the Member in connection with his employment by the Employer; (5) expenses for a funeral of any member of the Member's family; (6) unpaid income or real estate taxes, legal fees, or liabilities associated with the Member's divorce; or (7) payment of tuition and related educational fees for the next 12 months of post-secondary education for the Member, or for the Member's spouse, children or dependents (as defined in (1) above) . In addition to the above, the Committee may, in its sole discretion, permit a Member to take a loan from his Employer Contribution Account in any circumstance which the Committee determines to be a hardship. The amount of any loan to a Member from an Account shall be withdrawn, pro-rata, from each Mutual Fund in which the balance of such Account is invested at the time -42-

of the loan. The Account from which the loan is made shall be charged with such fees with respect to the loan as the Trustee and the Committee shall agree from time to time . (c) A Member shall request a loan by filing a written request with the Committee, in advance of the loan, setting forth the amount and term of the loan desired, the Account from which the loan is to be made, and, if the loan is to be made from the Member's Employer Contribution Account, the purpose for which the loan is requested. However, if the Committee so permits, and subject to such rules and guidelines as the Committee may have promulgated, a Member may use the telephone service made available by the Trustee to communicate the foregoing information directly to the Trustee in application for a loan. A Member requesting a loan shall complete such forms and documents as are prescribed by the Committee and/or the Trustee to obtain the loan. (d) Each loan must be for a minimum amount of at least $1,000. The amount of any loan, when added to the outstanding balance of all other Plan loans to the Member, shall not exceed the least of: (1) $50,000, reduced by the excess (if any) of (i) . the highest outstanding balance of Plan loans to the Member during the one year period ending the day before the loan is to be made over (ii) the outstanding balance of Plan loans to the Member on the day the loan is made; (2) one-half of the Vested Portion of the balance of the Member's Plan Accounts; or (3) either (i) in the case of a loan to be made from the Member's Employer Contribution Account, one-half of the

of the loan. The Account from which the loan is made shall be charged with such fees with respect to the loan as the Trustee and the Committee shall agree from time to time . (c) A Member shall request a loan by filing a written request with the Committee, in advance of the loan, setting forth the amount and term of the loan desired, the Account from which the loan is to be made, and, if the loan is to be made from the Member's Employer Contribution Account, the purpose for which the loan is requested. However, if the Committee so permits, and subject to such rules and guidelines as the Committee may have promulgated, a Member may use the telephone service made available by the Trustee to communicate the foregoing information directly to the Trustee in application for a loan. A Member requesting a loan shall complete such forms and documents as are prescribed by the Committee and/or the Trustee to obtain the loan. (d) Each loan must be for a minimum amount of at least $1,000. The amount of any loan, when added to the outstanding balance of all other Plan loans to the Member, shall not exceed the least of: (1) $50,000, reduced by the excess (if any) of (i) . the highest outstanding balance of Plan loans to the Member during the one year period ending the day before the loan is to be made over (ii) the outstanding balance of Plan loans to the Member on the day the loan is made; (2) one-half of the Vested Portion of the balance of the Member's Plan Accounts; or (3) either (i) in the case of a loan to be made from the Member's Employer Contribution Account, one-half of the Vested Portion of the balance of such Account, or (ii) in any other case, the Vested Portion of the balance of the Account from which the loan is to be made. (e) For the purpose of this Section 7.5, the Vested Portion of the balance of the Member's Plan Accounts, individually and in the aggregate, shall be determined as of the close of the last business day immediately preceding the time the loan is made. (f) The loan shall be evidenced by a Promissory Note in such form and containing such terms and condi-43-

tions as are herein required and as the Committee otherwise determines . (g) Each loan shall provide for repayment of principal and interest in level monthly installments over its term. Repayments shall commence with the month following the month in which the loan is made. The monthly installments of Members shall be deducted proportionately from each of their paychecks from the Employer for the month and remitted by the Employer to the Trustee, or shall be made in such other manner as prescribed by the Committee. Repayments shall be suspended, for up to one year, for periods during which the Member is taking an unpaid leave of absence from the Employer due to temporary disability. (h) The loan shall be for a term to be selected by the Member with the approval of the Committee. The term for a loan from the Member's Employer Contribution Account shall not exceed three years. The term for a loan from the Member's 401(k) Contribution Account or Rollover Account shall not exceed five years, or, if the proceeds of such loan are to be used to acquire any dwelling unit which, within a reasonable time, is to be used as the Member's principal residence, the term of such loan shall not exceed 15 years. Notwithstanding the above, the loan shall provide that all unpaid amounts of principal and interest shall become immediately due and payable one month after the Member's Termination of Service . (i) The interest rate charged on any loan from the Plan shall represent a prevailing interest rate charged on similar personal loans granted under like circumstances by persons in the business of lending money, as determined under rules of uniform application issued by the Committee from time to time. (j) The amount of the outstanding balance of any loan shall, itself, be deemed to be an investment of the Member's Account from which the loan was made. No Earnings shall be credited or charged to such Account under Section 6.3 with respect to the amount of the outstanding balance of any Plan loan. Repayments on the loan shall be credited to such Account, and shall be invested in accordance with the Member's investment

tions as are herein required and as the Committee otherwise determines . (g) Each loan shall provide for repayment of principal and interest in level monthly installments over its term. Repayments shall commence with the month following the month in which the loan is made. The monthly installments of Members shall be deducted proportionately from each of their paychecks from the Employer for the month and remitted by the Employer to the Trustee, or shall be made in such other manner as prescribed by the Committee. Repayments shall be suspended, for up to one year, for periods during which the Member is taking an unpaid leave of absence from the Employer due to temporary disability. (h) The loan shall be for a term to be selected by the Member with the approval of the Committee. The term for a loan from the Member's Employer Contribution Account shall not exceed three years. The term for a loan from the Member's 401(k) Contribution Account or Rollover Account shall not exceed five years, or, if the proceeds of such loan are to be used to acquire any dwelling unit which, within a reasonable time, is to be used as the Member's principal residence, the term of such loan shall not exceed 15 years. Notwithstanding the above, the loan shall provide that all unpaid amounts of principal and interest shall become immediately due and payable one month after the Member's Termination of Service . (i) The interest rate charged on any loan from the Plan shall represent a prevailing interest rate charged on similar personal loans granted under like circumstances by persons in the business of lending money, as determined under rules of uniform application issued by the Committee from time to time. (j) The amount of the outstanding balance of any loan shall, itself, be deemed to be an investment of the Member's Account from which the loan was made. No Earnings shall be credited or charged to such Account under Section 6.3 with respect to the amount of the outstanding balance of any Plan loan. Repayments on the loan shall be credited to such Account, and shall be invested in accordance with the Member's investment election with respect to New Money to be credited to such Account then in effect under Section 6.2. (k) The loan shall be secured by the portion of the Member's Account deemed to be invested in the out-44-

standing balance of the loan. As a condition of any loan to a Member hereunder, the Member shall agree in writing that in the event of a default by the Member on such loan, to the extent that such Account is being used as a security for the loan, such Account shall be reduced as an offset against the Member's obligation to repay any amount outstanding on such loan; provided, however, that no such reduction of the Member's 401(k) Contribution Account may be made until the earliest of the Member's attainment of age 59 1/2, his becoming Disabled or his Termination of Service. (1) If any portion of the loan remains outstanding at the time the Account from which the loan was made is to be distributed under Section 7.1, to the extent such Account is being used as security for the loan, the amount then distributable under Section 7.1 from such Account shall be reduced to offset the outstanding loan balance . (m) The failure to make any payment under the loan when due shall constitute a default on the loan. However, the Committee may, in its sole discretion, grant any Member who has failed to make any payment on a loan by its due date a grace period, not exceeding 30 days after such due date, during which the Member may make such payment and avoid a default on the loan. In the event of a default, the balance of the Member's Account from which the loan was made, to the extent such Account is being used as security for the loan, shall be reduced as an offset against the Member's obligations under the loan as provided in subsection (k) . In addition, the Committee shall take any commercially reasonable action it deems necessary or desirable to satisfy any remaining obligations under the loan. (n) Each loan hereunder shall be subject to such other terms and conditions as the Committee may require under rules of uniform application issued by the Committee from time to time. ARTICLE 8 - PLAN ADMINISTRATION

standing balance of the loan. As a condition of any loan to a Member hereunder, the Member shall agree in writing that in the event of a default by the Member on such loan, to the extent that such Account is being used as a security for the loan, such Account shall be reduced as an offset against the Member's obligation to repay any amount outstanding on such loan; provided, however, that no such reduction of the Member's 401(k) Contribution Account may be made until the earliest of the Member's attainment of age 59 1/2, his becoming Disabled or his Termination of Service. (1) If any portion of the loan remains outstanding at the time the Account from which the loan was made is to be distributed under Section 7.1, to the extent such Account is being used as security for the loan, the amount then distributable under Section 7.1 from such Account shall be reduced to offset the outstanding loan balance . (m) The failure to make any payment under the loan when due shall constitute a default on the loan. However, the Committee may, in its sole discretion, grant any Member who has failed to make any payment on a loan by its due date a grace period, not exceeding 30 days after such due date, during which the Member may make such payment and avoid a default on the loan. In the event of a default, the balance of the Member's Account from which the loan was made, to the extent such Account is being used as security for the loan, shall be reduced as an offset against the Member's obligations under the loan as provided in subsection (k) . In addition, the Committee shall take any commercially reasonable action it deems necessary or desirable to satisfy any remaining obligations under the loan. (n) Each loan hereunder shall be subject to such other terms and conditions as the Committee may require under rules of uniform application issued by the Committee from time to time. ARTICLE 8 - PLAN ADMINISTRATION 8.1. Responsibility for Administering the Plan. Authority to control and manage the operation and administration of the Plan shall rest exclusively with the Committee, except as to those responsibilities and powers reserved or granted to the Trustee under Section 8.5, and to the Company's Board of Directors under Section 8.6. -45-

8.2. Responsibilities of the Committee. The Committee shall be a "named fiduciary" of the Plan within the meaning of Section 402(a) of ERISA, the "administrator" of the Plan within the meaning of Section 3 (16) (A) of ERISA, and the "plan administrator" within the meaning of Section 414(g) of the Code. The Committee shall have the following responsibilities with respect to the administration of the Plan: (a) to furnish Members (and other individuals entitled to receive same) with such reports, notifications, documents, statements, information and explanations with respect to the Plan as may be required under the provisions hereof and by the Code and ERISA; (b) to file with the appropriate governmental agencies all reports with respect to the Plan required by the Code, ERISA or any other applicable statute; (c) to engage an independent certified public accountant to perform such functions with respect to the Plan as may be required of the Committee by ERISA; (d) to direct the Trustee to pay out of the Trust Fund all amounts which are payable hereunder to Members or their surviving spouses or other beneficiaries, any contributions to be returned to the Employer under Section 11.1 and any taxes (including interest and penalties) that may be levied or assessed on the Trust's assets or the income thereof; (e) to interpret the Plan, to decide all questions that may arise as to the construction or application of any of its provisions and, in accordance with the claims procedure set forth in Section 8.7, to make all final determinations as to the rights of Members or their surviving spouses or other beneficiaries to benefits under the Plan. Any determination made by the Committee as to the interpretation, construction or application of the Plan, or as to the rights of any Member or any other person to benefits under the Plan, shall be conclusive and binding on all

8.2. Responsibilities of the Committee. The Committee shall be a "named fiduciary" of the Plan within the meaning of Section 402(a) of ERISA, the "administrator" of the Plan within the meaning of Section 3 (16) (A) of ERISA, and the "plan administrator" within the meaning of Section 414(g) of the Code. The Committee shall have the following responsibilities with respect to the administration of the Plan: (a) to furnish Members (and other individuals entitled to receive same) with such reports, notifications, documents, statements, information and explanations with respect to the Plan as may be required under the provisions hereof and by the Code and ERISA; (b) to file with the appropriate governmental agencies all reports with respect to the Plan required by the Code, ERISA or any other applicable statute; (c) to engage an independent certified public accountant to perform such functions with respect to the Plan as may be required of the Committee by ERISA; (d) to direct the Trustee to pay out of the Trust Fund all amounts which are payable hereunder to Members or their surviving spouses or other beneficiaries, any contributions to be returned to the Employer under Section 11.1 and any taxes (including interest and penalties) that may be levied or assessed on the Trust's assets or the income thereof; (e) to interpret the Plan, to decide all questions that may arise as to the construction or application of any of its provisions and, in accordance with the claims procedure set forth in Section 8.7, to make all final determinations as to the rights of Members or their surviving spouses or other beneficiaries to benefits under the Plan. Any determination made by the Committee as to the interpretation, construction or application of the Plan, or as to the rights of any Member or any other person to benefits under the Plan, shall be conclusive and binding on all parties; (f) to promulgate such rules and regulations, and prescribe such forms and manuals, as it shall deem appropriate for the efficient administration of the Plan, and to maintain all data, records and documents with respect to the Plan that may be necessary for its operation and administration or that may be required to be maintained by law; -46-

(g) to employ suitable agents and legal counsel (who may be the same as legal counsel for the Employer) to advise or assist the Committee with respect to any of its duties hereunder; (h) to establish and carry out a funding policy and method for the Plan consistent with the objectives of the Plan and with the requirements of ERISA, and to communicate such funding policy and method to the Trustee; and (i) to perform such other duties and responsibilities as are specifically assigned to it hereunder or under the Trust Agreement, or as may be necessary for the Plan to be operated and administered in accordance with the requirements of the Code and ERISA. 8.3. Duties and Powers of the Committee. In carrying out its responsibilities under Section 8.2, the Committee shall comply with the standards of conduct set forth in subsection (a) and shall have the powers set forth in subsection (b) . (a) Standards of Conduct. The Committee shall discharge its duties under the Plan solely in the interest of the Members and their surviving spouses or other beneficiaries (subject, however, to the provisions of Section 11.1); and (1) for the exclusive purpose of providing benefits to Members and their surviving spouses or other beneficiaries and defraying the reasonable expenses of administering the Plan; (2) with the skill, care, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

(g) to employ suitable agents and legal counsel (who may be the same as legal counsel for the Employer) to advise or assist the Committee with respect to any of its duties hereunder; (h) to establish and carry out a funding policy and method for the Plan consistent with the objectives of the Plan and with the requirements of ERISA, and to communicate such funding policy and method to the Trustee; and (i) to perform such other duties and responsibilities as are specifically assigned to it hereunder or under the Trust Agreement, or as may be necessary for the Plan to be operated and administered in accordance with the requirements of the Code and ERISA. 8.3. Duties and Powers of the Committee. In carrying out its responsibilities under Section 8.2, the Committee shall comply with the standards of conduct set forth in subsection (a) and shall have the powers set forth in subsection (b) . (a) Standards of Conduct. The Committee shall discharge its duties under the Plan solely in the interest of the Members and their surviving spouses or other beneficiaries (subject, however, to the provisions of Section 11.1); and (1) for the exclusive purpose of providing benefits to Members and their surviving spouses or other beneficiaries and defraying the reasonable expenses of administering the Plan; (2) with the skill, care, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (3) in accordance with the documents and instruments governing the Plan insofar as such documents and instruments are consistent with the provisions of ERISA; and (4) in accordance with such other applicable standards as may be prescribed by ERISA for Plan fiduciaries . In addition, the Committee shall maintain a written record of all actions taken by it and determinations made by it in carrying out its responsibilities under the Plan, and -47-

shall prepare and submit to the Company's Board of Directors such written reports relating to its responsibilities under the Plan as the Board may request of it from time to time. Any action to be taken by the Committee hereunder shall be taken upon the affirmative vote of at least a majority of all persons serving on the Committee, except as otherwise permitted under subsection (b) (1) . Any direction to be given by the Committee hereunder in effecting any action may be given by any person serving on the Committee, unless the duty to give such direction with respect to such action has been allocated to a specific person or persons serving on the Committee under subsection (b) (1). (b) Powers. The Committee shall have the following powers: (1) The persons serving on the Committee may allocate specific duties and responsibilities among themselves. Any such allocation shall be made pursuant to a written instrument, signed by all such persons, and setting forth (i) the duties or responsibilities so allocated, (ii) the person or persons to whom such duties or responsibilities are allocated, and (iii) the period of time for which such allocation is to be effective. If any duty or responsibility is so allocated, a person to whom such duty or responsibility has not been allocated shall not be liable for any act or omission of the person or persons to whom such duty or responsibility has been allocated, except as may otherwise be provided under Section 405(b) (2) of ERISA; (2) The Committee may designate persons other than persons serving on the Committee to carry out any fiduciary responsibility, other than a "trustee responsibility" within the meaning of Section 405(c) (3) of ERISA. Any such designation shall be made pursuant to a written instrument setting forth (i) the duties or responsibilities so delegated, (ii) the person or persons to whom such duties or responsibilities are

shall prepare and submit to the Company's Board of Directors such written reports relating to its responsibilities under the Plan as the Board may request of it from time to time. Any action to be taken by the Committee hereunder shall be taken upon the affirmative vote of at least a majority of all persons serving on the Committee, except as otherwise permitted under subsection (b) (1) . Any direction to be given by the Committee hereunder in effecting any action may be given by any person serving on the Committee, unless the duty to give such direction with respect to such action has been allocated to a specific person or persons serving on the Committee under subsection (b) (1). (b) Powers. The Committee shall have the following powers: (1) The persons serving on the Committee may allocate specific duties and responsibilities among themselves. Any such allocation shall be made pursuant to a written instrument, signed by all such persons, and setting forth (i) the duties or responsibilities so allocated, (ii) the person or persons to whom such duties or responsibilities are allocated, and (iii) the period of time for which such allocation is to be effective. If any duty or responsibility is so allocated, a person to whom such duty or responsibility has not been allocated shall not be liable for any act or omission of the person or persons to whom such duty or responsibility has been allocated, except as may otherwise be provided under Section 405(b) (2) of ERISA; (2) The Committee may designate persons other than persons serving on the Committee to carry out any fiduciary responsibility, other than a "trustee responsibility" within the meaning of Section 405(c) (3) of ERISA. Any such designation shall be made pursuant to a written instrument setting forth (i) the duties or responsibilities so delegated, (ii) the person or persons to whom such duties or responsibilities are delegated, and (iii) the period of time for which such delegation is to be effective. If any fiduciary responsibility is so delegated, the Committee shall not be liable for any act or omission of the person or persons designated by it to carry out such responsibility, except as otherwise provided under Section 405(c) (2) of ERISA. Any person to whom fiduciary responsibilities are so delegated shall perform such responsibilities in accordance with the standards of conduct set forth in subsection (a) of this Section ; -48-

(3) The Committee, and any person to whom fiduciary responsibilities are delegated by it under subsection (b) (2) above, may employ attorneys, accountants, actuaries, and other consultants or advisors to render advice to or otherwise to assist them in carrying out their responsibilities under the Plan; and (4) The Committee shall have all other powers necessary to enable it to carry out its responsibilities under Section 8.2. 8.4. Reimbursement and Indemnification of the Committee. The persons serving on the Committee, and any persons designated by the Committee to perform fiduciary responsibilities pursuant to Section 8.3(b) (2), shall not receive any compensation for their services as such, but shall be reimbursed by the Company for all reasonable expenses incurred by them in the performance of their duties hereunder. The persons serving on the Committee, and any other persons designated by the Committee to perform fiduciary responsibilities pursuant to Section 8.3(b) (2), shall be indemnified and held harmless by the Company and each other Employer for any liability or loss (including legal fees or other expenses of litigation) arising out of or in connection with their services to the Plan in such capacity, to the extent that such liability or loss (a) is not insured against under any applicable policy of insurance (whether or not maintained by the Employer) and (b) is not determined to be due to their gross negligence or willful misconduct. 8.5. Responsibilities of the Trustee. The Trustee shall have the following responsibilities and powers in connection with the Plan: (a) to hold all amounts contributed to the Plan by the Employer, any income thereon and any other Plan assets, as part of the Trust Fund; (b) to make payments out of the Trust Fund in accordance with the instructions of the Committee; (c) to hold and control the Trust Fund, and to invest the Trust Fund in accordance with any directions received

(3) The Committee, and any person to whom fiduciary responsibilities are delegated by it under subsection (b) (2) above, may employ attorneys, accountants, actuaries, and other consultants or advisors to render advice to or otherwise to assist them in carrying out their responsibilities under the Plan; and (4) The Committee shall have all other powers necessary to enable it to carry out its responsibilities under Section 8.2. 8.4. Reimbursement and Indemnification of the Committee. The persons serving on the Committee, and any persons designated by the Committee to perform fiduciary responsibilities pursuant to Section 8.3(b) (2), shall not receive any compensation for their services as such, but shall be reimbursed by the Company for all reasonable expenses incurred by them in the performance of their duties hereunder. The persons serving on the Committee, and any other persons designated by the Committee to perform fiduciary responsibilities pursuant to Section 8.3(b) (2), shall be indemnified and held harmless by the Company and each other Employer for any liability or loss (including legal fees or other expenses of litigation) arising out of or in connection with their services to the Plan in such capacity, to the extent that such liability or loss (a) is not insured against under any applicable policy of insurance (whether or not maintained by the Employer) and (b) is not determined to be due to their gross negligence or willful misconduct. 8.5. Responsibilities of the Trustee. The Trustee shall have the following responsibilities and powers in connection with the Plan: (a) to hold all amounts contributed to the Plan by the Employer, any income thereon and any other Plan assets, as part of the Trust Fund; (b) to make payments out of the Trust Fund in accordance with the instructions of the Committee; (c) to hold and control the Trust Fund, and to invest the Trust Fund in accordance with any directions received from the Committee and the Members which are proper, and which are in accordance with the terms of the Plan and the requirements of ERISA; and (d) to perform such other responsibilities and duties in connection with the Plan and Trust as are set forth in the Trust Agreement. -49-

8.6. Responsibilities of the Company's Board of Directors. The following responsibilities and powers in connection with the Plan shall be reserved to the Board of Directors of the Company: (a) to amend or terminate the Plan; (b) to establish a committee to control and manage the operation and administration of the Plan; and to appoint, remove and replace the persons serving on such Committee, and to determine the number of persons who shall serve on such Committee; and (c) to appoint, remove and replace the Trustee. 8.7. Claims Procedure. Any claim for benefits or other payments under the Plan shall be determined in accordance with the procedure set forth below. (a) Initial Determination. Any claim for benefits or other payments under the Plan shall be made by filing a written statement of such claim with the person or persons designated by the Committee to process and make initial determinations as to such claims. In the event such claim is denied in whole or in part, such person or persons shall notify the claimant of the denial within 90 days after the date on which the claim was filed. Such notification shall be in writing and shall set forth: the specific reason or reasons for the denial; specific reference to the provisions of the Plan on which denial was based; a description of any additional material or information necessary for the claimant to perfect the claim, and an explanation of why such material or information is necessary; and an explanation of the review procedure under subsection (b) .

8.6. Responsibilities of the Company's Board of Directors. The following responsibilities and powers in connection with the Plan shall be reserved to the Board of Directors of the Company: (a) to amend or terminate the Plan; (b) to establish a committee to control and manage the operation and administration of the Plan; and to appoint, remove and replace the persons serving on such Committee, and to determine the number of persons who shall serve on such Committee; and (c) to appoint, remove and replace the Trustee. 8.7. Claims Procedure. Any claim for benefits or other payments under the Plan shall be determined in accordance with the procedure set forth below. (a) Initial Determination. Any claim for benefits or other payments under the Plan shall be made by filing a written statement of such claim with the person or persons designated by the Committee to process and make initial determinations as to such claims. In the event such claim is denied in whole or in part, such person or persons shall notify the claimant of the denial within 90 days after the date on which the claim was filed. Such notification shall be in writing and shall set forth: the specific reason or reasons for the denial; specific reference to the provisions of the Plan on which denial was based; a description of any additional material or information necessary for the claimant to perfect the claim, and an explanation of why such material or information is necessary; and an explanation of the review procedure under subsection (b) . (b) Review Procedure. A claimant whose claim is denied in whole or in part under subsection (a) shall be entitled to have such denial reviewed by the Committee, by filing a written request for such review with the Committee within 60 days after his receipt of notification of the denial of his claim under subsection (a) . Upon receipt of such request, the Committee shall make a full and fair review of the claim; and in connection with such review, the claimant shall be entitled to review pertinent documents and to submit issues and comments in writing. (c) Decision on Review. The Committee shall make a decision with respect to such claim within 60 days after its receipt of the claimant's written request for review; provided, however, that if the Committee determines that a hearing is necessary, the Committee shall hold such hearing -50-

within such 60-day period and shall make its decision within 120 days after its receipt of the claimant's request for review. The Committee's decision on review shall be in writing and shall include specific reasons for the decision and specific references to the provisions of the Plan on which its decision was based. 8.8. Agent or Service of Process. The agent to accept service of legal process on behalf of the Plan shall be such person as may be designated by the Committee, from time to time, to perform such function or, in the absence of such designation, the Committee itself. 8.9. Expenses. The Employer shall pay all of the fees and expenses of the Plan and Trust which are not specifically described in the Trust Agreement. All other fees and expenses of the Plan and Trust shall be paid by the Employer, or out of the Trust Fund, as provided in the Trust Agreement. ARTICLE 9 - AMENDMENT, MERGER AND TERMINATION 9.1. Amendment. The Company may amend this Plan at any time, by a duly adopted resolution of the Company's Board of Directors. Any such amendment may be made with retroactive effect to the extent not prohibited by law. However, no such amendment shall decrease the balance of any Member's Plan Accounts, or affect the computation of the extent to which a Member is vested in his Accounts. In addition, no such amendment shall increase the duties or liabilities of the Committee or the Trustee without their written consent. 9.2. Merger or Consolidation.

within such 60-day period and shall make its decision within 120 days after its receipt of the claimant's request for review. The Committee's decision on review shall be in writing and shall include specific reasons for the decision and specific references to the provisions of the Plan on which its decision was based. 8.8. Agent or Service of Process. The agent to accept service of legal process on behalf of the Plan shall be such person as may be designated by the Committee, from time to time, to perform such function or, in the absence of such designation, the Committee itself. 8.9. Expenses. The Employer shall pay all of the fees and expenses of the Plan and Trust which are not specifically described in the Trust Agreement. All other fees and expenses of the Plan and Trust shall be paid by the Employer, or out of the Trust Fund, as provided in the Trust Agreement. ARTICLE 9 - AMENDMENT, MERGER AND TERMINATION 9.1. Amendment. The Company may amend this Plan at any time, by a duly adopted resolution of the Company's Board of Directors. Any such amendment may be made with retroactive effect to the extent not prohibited by law. However, no such amendment shall decrease the balance of any Member's Plan Accounts, or affect the computation of the extent to which a Member is vested in his Accounts. In addition, no such amendment shall increase the duties or liabilities of the Committee or the Trustee without their written consent. 9.2. Merger or Consolidation. (a) General. In the event that the Plan is merged or consolidated with any other plan, or in the event of any transfer of assets or liabilities of the Plan to any other plan, the benefit which each Member would be entitled to receive if the Plan terminated immediately after such merger, consolidation or transfer shall be at least equal to the benefit which he would have been entitled to receive if the Plan had terminated immediately before the merger, consolidation or transfer. (b) Transfer Accounts. In the event that any Employer terminates any plan and its trust which are qualified and tax-exempt under Sections 401(a) and 501(a) of the Code, and such plan was a defined contribution plan (such plan shall be referred to below as a "Terminated Plan"), then the Committee may, in its sole discretion, permit such Employer to directly transfer to this Plan any or all of the account -51-

balances under the Terminated Plan which belong to Members in this Plan. Any such transfer shall be made in accordance with the applicable provisions of the law, and in accordance with such rules as are prescribed by the Committee. The account balances under the Terminated Plan of any Member which are so transferred to this Plan shall be held in an account referred to as a "Transfer Account" established and maintained under the Plan for such Member. A Member's interest in his Transfer Account shall be fully vested and nonforfeitable at all times. The Transfer Account shall be invested in accordance with rules and procedures which are consistent with those set forth in Article 6, as if such account was a Rollover Account. A Member may borrow from his Transfer Account under the provisions of Section 7.5 as if such Account was a Rollover Account. Any loan against the Member's account balances under the Terminated Plan which is outstanding at the time such balances are transferred to this Plan may, in the discretion of the Committee, be included in such transfer; and the Member shall repay any such loan in accordance with the terms and conditions thereof as established under the Terminated Plan. A Transfer Account shall be credited with Earnings in the manner described in Section 5.1(b) However, the balance of any Transfer Account shall be distributed, or may be withdrawn, under the same terms and conditions which applied to distributions and withdrawals from participants' accounts under the Terminated Plan (immediately prior to the termination thereof) in lieu of the terms and conditions of Article 7, and, upon Plan termination, Section 9.3(b), except that, for purposes of determining the amount of any distribution or withdrawal, the Transfer Account shall be valued as of the close of the last business day immediately preceding the time such distribution or withdrawal is made. If appropriate, the Transfer Account shall be divided into sub-accounts to account separately for any portions of the account balances transferred from the Terminated Plan which, under

balances under the Terminated Plan which belong to Members in this Plan. Any such transfer shall be made in accordance with the applicable provisions of the law, and in accordance with such rules as are prescribed by the Committee. The account balances under the Terminated Plan of any Member which are so transferred to this Plan shall be held in an account referred to as a "Transfer Account" established and maintained under the Plan for such Member. A Member's interest in his Transfer Account shall be fully vested and nonforfeitable at all times. The Transfer Account shall be invested in accordance with rules and procedures which are consistent with those set forth in Article 6, as if such account was a Rollover Account. A Member may borrow from his Transfer Account under the provisions of Section 7.5 as if such Account was a Rollover Account. Any loan against the Member's account balances under the Terminated Plan which is outstanding at the time such balances are transferred to this Plan may, in the discretion of the Committee, be included in such transfer; and the Member shall repay any such loan in accordance with the terms and conditions thereof as established under the Terminated Plan. A Transfer Account shall be credited with Earnings in the manner described in Section 5.1(b) However, the balance of any Transfer Account shall be distributed, or may be withdrawn, under the same terms and conditions which applied to distributions and withdrawals from participants' accounts under the Terminated Plan (immediately prior to the termination thereof) in lieu of the terms and conditions of Article 7, and, upon Plan termination, Section 9.3(b), except that, for purposes of determining the amount of any distribution or withdrawal, the Transfer Account shall be valued as of the close of the last business day immediately preceding the time such distribution or withdrawal is made. If appropriate, the Transfer Account shall be divided into sub-accounts to account separately for any portions of the account balances transferred from the Terminated Plan which, under the provisions of the Terminated Plan, could be distributed or withdrawn at different times, or in different forms or manners, than other portions of such account balances. Except as otherwise provided above, the Transfer Account shall be treated as an Account under the Plan. 9.3. Termination. (a) General. The Company reserves the right to terminate the Plan at any time, without the consent of any other party, pursuant to a resolution authorizing such termination duly adopted by the Company's Board of Directors. Not-52-

withstanding anything herein to the contrary, the Employer, upon termination of the Plan, shall have no obligation or liability whatsoever to make any further contributions to the Trust, and neither the Trustee, nor any Member, Beneficiary, Employee or other person shall have any right to compel the Employer to make any such further contributions. (b) Termination or Continuation of the Trust. Upon termination of the Plan, one of the following actions shall be taken: (1) If the Company so directs, the Trust shall continue in existence. In such event, the Trust Fund shall be held, administered and distributed as directed by the Committee and as provided in the Plan, and all of the provisions of the Plan set forth herein, which are applicable in the opinion of the Committee, other than the provisions relating to contributions, shall remain in full force and effect. (2) If the Plan is terminated without establishment or maintenance of another defined contribution plan within the meaning of Section 401(k) (10) of the Code, and if the Company so directs, the Trust shall be terminated. In such case, notwithstanding any other provision of the Plan to the contrary, the Plan Account balances of each Member and Beneficiary shall be distributed to such Member or Beneficiary, as soon as administratively feasible, in the form of a single lump sum payment. (3) If, upon termination of the Plan, another defined contribution plan has been, or will be, established or maintained within the meaning of Section 401(k) (10) of the Code, then, notwithstanding any other provision of

withstanding anything herein to the contrary, the Employer, upon termination of the Plan, shall have no obligation or liability whatsoever to make any further contributions to the Trust, and neither the Trustee, nor any Member, Beneficiary, Employee or other person shall have any right to compel the Employer to make any such further contributions. (b) Termination or Continuation of the Trust. Upon termination of the Plan, one of the following actions shall be taken: (1) If the Company so directs, the Trust shall continue in existence. In such event, the Trust Fund shall be held, administered and distributed as directed by the Committee and as provided in the Plan, and all of the provisions of the Plan set forth herein, which are applicable in the opinion of the Committee, other than the provisions relating to contributions, shall remain in full force and effect. (2) If the Plan is terminated without establishment or maintenance of another defined contribution plan within the meaning of Section 401(k) (10) of the Code, and if the Company so directs, the Trust shall be terminated. In such case, notwithstanding any other provision of the Plan to the contrary, the Plan Account balances of each Member and Beneficiary shall be distributed to such Member or Beneficiary, as soon as administratively feasible, in the form of a single lump sum payment. (3) If, upon termination of the Plan, another defined contribution plan has been, or will be, established or maintained within the meaning of Section 401(k) (10) of the Code, then, notwithstanding any other provision of the Plan to the contrary (i) an immediate distribution shall be made, in accordance with the provisions of (2) above, to all Beneficiaries and to all Members who have attained age 59-1/2 or are Disabled, and (ii) the Trust shall be continued, in accordance with the provisions of (1) above, with respect to all other Members; provided, however, that each such other Member's Plan Account balances shall be distributed, in a single lump-sum payment, as soon as practicable after such Member has attained age 59-1/2, has become Disabled or has incurred a Termination of Service for any reason. (c) Vesting Upon Termination. Upon the termination or partial termination of the Plan, or upon the complete discontinuance of contributions to the Plan, notwithstanding any other provision of the Plan to the contrary, each -53-

Member affected thereby shall become 100% vested, and shall have a nonforfeitable interest, in his Plan Accounts. 9.4. Termination of An Employer's Participation in the Plan. An Employer, other than the Company, may at any time terminate its participation in the Plan, and the Company may at any time direct that an Employer terminate its participation in the Plan. Unless the Company specifically directs otherwise, an Employer other than the Company shall be treated as having terminated its participation in the Plan (a) upon the sale or other transfer of all or substantially all of its assets to an Unaffiliated Entity or (b) upon the sale or other transfer of its stock to an Unaffiliated Entity in a transaction that results in the termination of such Employer's "parent-subsidiary or controlled group relationship" with the Company, or with the controlled group of which the Company is a member, within the meaning of Section 414(b) of the Code. For purposes of the foregoing, the term "Unaffiliated Entity" shall mean any entity other than one described in Section 1.19(f) (2), (3) or (4). Upon any such termination of participation, the Plan shall terminate with respect to the terminating Employer and its Employees and shall continue in effect with respect to the remaining Employers and their Employees. In the event of such a termination, the provisions of section 9.3(b) shall apply with respect to the portion of the Trust Fund attributable to the terminating Employer, and Section 9.3(c) shall apply to the Employees of such Employer. ARTICLE 10 - TOP-HEAVY PROVISIONS 10.1. General. With respect to each Plan Year in which the Plan is Top-Heavy, the provisions of Sections 10.2, 10.3, 10.4 and 10.5 shall apply notwithstanding any other provisions in this Plan to the contrary. With respect to any Plan Year in which the Plan is not Top-Heavy, except as otherwise provided herein, the provisions of Sections 10.2, 10.3. 10.4 and 10.5 shall not apply.

Member affected thereby shall become 100% vested, and shall have a nonforfeitable interest, in his Plan Accounts. 9.4. Termination of An Employer's Participation in the Plan. An Employer, other than the Company, may at any time terminate its participation in the Plan, and the Company may at any time direct that an Employer terminate its participation in the Plan. Unless the Company specifically directs otherwise, an Employer other than the Company shall be treated as having terminated its participation in the Plan (a) upon the sale or other transfer of all or substantially all of its assets to an Unaffiliated Entity or (b) upon the sale or other transfer of its stock to an Unaffiliated Entity in a transaction that results in the termination of such Employer's "parent-subsidiary or controlled group relationship" with the Company, or with the controlled group of which the Company is a member, within the meaning of Section 414(b) of the Code. For purposes of the foregoing, the term "Unaffiliated Entity" shall mean any entity other than one described in Section 1.19(f) (2), (3) or (4). Upon any such termination of participation, the Plan shall terminate with respect to the terminating Employer and its Employees and shall continue in effect with respect to the remaining Employers and their Employees. In the event of such a termination, the provisions of section 9.3(b) shall apply with respect to the portion of the Trust Fund attributable to the terminating Employer, and Section 9.3(c) shall apply to the Employees of such Employer. ARTICLE 10 - TOP-HEAVY PROVISIONS 10.1. General. With respect to each Plan Year in which the Plan is Top-Heavy, the provisions of Sections 10.2, 10.3, 10.4 and 10.5 shall apply notwithstanding any other provisions in this Plan to the contrary. With respect to any Plan Year in which the Plan is not Top-Heavy, except as otherwise provided herein, the provisions of Sections 10.2, 10.3. 10.4 and 10.5 shall not apply. 10.2. Minimum Benefit. For any Plan Year in which the Plan is Top-Heavy, the Employer shall make a contribution to the Plan under this Section 10.2 on behalf of any Member who is a Non-Key Employee. Such contribution shall be in the amount by which the contributions made by the Employer on such Member's behalf, or allocated to such Member, for such year under this Plan, and under each other defined contribution plan aggregated with this Plan under Section 10.6(a), is less than the smaller of (a) 3% of such Member's Section 415 Compensation for such year or (b) the percentage of such Member's Section 415 Compensation for such year which is equal to the highest Allocation Percentage for the year of any Member who -54-

is a Key Employee. For this purpose, (1) 401(k) Contributions made on behalf of Non-Key Employees under this Plan, and any contributions subject to Section 401(k) or 401(m) of the Code made on behalf of Non-Key Employees under any other defined contribution plan, shall be disregarded; (2) a Key Employee's "Allocation Percentage" for a Plan Year shall mean the percentage determined by dividing the sum for such year of (i) total 401(k) Contributions and Employer Contributions made on behalf of the Key Employee, or allocated to the Key Employee, under this Plan and (ii) the total contributions made by the Employer on such Key Employee's behalf, or allocated to such Key Employee, under any other defined contribution plan aggregated with this Plan under Section 10.6(a) by so much of his Section 415 compensation for the year as does not exceed the maximum amount of his Section 415 Compensation that may be taken into account hereunder; and (3) any person who is not a Member solely because he has not elected to have any 401(k) Contributions made on his behalf shall be treated as a Member. Clause (b) in the second preceding sentence shall not apply in any Plan Year in which this Plan enables a defined benefit plan, which is aggregated with this Plan under Section 10.6(a), to meet the requirements of Section 401 (a) (4) or 410 of the Code for such year. Notwithstanding the foregoing, the amount to be contributed on behalf of any Member pursuant to this Section shall not exceed the minimum amount that must be contributed on such Member's behalf in order to meet the "minimum benefit" requirements of Section 416(c) of the Code and the regulations issued thereunder; and no amount shall be contributed under this Section on behalf of a Member for any Plan Year if (A) the Member is not employed by the Employer on the last day of such Plan Year, or (B) the Member is entitled to receive for such year, under any defined benefit plan aggregated with this Plan under Section 10.6(a), a benefit that is at least equal to the defined benefit minimum described in M-2 of Section 1.416-1 of the Treasury regulations.

is a Key Employee. For this purpose, (1) 401(k) Contributions made on behalf of Non-Key Employees under this Plan, and any contributions subject to Section 401(k) or 401(m) of the Code made on behalf of Non-Key Employees under any other defined contribution plan, shall be disregarded; (2) a Key Employee's "Allocation Percentage" for a Plan Year shall mean the percentage determined by dividing the sum for such year of (i) total 401(k) Contributions and Employer Contributions made on behalf of the Key Employee, or allocated to the Key Employee, under this Plan and (ii) the total contributions made by the Employer on such Key Employee's behalf, or allocated to such Key Employee, under any other defined contribution plan aggregated with this Plan under Section 10.6(a) by so much of his Section 415 compensation for the year as does not exceed the maximum amount of his Section 415 Compensation that may be taken into account hereunder; and (3) any person who is not a Member solely because he has not elected to have any 401(k) Contributions made on his behalf shall be treated as a Member. Clause (b) in the second preceding sentence shall not apply in any Plan Year in which this Plan enables a defined benefit plan, which is aggregated with this Plan under Section 10.6(a), to meet the requirements of Section 401 (a) (4) or 410 of the Code for such year. Notwithstanding the foregoing, the amount to be contributed on behalf of any Member pursuant to this Section shall not exceed the minimum amount that must be contributed on such Member's behalf in order to meet the "minimum benefit" requirements of Section 416(c) of the Code and the regulations issued thereunder; and no amount shall be contributed under this Section on behalf of a Member for any Plan Year if (A) the Member is not employed by the Employer on the last day of such Plan Year, or (B) the Member is entitled to receive for such year, under any defined benefit plan aggregated with this Plan under Section 10.6(a), a benefit that is at least equal to the defined benefit minimum described in M-2 of Section 1.416-1 of the Treasury regulations. Any amount contributed under this Section 10.2 by the Employer on behalf of any Member shall be credited to the Member's Employer Contribution Account, as of the day on which such contribution is made to the Plan, but no later than by the final day of the Plan Year to which the contribution relates . 10.3. Minimum Vesting. In the case of a Member who earns at least one Hour of Service under the Plan during or subsequent to a Plan Year for which the Plan is Top-Heavy, the Vested Portion of his Plan Accounts shall be determined as provided in Section 1.34, except that the following schedule shall apply to all such Members in lieu of the schedules -55-

appearing in (1), (2) and (3) of subsection (a) of Section 1.34:
Years of Service ---------------0-1 2 3 Vested Percentage ----------------0 40 100

10.4. Maximum Compensation. For any Plan Year beginning prior to August 1, 1989 in which the Plan is TopHeavy, the annual Compensation taken into account under the Plan, and the annual Section 415 Compensation taken into account under this Article 10, for any Member shall not exceed $200,000, adjusted annually by the Secretary of the Treasury under Section 416(d) of the Code and the Treasury regulations issued thereunder . 10.5. Section 415 Limits. For any Plan Year in which the Plan is Top-Heavy, the overall limit of Section 415(e) of the Code shall be applied by substituting "1.0" for "1.25" wherever "1.25" appears. However, the preceding sentence shall not apply with respect to a Plan Year if (a) each Member who is a Non-Key Employee is entitled to receive for such year (1) under this Plan, when aggregated with any other defined contribution plan aggregated with this Plan under Section 10.6(a), a benefit that is at least equal to the defined contribution minimum described in M-14 of Section 1.416-1 of the Treasury regulations, or (2) under any defined benefit plan aggregated with this Plan under Section 10.6(a), a benefit that is at least equal to the defined benefit minimum described in M-14 of Section 1.416-1 of the Treasury regulations, and (b) the Plan is not Super Top-Heavy for such year.

appearing in (1), (2) and (3) of subsection (a) of Section 1.34:
Years of Service ---------------0-1 2 3 Vested Percentage ----------------0 40 100

10.4. Maximum Compensation. For any Plan Year beginning prior to August 1, 1989 in which the Plan is TopHeavy, the annual Compensation taken into account under the Plan, and the annual Section 415 Compensation taken into account under this Article 10, for any Member shall not exceed $200,000, adjusted annually by the Secretary of the Treasury under Section 416(d) of the Code and the Treasury regulations issued thereunder . 10.5. Section 415 Limits. For any Plan Year in which the Plan is Top-Heavy, the overall limit of Section 415(e) of the Code shall be applied by substituting "1.0" for "1.25" wherever "1.25" appears. However, the preceding sentence shall not apply with respect to a Plan Year if (a) each Member who is a Non-Key Employee is entitled to receive for such year (1) under this Plan, when aggregated with any other defined contribution plan aggregated with this Plan under Section 10.6(a), a benefit that is at least equal to the defined contribution minimum described in M-14 of Section 1.416-1 of the Treasury regulations, or (2) under any defined benefit plan aggregated with this Plan under Section 10.6(a), a benefit that is at least equal to the defined benefit minimum described in M-14 of Section 1.416-1 of the Treasury regulations, and (b) the Plan is not Super Top-Heavy for such year. 10.6. Definitions. For purposes of this Article 10, the following terms shall have the following meanings, and the following rules shall apply: (a) "Top-Heavy" and "Super Top-Heavy" - the Plan shall be deemed to be Top-Heavy with respect to any Plan Year if, as of the Determination Date for that year, the aggregate Benefits of all Key Employees under this Plan, and all other plans which are aggregated with this Plan, exceed 60% of the aggregate Benefits of all Key and Non-Key Employees under this Plan and all such other plans. The Plan shall be deemed to be Super Top-Heavy with respect to any Plan Year if, as of the Determination Date for that year, the aggregate Benefits of all Key Employees under this Plan, and all other plans that are aggregated with this Plan, exceed 90% of the aggregate Benefits of all Key and Non-Key Employees under this Plan -56-

and all such other plans. For purposes of the two preceding sentences, each qualified plan maintained by the Employer, including this Plan, (1) in which a Key Employee was a participant, or (2) which enabled any plan described in clause (1) to meet the requirements of Section 401(a) (4) or Section 410 of the Code, during the 5-year period ending on the Determination Date for the Plan Year in question shall be aggregated. A terminated plan shall be aggregated with this Plan, for these purposes, if such plan was maintained by the Employer during the aforesaid 5-year period and would, but for its termination, be so aggregated under the preceding sentence. (b) "Determination Date" - The Determination Date for a Plan Year shall mean the final day of the immediately preceding Plan Year, except, however, the Determination Date for the first Plan Year shall be the final day of such year. (c) "Benefits" - An individual's Benefits shall mean the sum of (1) the balance of his Plan Accounts under this Plan and his accounts under all other defined contribution plans aggregated with this Plan under Section 10.6(a); (2) the present value of his cumulative accrued benefits under all defined benefit plans aggregated with this Plan under Section 10.6(a); and (3) the aggregate distributions made with respect to him under the plans described in clauses (1) and (2) hereof during the 5-year period ending on the Determination Date as of which such individual's Benefits are being determined. For purposes of this Section 10.6(c), the Benefits of any individual shall be disregarded if such individual (i) has

and all such other plans. For purposes of the two preceding sentences, each qualified plan maintained by the Employer, including this Plan, (1) in which a Key Employee was a participant, or (2) which enabled any plan described in clause (1) to meet the requirements of Section 401(a) (4) or Section 410 of the Code, during the 5-year period ending on the Determination Date for the Plan Year in question shall be aggregated. A terminated plan shall be aggregated with this Plan, for these purposes, if such plan was maintained by the Employer during the aforesaid 5-year period and would, but for its termination, be so aggregated under the preceding sentence. (b) "Determination Date" - The Determination Date for a Plan Year shall mean the final day of the immediately preceding Plan Year, except, however, the Determination Date for the first Plan Year shall be the final day of such year. (c) "Benefits" - An individual's Benefits shall mean the sum of (1) the balance of his Plan Accounts under this Plan and his accounts under all other defined contribution plans aggregated with this Plan under Section 10.6(a); (2) the present value of his cumulative accrued benefits under all defined benefit plans aggregated with this Plan under Section 10.6(a); and (3) the aggregate distributions made with respect to him under the plans described in clauses (1) and (2) hereof during the 5-year period ending on the Determination Date as of which such individual's Benefits are being determined. For purposes of this Section 10.6(c), the Benefits of any individual shall be disregarded if such individual (i) has not performed any services for the Employer during the 5-year period ending on the Determination Date for the Plan Year or (ii) was a Key Employee for any Plan Year but subsequently became a Non-Key Employee for any Plan Year. The present value of accrued benefits under any defined benefit plan shall be determined for each Non-Key Employee under the uniform method of benefit accrual used by all qualified defined benefit plans of the Employer, or, if there is no such method, as if benefits accrued not more rapidly than under the slowest accrual rate permitted under Section 411(b) (1) (C) of the Code. (d) "Key Employee" and "Non-Key Employee" - shall be defined as under Section 416(i) of the Code and the Treasury regulations thereunder. -57-

(e) "Section 415 Compensation" - shall mean compensation as defined under Section 1.415-2(d)(1), (2), (3) and (4) of the Treasury regulations. For Plan Years beginning on and after August 1, 1989, the $200,000 limitation set forth in Section 1.7 shall apply. (f) The benefits attributable to any plan aggregated with this Plan under Section 10.6(a) shall be taken into account for purposes of Sections 10.2, 10.5 and 10.6(a) and (c) in a Plan Year in a manner consistent with T-23 of Section 1.416-1 of the Treasury regulations. (g) For purposes of this Article 10, wherever required by Section 416 of the Code and the regulations thereunder, the term "Employer" includes all entities aggregated with the Employer under Section 414(b), (c), (ni) or (o) of the Code and the regulations thereunder. 10.7. Applicability. In the event that Congress should provide by statute, or the Treasury Department or the Internal Revenue Service should provide by regulation, ruling or notice, that the provisions of this Article are no longer necessary to meet the qualification requirements of Section 401(a) of the Code, this Article shall become void, and shall no longer apply, without the necessity of any amendment to the Plan. ARTICLE 11 - MISCELLANEOUS 11.1. Plan Assets to be Held for Exclusive Benefit of Members. The assets of the Plan shall never inure to the benefit of the Employer and shall be held for the exclusive purposes of providing benefits to Members of the Plan and their spouses and other beneficiaries, and defraying the reasonable costs and expenses of administering the Plan. However, this Section shall not prevent a contribution made by the Employer under the Plan from being

(e) "Section 415 Compensation" - shall mean compensation as defined under Section 1.415-2(d)(1), (2), (3) and (4) of the Treasury regulations. For Plan Years beginning on and after August 1, 1989, the $200,000 limitation set forth in Section 1.7 shall apply. (f) The benefits attributable to any plan aggregated with this Plan under Section 10.6(a) shall be taken into account for purposes of Sections 10.2, 10.5 and 10.6(a) and (c) in a Plan Year in a manner consistent with T-23 of Section 1.416-1 of the Treasury regulations. (g) For purposes of this Article 10, wherever required by Section 416 of the Code and the regulations thereunder, the term "Employer" includes all entities aggregated with the Employer under Section 414(b), (c), (ni) or (o) of the Code and the regulations thereunder. 10.7. Applicability. In the event that Congress should provide by statute, or the Treasury Department or the Internal Revenue Service should provide by regulation, ruling or notice, that the provisions of this Article are no longer necessary to meet the qualification requirements of Section 401(a) of the Code, this Article shall become void, and shall no longer apply, without the necessity of any amendment to the Plan. ARTICLE 11 - MISCELLANEOUS 11.1. Plan Assets to be Held for Exclusive Benefit of Members. The assets of the Plan shall never inure to the benefit of the Employer and shall be held for the exclusive purposes of providing benefits to Members of the Plan and their spouses and other beneficiaries, and defraying the reasonable costs and expenses of administering the Plan. However, this Section shall not prevent a contribution made by the Employer under the Plan from being returned to it, or other Plan assets to be distributed to the Employer, in the following circumstances: (a) If an amount is contributed under the Plan by the Employer pursuant to a mistake of fact, the amount so contributed shall be returned to the Employer within one year of the date of such contribution. (b) Each contribution which the Employer makes under the Plan is conditioned upon the deductibility of such contribution under Section 404 of the Code. To the extent a deduction therefor is not allowed, the amount of any such contribution shall be returned to the Employer -58-

within one year after the contribution is determined to be nondeductible. 11.2. Nonassignability of Rights. Except to the extent provided in Section 11.3, no interest, right or claim in or to any part of the Trust Fund or any payment therefrom shall be assignable, transferable or subject to sale, mortgage, pledge, garnishment, attachment, execution or levy of any kind, and the Trustee shall not recognize any attempt to assign, transfer, sell, mortgage, pledge, garnish, attach or execute the same. 11.3. Qualified Domestic Relations Orders. To the extent so provided in an order that the Committee determines to constitute a "qualified domestic relations order" within the meaning of Section 414 (p) (1) (A) of the Code ("QDRO"), the right to receive all or a portion of the benefits payable under the Plan with respect to a Member may be assigned or transferred by the Member to any "alternate payee" within the meaning of Section 414(p) (8) of the Code ("Alternate Payee") specified in such QDRO. Notwithstanding any other provision in this Plan to the contrary, if a QDRO so provides, the portion of a Member's interest in the Plan which is payable under the QDRO to any Alternate Payee shall be distributed to such Alternate Payee, in the form of a single lump sum payment, as soon as practicable after the Committee has determined that such order constitutes a QDRO. 11.4. Trust Fund as Sole Source of Benefit Payments. The Trust Fund shall be the sole source of payment of benefits under the Plan. In no event shall the Employer be liable to any Member or to any other individual for the payment of such benefits 11.5. Right to Employment. The Plan shall not confer upon any Employee any right of employment, nor shall any

within one year after the contribution is determined to be nondeductible. 11.2. Nonassignability of Rights. Except to the extent provided in Section 11.3, no interest, right or claim in or to any part of the Trust Fund or any payment therefrom shall be assignable, transferable or subject to sale, mortgage, pledge, garnishment, attachment, execution or levy of any kind, and the Trustee shall not recognize any attempt to assign, transfer, sell, mortgage, pledge, garnish, attach or execute the same. 11.3. Qualified Domestic Relations Orders. To the extent so provided in an order that the Committee determines to constitute a "qualified domestic relations order" within the meaning of Section 414 (p) (1) (A) of the Code ("QDRO"), the right to receive all or a portion of the benefits payable under the Plan with respect to a Member may be assigned or transferred by the Member to any "alternate payee" within the meaning of Section 414(p) (8) of the Code ("Alternate Payee") specified in such QDRO. Notwithstanding any other provision in this Plan to the contrary, if a QDRO so provides, the portion of a Member's interest in the Plan which is payable under the QDRO to any Alternate Payee shall be distributed to such Alternate Payee, in the form of a single lump sum payment, as soon as practicable after the Committee has determined that such order constitutes a QDRO. 11.4. Trust Fund as Sole Source of Benefit Payments. The Trust Fund shall be the sole source of payment of benefits under the Plan. In no event shall the Employer be liable to any Member or to any other individual for the payment of such benefits 11.5. Right to Employment. The Plan shall not confer upon any Employee any right of employment, nor shall any provision of the Plan interfere with the right of the Employer to discharge any Employee. 11.6. Gender and Number. Words used in the masculine include the feminine gender. Words used in the singular or plural shall be construed as if plural or singular, respectively, where they would so apply. 11.7. Titles. Titles of Articles, Sections and subsections are inserted for convenience and shall nOt affect the meaning or construction of the Plan. -59-

EXHIBIT 10.35 PALL DEUTSCHLAND GMBH Dreieich Concept Of An Additional Pension Plan For Senior Executives September 1988

I OBJECTIVES / INSTRUCTION PALL DEUTSCHLAND GMBH intends to improve the pension entitlements for senior management employees. The intention is to provide this group of employees with a total net retirement income of 65 to 70 per cent of final net active earnings after approximately 30 years of service. The improved pension entitlements should be granted, at the earliest, upon the attainment of age 50 so that employees under the age of 50 can not accrue vested rights under this pension arrangement. Once an employee qualifies for an additional pension contract his benefit entitlement should be increased step by step or i.e. for each year of service he is credited with an additional pension unit until at age 65 he gets the full benefit of the improvement. The purpose is to minimize portability rights in case an employee leaves the company after age 50 but before reaching the retirement age.

EXHIBIT 10.35 PALL DEUTSCHLAND GMBH Dreieich Concept Of An Additional Pension Plan For Senior Executives September 1988

I OBJECTIVES / INSTRUCTION PALL DEUTSCHLAND GMBH intends to improve the pension entitlements for senior management employees. The intention is to provide this group of employees with a total net retirement income of 65 to 70 per cent of final net active earnings after approximately 30 years of service. The improved pension entitlements should be granted, at the earliest, upon the attainment of age 50 so that employees under the age of 50 can not accrue vested rights under this pension arrangement. Once an employee qualifies for an additional pension contract his benefit entitlement should be increased step by step or i.e. for each year of service he is credited with an additional pension unit until at age 65 he gets the full benefit of the improvement. The purpose is to minimize portability rights in case an employee leaves the company after age 50 but before reaching the retirement age. 1

II OUTLINE OF THE CONCEPT In a recent meeting in Dreieich the basics of a plan concept have been developed. The main features are summarized in the following: 1. After a potential beneficiary has attained age 51 his achievable pension on basis of the present plan is compared with the achievable benefit, if the accrual rate above the Social Security Contribution Ceiling had been increased from 0.9 per cent to 1.5 per cent per year of service. 2. The difference between these two amounts is divided by 15, i.e. normally the remaining number of years of service between age 50 and 65. 3. The employee is credited with one resulting pension unit for the year of service between age 50 and age 51. 4. After one year, at age 52, the employee is credited with a second pension unit. If this employee has had a salary increase, a new calculation must be made to determine the difference between achievable pensions on basis of the present plan and the (fictitious) improved plan, If the pension entitlements increase in line with salary increases the pension units calculated in each year will increase correspondingly. Since, however, the PALL scheme is a final average pay plan, the pension units for previous years of service after age 50 must be revalued in order to account for the salary increases and to maintain the nature of a final pay plan. If the pension units were just added up, the plan improvement would be on a carrier average basis. 2

In the following the concept is demonstrated by an example. It is assumed that an employee at the age of 51 has pensionable earnings of DM 100,000.-- p.a. His entry age was 35 so that his potential period of service is 30 years. Under the present PALL scheme his pension entitlement at age 65 would be DM 14,040.--p.a. If the accrual rate above the SSCC were increased to 1.5 per cent if his achievable benefit would be DM 19.080 p.a.

I OBJECTIVES / INSTRUCTION PALL DEUTSCHLAND GMBH intends to improve the pension entitlements for senior management employees. The intention is to provide this group of employees with a total net retirement income of 65 to 70 per cent of final net active earnings after approximately 30 years of service. The improved pension entitlements should be granted, at the earliest, upon the attainment of age 50 so that employees under the age of 50 can not accrue vested rights under this pension arrangement. Once an employee qualifies for an additional pension contract his benefit entitlement should be increased step by step or i.e. for each year of service he is credited with an additional pension unit until at age 65 he gets the full benefit of the improvement. The purpose is to minimize portability rights in case an employee leaves the company after age 50 but before reaching the retirement age. 1

II OUTLINE OF THE CONCEPT In a recent meeting in Dreieich the basics of a plan concept have been developed. The main features are summarized in the following: 1. After a potential beneficiary has attained age 51 his achievable pension on basis of the present plan is compared with the achievable benefit, if the accrual rate above the Social Security Contribution Ceiling had been increased from 0.9 per cent to 1.5 per cent per year of service. 2. The difference between these two amounts is divided by 15, i.e. normally the remaining number of years of service between age 50 and 65. 3. The employee is credited with one resulting pension unit for the year of service between age 50 and age 51. 4. After one year, at age 52, the employee is credited with a second pension unit. If this employee has had a salary increase, a new calculation must be made to determine the difference between achievable pensions on basis of the present plan and the (fictitious) improved plan, If the pension entitlements increase in line with salary increases the pension units calculated in each year will increase correspondingly. Since, however, the PALL scheme is a final average pay plan, the pension units for previous years of service after age 50 must be revalued in order to account for the salary increases and to maintain the nature of a final pay plan. If the pension units were just added up, the plan improvement would be on a carrier average basis. 2

In the following the concept is demonstrated by an example. It is assumed that an employee at the age of 51 has pensionable earnings of DM 100,000.-- p.a. His entry age was 35 so that his potential period of service is 30 years. Under the present PALL scheme his pension entitlement at age 65 would be DM 14,040.--p.a. If the accrual rate above the SSCC were increased to 1.5 per cent if his achievable benefit would be DM 19.080 p.a. The difference between the two amounts is DM 5,040.--. This amount divided by 15 leads to a first pension unit of DM 336. --. The following table shows the development of the pension units in each year until age 65 as well as the accrued revalued pension units until retirement age. Demonstration of Plan Concept
Age Accrued Pension Increase Units (in %) --------------------------------------------------51 336 336 52 349,44 698,88 108 53 363,42 1.090,26 56 54 377,96 1.511,84 38,7 Pension Unit

II OUTLINE OF THE CONCEPT In a recent meeting in Dreieich the basics of a plan concept have been developed. The main features are summarized in the following: 1. After a potential beneficiary has attained age 51 his achievable pension on basis of the present plan is compared with the achievable benefit, if the accrual rate above the Social Security Contribution Ceiling had been increased from 0.9 per cent to 1.5 per cent per year of service. 2. The difference between these two amounts is divided by 15, i.e. normally the remaining number of years of service between age 50 and 65. 3. The employee is credited with one resulting pension unit for the year of service between age 50 and age 51. 4. After one year, at age 52, the employee is credited with a second pension unit. If this employee has had a salary increase, a new calculation must be made to determine the difference between achievable pensions on basis of the present plan and the (fictitious) improved plan, If the pension entitlements increase in line with salary increases the pension units calculated in each year will increase correspondingly. Since, however, the PALL scheme is a final average pay plan, the pension units for previous years of service after age 50 must be revalued in order to account for the salary increases and to maintain the nature of a final pay plan. If the pension units were just added up, the plan improvement would be on a carrier average basis. 2

In the following the concept is demonstrated by an example. It is assumed that an employee at the age of 51 has pensionable earnings of DM 100,000.-- p.a. His entry age was 35 so that his potential period of service is 30 years. Under the present PALL scheme his pension entitlement at age 65 would be DM 14,040.--p.a. If the accrual rate above the SSCC were increased to 1.5 per cent if his achievable benefit would be DM 19.080 p.a. The difference between the two amounts is DM 5,040.--. This amount divided by 15 leads to a first pension unit of DM 336. --. The following table shows the development of the pension units in each year until age 65 as well as the accrued revalued pension units until retirement age. Demonstration of Plan Concept
Accrued Pension Increase Units (in %) --------------------------------------------------51 336 336 52 349,44 698,88 108 53 363,42 1.090,26 56 54 377,96 1.511,84 38,7 55 393,08 1.965,40 30 56 408,80 2.452,80 24,8 57 425,15 2.976,05 21,3 58 442,16 3.537,28 18,9 59 459,85 4.138,65 17 60 478,24 4.782,40 15,5 61 497,37 5.471,07 14,4 62 517,26 6.207,12 13,4 63 537,95 6.993,35 12,7 64 559,67 7.835,38 12 65 582,06 8.730,90 11,4 ---------------------------------------------------Age Pension Unit

3

In practice, each beneficiary will receive a revised pension contract every year stating the respective accrued pension units which represent the achievable old-age retirement pension at any time between age 51 and 65.

In the following the concept is demonstrated by an example. It is assumed that an employee at the age of 51 has pensionable earnings of DM 100,000.-- p.a. His entry age was 35 so that his potential period of service is 30 years. Under the present PALL scheme his pension entitlement at age 65 would be DM 14,040.--p.a. If the accrual rate above the SSCC were increased to 1.5 per cent if his achievable benefit would be DM 19.080 p.a. The difference between the two amounts is DM 5,040.--. This amount divided by 15 leads to a first pension unit of DM 336. --. The following table shows the development of the pension units in each year until age 65 as well as the accrued revalued pension units until retirement age. Demonstration of Plan Concept
Accrued Pension Increase Units (in %) --------------------------------------------------51 336 336 52 349,44 698,88 108 53 363,42 1.090,26 56 54 377,96 1.511,84 38,7 55 393,08 1.965,40 30 56 408,80 2.452,80 24,8 57 425,15 2.976,05 21,3 58 442,16 3.537,28 18,9 59 459,85 4.138,65 17 60 478,24 4.782,40 15,5 61 497,37 5.471,07 14,4 62 517,26 6.207,12 13,4 63 537,95 6.993,35 12,7 64 559,67 7.835,38 12 65 582,06 8.730,90 11,4 ---------------------------------------------------Age Pension Unit

3

In practice, each beneficiary will receive a revised pension contract every year stating the respective accrued pension units which represent the achievable old-age retirement pension at any time between age 51 and 65. Wiesbaden, September 28, 1988 Hr-eb IPC INTERNATIONAL PENSION CONSULTANTS GMBH 1.V.
/s/ R&B Ter /s/ Hauner

4

EXHIBIT 10.13 PALL CORPORATION [PICTURE BY PAUL KLEE, SCHEIDUNG ABENDS (PARTING IN THE EVENING/SEPARATION IN THE EVENING)] 1996 ANNUAL REPORT

In practice, each beneficiary will receive a revised pension contract every year stating the respective accrued pension units which represent the achievable old-age retirement pension at any time between age 51 and 65. Wiesbaden, September 28, 1988 Hr-eb IPC INTERNATIONAL PENSION CONSULTANTS GMBH 1.V.
/s/ R&B Ter /s/ Hauner

4

EXHIBIT 10.13 PALL CORPORATION [PICTURE BY PAUL KLEE, SCHEIDUNG ABENDS (PARTING IN THE EVENING/SEPARATION IN THE EVENING)] 1996 ANNUAL REPORT

FISCAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------Years Ended --------------------------------------------(In thousands, except per share data) AUGUST 3, 1996 July 29, 1995 % INCREASED - ----------------------------------------------------------------------Net Sales $ 960,376 $ 822,823 17 Earnings Before Income Taxes $ 197,854 $ 167,704 18 Net Earnings $ 138,498 $ 118,436(a) 17 Earnings Per Share $ 1.21 $ 1.03(a) 17 Total Assets at End of Year $ 1,184,958 $ 1,074,922 10 Working Capital $ 250,984 $ 237,034 6 Stockholders' Equity $ 732,300 $ 651,799 12 Average Shares Outstanding 114,839 115,184 Equity Per Share Outstanding at Year End $ 6.38 $ 5.70 12 - ----------------------------------------------------------------------------------------

(a) Includes a charge against earnings of $780 after income taxes, (1 cent per share) as a result of adopting the Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits). SALES (In millions)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 - ------------------- ---------------332 390 434 497 564 557 685 687 701 823 960

EXHIBIT 10.13 PALL CORPORATION [PICTURE BY PAUL KLEE, SCHEIDUNG ABENDS (PARTING IN THE EVENING/SEPARATION IN THE EVENING)] 1996 ANNUAL REPORT

FISCAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------Years Ended --------------------------------------------(In thousands, except per share data) AUGUST 3, 1996 July 29, 1995 % INCREASED - ----------------------------------------------------------------------Net Sales $ 960,376 $ 822,823 17 Earnings Before Income Taxes $ 197,854 $ 167,704 18 Net Earnings $ 138,498 $ 118,436(a) 17 Earnings Per Share $ 1.21 $ 1.03(a) 17 Total Assets at End of Year $ 1,184,958 $ 1,074,922 10 Working Capital $ 250,984 $ 237,034 6 Stockholders' Equity $ 732,300 $ 651,799 12 Average Shares Outstanding 114,839 115,184 Equity Per Share Outstanding at Year End $ 6.38 $ 5.70 12 - ----------------------------------------------------------------------------------------

(a) Includes a charge against earnings of $780 after income taxes, (1 cent per share) as a result of adopting the Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits). SALES (In millions)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 - ------------------- ---------------332 390 434 497 564 557 685 687 701 823 960

DIVIDENDS PER SHARE (In dollars)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 - ---------- ---- ------- ---------- ---- ---.09 .11 .13 .15 .18 .21 .26 .31 .36 .41 .47

EARNINGS PER SHARE (In dollars)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 - ---------------------------------.37 .43 .50 .50 .57 .69 .79 .68 .86 1.03 1.21

CONTENTS
Profile of Pall Corporation Pall at a Glance 1. Inside Gate.

FISCAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------Years Ended --------------------------------------------(In thousands, except per share data) AUGUST 3, 1996 July 29, 1995 % INCREASED - ----------------------------------------------------------------------Net Sales $ 960,376 $ 822,823 17 Earnings Before Income Taxes $ 197,854 $ 167,704 18 Net Earnings $ 138,498 $ 118,436(a) 17 Earnings Per Share $ 1.21 $ 1.03(a) 17 Total Assets at End of Year $ 1,184,958 $ 1,074,922 10 Working Capital $ 250,984 $ 237,034 6 Stockholders' Equity $ 732,300 $ 651,799 12 Average Shares Outstanding 114,839 115,184 Equity Per Share Outstanding at Year End $ 6.38 $ 5.70 12 - ----------------------------------------------------------------------------------------

(a) Includes a charge against earnings of $780 after income taxes, (1 cent per share) as a result of adopting the Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits). SALES (In millions)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 - ------------------- ---------------332 390 434 497 564 557 685 687 701 823 960

DIVIDENDS PER SHARE (In dollars)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 - ---------- ---- ------- ---------- ---- ---.09 .11 .13 .15 .18 .21 .26 .31 .36 .41 .47

EARNINGS PER SHARE (In dollars)
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 - ---------------------------------.37 .43 .50 .50 .57 .69 .79 .68 .86 1.03 1.21

CONTENTS
Profile of Pall Corporation Pall at a Glance Letter to Shareholders Business Units-Year in Review Financial Contents Corporate Directory 1. Inside Gate. 2. 5. 30. 49.

ABOUT THE COVER Cover Painting: Paul Klee, (Scheidung Abends) Parting in the Evening/Separation in the Evening, 1922/79. Watercolor on paper, 33.5 x 23.2 cm. Private collection, Switzerland. (C)1996 Artists Rights Society (ARS)/ New York, VG Bild-Kunst, Bonn.

PROFILE OF PALL

PROFILE OF PALL Pall Corporation is in the business of purifying liquids and gases. It has the broadest-based filtration and separations product lines in the world. Our engineering expertise and unmatched array of proprietary technologies enable us to provide innovative solutions to complex contamination problems. The worldwide demand for filtration and separations products has risen to more than $12 billion and is increasing steadily. Pall serves global customers in three major markets: Health Care, Aeropower and Fluid Processing. The diverse customers in these markets share an urgent need for pure products, clean processes and efficiently operating equipment. Pall products meet these needs. - - Pall at a Glance [Caption] [Filtration Separation Solution (TM).]

PALL AT A GLANCE
Percent of Fiscal 1996 Total Sales Description (amounts in millions) - -------------------------------------------------------------------------------FLUID PROCESSING 26.5% In this diverse market, Pall products are critical to the producers of oil and 1995 $213.1 gas, electricity, chemicals, plastics, 1996 $253.9 semiconductors, photographic film, magnetic storage devices, thin-film rigid discs, jet ink printers, computer terminals, disc drives and many more. To meet the stringent challenges of these innovators, Pall offers a wide range of sophisticated products and services that enhance the purity of process fluids by removing microscopic and larger contaminants that can devastate production equipment, product yields and quality. - -------------------------------------------------------------------------------AEROPOWER 24.5% Pall is a leading supplier of filtration products to the commercial and military 1995 212.8 aircraft market for use on aircraft, 1996 235.1 ships and land-based vehicles. Our industrial customers include power generation plants, manufacturers of aluminum and steel, paper, automobiles, injection molded parts and mobile equipment--including trucks and earthmoving machinery. Pall's high-performance products remove particulates and water from hydraulic and lubrication fluids and systems, extending their useful life, minimizing waste for disposal, and increasing overall productivity. - -------------------------------------------------------------------------------HEALTH CARE 25.0% PATIENT PROTECTION 1995 1996 194.5 239.5 Pall filters protect patients receiving blood transfusions, undergoing open-heart surgery, organ transplants, intravenous feeding and breathing therapy. They are used extensively in hospitals and in blood centers. Often

PALL AT A GLANCE
Percent of Fiscal 1996 Total Sales Description (amounts in millions) - -------------------------------------------------------------------------------FLUID PROCESSING 26.5% In this diverse market, Pall products are critical to the producers of oil and 1995 $213.1 gas, electricity, chemicals, plastics, 1996 $253.9 semiconductors, photographic film, magnetic storage devices, thin-film rigid discs, jet ink printers, computer terminals, disc drives and many more. To meet the stringent challenges of these innovators, Pall offers a wide range of sophisticated products and services that enhance the purity of process fluids by removing microscopic and larger contaminants that can devastate production equipment, product yields and quality. - -------------------------------------------------------------------------------AEROPOWER 24.5% Pall is a leading supplier of filtration products to the commercial and military 1995 212.8 aircraft market for use on aircraft, 1996 235.1 ships and land-based vehicles. Our industrial customers include power generation plants, manufacturers of aluminum and steel, paper, automobiles, injection molded parts and mobile equipment--including trucks and earthmoving machinery. Pall's high-performance products remove particulates and water from hydraulic and lubrication fluids and systems, extending their useful life, minimizing waste for disposal, and increasing overall productivity. - -------------------------------------------------------------------------------HEALTH CARE 25.0% PATIENT PROTECTION 1995 1996 Pall filters protect patients receiving blood transfusions, undergoing open-heart surgery, organ transplants, intravenous feeding and breathing therapy. They are used extensively in hospitals and in blood centers. Often the last line of defense, our sophisticated products provide unparalleled protection from particulates, bacteria, viral and foreign leukocyte contamination. They help to improve patient outcomes, shorten hospital stays, and lower health care costs. - -------------------------------------------------------------------------------HEALTH CARE 24.0% PHARMACEUTICALS, DIAGNOSTICS, FOOD & BEVERAGE 1995 202.4 1996 231.9 Pall is an innovator and leader in the supply of filtration systems, validation services and proprietary membranes that are fundamental to manufacturers of pharmaceuticals, biopharmaceuticals, blood fractions, therapeutic biologicals and food and beverages, as well as producers of diagnostic tests and users of laboratory-scale filtration devices. These producers rely on Pall to ensure the efficacy and safety of their products and processes. - -------------------------------------------------------------------------------194.5 239.5

2
Sales by Market Segment 1996 Market Potential Competitors (amounts in millions) (amounts in millions) - ---------------------------------------------------------------------------------------------------[Pie Chart 1] Microelectronics, Data Storage $3,600 Baker Hughes, CUNO, Funda Filter, and Photographic Film Graver, Memtec, Millipore, Roki 1996 Sales: $156.4 Techno, Ronningen-Petter 1995 Sales: $128.6 Oil/Gas, Chemical/Petrochemical and Power Generation 1996 Sales: $ 97.5 1995 Sales: $ 84.5 - ---------------------------------------------------------------------------------------------------[Pie Chart 2] Airborne, Military Land and Marine 1996 Sales: $ 99.9 1995 Sales: $ 94.1

$2,075

Donaldson, Fairley Arlon, Hydac, Koito Manufacturing, LeBozak, Mark IV Industries, Parker Hannifin, Schroeder, Taisei, Western Filter

Industrial and Mobile Fluid Power 1996 Sales: $135.2 1995 Sales: $118.7 - ---------------------------------------------------------------------------------------------------[Pie Chart 3] Patient Protection 1996 Sales: $239.5 1995 Sales: $194.5 BioSupport and OEM Diagnostics 1996 Sales: $ 38.3 1995 Sales: $ 32.8 Pharmaceutical, Biologicals and Bioprocessing 1996 Sales: $145.4 1995 Sales: $125.0 Food & Beverage 1996 Sales: $ 48.2 1995 Sales: $ 44.6 GRAND TOTAL = $12.4 BILLION

$4,075

Abbott, Asahi Medical, Maco Pharma

$2,650

Abcor, CUNO, Gelman Sciences, Koch, Millipore, Sartorius

3

LETTER TO SHAREHOLDERS [PHOTO OF ERIC KRASNOFF CHAIRMAN AND CHIEF EXECUTIVE OFFICER] Solid execution of Pall Corporation's Business Plan in fiscal 1996 achieved our twin goals of double-digit sales and earnings growth. Both were up over 16 percent despite the negative effects of currency and some pockets of economic weakness in Europe. Significantly, each of our three market segments, Health Care, Aeropower and Fluid Processing, contributed to this success. As 1996 ended, we celebrated a very special milestone . . . Pall Corporation's 50th anniversary. We paused at each of our locations throughout the world to appreciate the enduring values that brought us this far. We also dedicated ourselves to preserving those values . . . integrity, a commitment to quality and to serving our customers' long-term needs, a drive to push the boundaries of science and technology, a long-standing awareness of operating globally and a willingness to take strategic risks . . . in order to excel in the years ahead.

Sales by Market Segment 1996 Market Potential Competitors (amounts in millions) (amounts in millions) - ---------------------------------------------------------------------------------------------------[Pie Chart 1] Microelectronics, Data Storage $3,600 Baker Hughes, CUNO, Funda Filter, and Photographic Film Graver, Memtec, Millipore, Roki 1996 Sales: $156.4 Techno, Ronningen-Petter 1995 Sales: $128.6 Oil/Gas, Chemical/Petrochemical and Power Generation 1996 Sales: $ 97.5 1995 Sales: $ 84.5 - ---------------------------------------------------------------------------------------------------[Pie Chart 2] Airborne, Military Land and Marine 1996 Sales: $ 99.9 1995 Sales: $ 94.1

$2,075

Donaldson, Fairley Arlon, Hydac, Koito Manufacturing, LeBozak, Mark IV Industries, Parker Hannifin, Schroeder, Taisei, Western Filter

Industrial and Mobile Fluid Power 1996 Sales: $135.2 1995 Sales: $118.7 - ---------------------------------------------------------------------------------------------------[Pie Chart 3] Patient Protection 1996 Sales: $239.5 1995 Sales: $194.5 BioSupport and OEM Diagnostics 1996 Sales: $ 38.3 1995 Sales: $ 32.8 Pharmaceutical, Biologicals and Bioprocessing 1996 Sales: $145.4 1995 Sales: $125.0 Food & Beverage 1996 Sales: $ 48.2 1995 Sales: $ 44.6 GRAND TOTAL = $12.4 BILLION

$4,075

Abbott, Asahi Medical, Maco Pharma

$2,650

Abcor, CUNO, Gelman Sciences, Koch, Millipore, Sartorius

3

LETTER TO SHAREHOLDERS [PHOTO OF ERIC KRASNOFF CHAIRMAN AND CHIEF EXECUTIVE OFFICER] Solid execution of Pall Corporation's Business Plan in fiscal 1996 achieved our twin goals of double-digit sales and earnings growth. Both were up over 16 percent despite the negative effects of currency and some pockets of economic weakness in Europe. Significantly, each of our three market segments, Health Care, Aeropower and Fluid Processing, contributed to this success. As 1996 ended, we celebrated a very special milestone . . . Pall Corporation's 50th anniversary. We paused at each of our locations throughout the world to appreciate the enduring values that brought us this far. We also dedicated ourselves to preserving those values . . . integrity, a commitment to quality and to serving our customers' long-term needs, a drive to push the boundaries of science and technology, a long-standing awareness of operating globally and a willingness to take strategic risks . . . in order to excel in the years ahead. We are extremely proud of our employees' achievements and share their conviction that even greater successes are at hand. Pall's skilled and dedicated work force is unequaled at serving the filtration and separations needs of

LETTER TO SHAREHOLDERS [PHOTO OF ERIC KRASNOFF CHAIRMAN AND CHIEF EXECUTIVE OFFICER] Solid execution of Pall Corporation's Business Plan in fiscal 1996 achieved our twin goals of double-digit sales and earnings growth. Both were up over 16 percent despite the negative effects of currency and some pockets of economic weakness in Europe. Significantly, each of our three market segments, Health Care, Aeropower and Fluid Processing, contributed to this success. As 1996 ended, we celebrated a very special milestone . . . Pall Corporation's 50th anniversary. We paused at each of our locations throughout the world to appreciate the enduring values that brought us this far. We also dedicated ourselves to preserving those values . . . integrity, a commitment to quality and to serving our customers' long-term needs, a drive to push the boundaries of science and technology, a long-standing awareness of operating globally and a willingness to take strategic risks . . . in order to excel in the years ahead. We are extremely proud of our employees' achievements and share their conviction that even greater successes are at hand. Pall's skilled and dedicated work force is unequaled at serving the filtration and separations needs of our customers. We thank them all for our first 50 years and enlist their ongoing support in pursuit of our bright future. Over the past two years your company has redefined itself. No longer content to be a niche supplier of components, we have broadened both our product lines and our technical support and service capabilities. Profits have grown apace. This is not a rags to riches saga. Our metamorphosis started from a strong base. But certainly a flower to bouquet analogy is apt. Pall Corporation is now a veritable garden of products and services . . . and business is blooming! We are a systems engineering and specialty materials company. Our product--Solutions. We solve the knottiest problems of filtration and separations for our customers . . . and do so with a broader range of proprietary technologies than any competitor. We apply our know-how to an equally wide range of markets and applications. Pall succeeds best with customers who require intense scientific support and in applications that are complex and demanding. 4

At first glance there does not seem to be much similarity between a manufacturer of pharmaceuticals, a jet engine producer, and a pulp and paper plant. Yet most companies are driven by similar global operating pressures. Regardless of industry, our customers share an imperative to be cost-efficient, profitable and environmentally responsible producers. To achieve this, companies throughout the world are focusing on core competencies by outsourcing as much work as possible to an increasingly concentrated vendor base. [CAPTION] ["Our product--Solutions. We solve the knottiest problems of filtration and separations for our customers . . . and do so with a broader range of proprietary technologies than any competitor."] This trend of outsourcing and vendor consolidation meshes seamlessly with our major strategic move begun at the end of fiscal 1994 to become an integrated source for high-end filtration and separations. As part of that strategy we emphasize systems over components and provide sophisticated and unique custom-engineered solutions for customer problems. To effectively provide this comprehensive support from the design stage throughout installation and beyond, has required, appropriately enough, the "re-engineering" of our Engineering Departments in the U.S., Europe and Asia. Additional scientists and laboratories have also been added throughout the world, particularly in Asia. I am pleased to say that this investment was substantially completed by the end of 1996. We have also refocused and bolstered research and development over the past two years. The results are

At first glance there does not seem to be much similarity between a manufacturer of pharmaceuticals, a jet engine producer, and a pulp and paper plant. Yet most companies are driven by similar global operating pressures. Regardless of industry, our customers share an imperative to be cost-efficient, profitable and environmentally responsible producers. To achieve this, companies throughout the world are focusing on core competencies by outsourcing as much work as possible to an increasingly concentrated vendor base. [CAPTION] ["Our product--Solutions. We solve the knottiest problems of filtration and separations for our customers . . . and do so with a broader range of proprietary technologies than any competitor."] This trend of outsourcing and vendor consolidation meshes seamlessly with our major strategic move begun at the end of fiscal 1994 to become an integrated source for high-end filtration and separations. As part of that strategy we emphasize systems over components and provide sophisticated and unique custom-engineered solutions for customer problems. To effectively provide this comprehensive support from the design stage throughout installation and beyond, has required, appropriately enough, the "re-engineering" of our Engineering Departments in the U.S., Europe and Asia. Additional scientists and laboratories have also been added throughout the world, particularly in Asia. I am pleased to say that this investment was substantially completed by the end of 1996. We have also refocused and bolstered research and development over the past two years. The results are gratifying. More new products were introduced in 1996 than at any time in our history. Equally significant, a bevy of developments in the pipeline promise the continuing release of commercially significant products through the end of this century. Such internal generation of new products remains our core focus. But to master every possible technology in each of our broad markets is a fool's errand. So we have reached out to other companies, universities and customers to add technology to our portfolio. These arrangements run the gamut from licensing agreements to exclusive marketing partnerships to acquisitions. This openness has, in just the last few years, brought us such capabilities as ceramic filter materials for hot gas applications, molecular purifiers for the semiconductor industry, ultrafiltration for just about everything and blood collection systems for blood processing, to name but a few. These technologies and others fit within our strategic vision by addressing the pressing purification and separations needs of our customers. Our sales growth will continue to be driven by new products, new geographies, acquisitions and alliances. Each of these made a significant contribution in the year. Strategic acquisitions in the Health Care segment added about $38 million to our sales in the year. Asia, outside Japan, where we have been investing heavily, grew 41 percent. Each of our three major markets achieved double-digit sales growth in 1996. For the third year in a row, our best growth--19 percent--came from Fluid Processing. Sales to Microelectronics customers, which now account for 39 percent of this segment, increased more than 20 percent for the third consecutive year. We were particularly successful in the U.S., where Microelectronics sales jumped 60 percent over fiscal 1995. We expect to be able to sustain growth as new products increase our penetration. Yet even without the Microelectronics contribution, Fluid Processing grew 18 percent. Sales in Health Care increased 19 percent and continue to represent close to half of Pall's total sales. Medical Product sales account for half of these revenues. All four of our Health Care submarkets experienced doubledigit local currency growth. 5

To increase the momentum of sales to blood centers and leverage our acquisition of Medsep, we restructured our distribution and now sell direct to blood centers. At the same time, our Hospital Products distributors are focused more intensely on sales to hospitals. Sales to blood centers now represent 42 percent of our blood filter sales, up from 21 percent just two years ago. This increased focus will result in better sales growth and service to both

To increase the momentum of sales to blood centers and leverage our acquisition of Medsep, we restructured our distribution and now sell direct to blood centers. At the same time, our Hospital Products distributors are focused more intensely on sales to hospitals. Sales to blood centers now represent 42 percent of our blood filter sales, up from 21 percent just two years ago. This increased focus will result in better sales growth and service to both blood center and hospital customers. We were mildly but pleasantly surprised by the robust growth in Aeropower of 10 1/2 percent. Sales in the Aerospace subsegment, at about $100 million, were up 6 percent against the difficult comparison of a $9 million, one-time sale to the U.K. military in fiscal 1995. Commercial Aerospace business increased 27 percent. We expect to see double-digit growth for some time to come in this market. The commercial sector now represents about half of our Aerospace sales. We continue to fortify our distribution in this market to ensure our ability to capitalize on its promise. Sales to U.S. military customers now account for just 3 1/2 percent of Pall's total sales, and actually showed an increase in fiscal 1996 of 14 percent. The Industrial Hydraulics segment is 58 percent of Aeropower and also increased 14 percent. These results will be bolstered in 1997 as our separations technologies and experience expand in this part of the business. We continued to generate cash in fiscal 1996 and increased our dividend this year by 17 percent so that we still distributed about 40 percent of after-tax profits. We purchased the Medical Plastics business of Bayer for $45 million in cash. We bought back $10 million of our own stock and spent $82 million on capital projects. Even so, our borrowings, net of cash and short-term investments, increased just $13 million to $98 million. Our balance sheet remains very strong with net debt at 13 percent of equity. Return on average equity increased to 20 percent this year. In fiscal year 1997 we intend to establish manufacturing facilities in The Republic of Ireland and take advantage of that country's favorable tax rates. We also plan to open modest facilities in India under a joint venture with our long-time local distributor. [CAPTION] ["Your company's ability to master complex technologies to achieve solutions to real customer problems has never been greater."] The cover of this Report is a reproduction of an original watercolor from 1922 by Paul Klee entitled Separation in the Evening. The Swiss-born Klee is renowned for his creativity and for his ability to continually reinvent his art while remaining true to his ideals. For us, the painting captures our vision of attacking problems from multiple directions with a bright and varied palette. The following pages detail a wealth of capabilities and a mountain of banked potential ready to be converted to sales. Your company's ability to master complex technologies to achieve solutions to real customer problems has never been greater. I welcome you to our company and ask you to share our zeal for the future.
/s/ Eric Krasnoff Eric Krasnoff Chairman and Chief Executive Officer

6

[CAPTION] ["IN THE LAST TWO YEARS SALES INCREASED 37% TO $960 MILLION. OUR SALES GOAL OF $1 BILLION DURING CALENDAR YEAR 1996 IS WITHIN REACH."] [PHOTO OF JEREMY HAYWARD-SURRY, PRESIDENT,

[CAPTION] ["IN THE LAST TWO YEARS SALES INCREASED 37% TO $960 MILLION. OUR SALES GOAL OF $1 BILLION DURING CALENDAR YEAR 1996 IS WITHIN REACH."] [PHOTO OF JEREMY HAYWARD-SURRY, PRESIDENT, TREASURER AND CHIEF FINANCIAL OFFICER] [CAPTION] [50 YEARS OF INNOVATION] [CAPTION] ["OUR MANUFACTURING PHILOSOPHY IS TO ADHERE TO THE HIGHEST INTERNATIONAL QUALITY AND ENVIRONMENTAL STANDARDS AND TO GLOBALIZE THESE EFFORTS TO BETTER SUPPORT OUR CUSTOMERS."] [PHOTO OF DEREK WILLIAMS, EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER] 7

HOSPITAL PRODUCTS PATIENT PROTECTION Pall filters play a vital role protecting hospital patients receiving blood transfusions, undergoing open-heart surgery, organ transplants, intravenous feeding and breathing therapy. Our hospital products business grew by 9 percent. TRENDS TO CONTROL COSTS Pressure on health care economics continues unabated but with a new target. No longer simply a purchasing exercise, hospitals are focused on improving patient outcomes as a means to strengthen their bottom lines. Clinical data indicating that filtration is a means to improve patient outcomes and reduce health care costs continues to mount. Pall filters are the most widely used in these studies. Hospital administrators and group purchasing organizations -- an industry "born" to watch costs -- are selecting products that add value by reducing the cost of patient care. ROOM FOR GROWTH When we first entered the white blood cell filtration market, most filters were used on critically ill patients. Blood filtration opportunities in general surgical procedures, such as gall bladder surgery, hip replacement and appendectomies, are still largely untapped. PRODUCTS FOR THE PROVIDER We are addressing the needs of nursing personnel PROBLEM: Complications resulting from blood transfusions significantly increase costs, prolong hospital stays, and pose patient health problems for years to come. [PHOTO OF EZ PRIME REDUCTION FILTER] The new EZ Prime bedside leukocyte reduction filter is easier to use, while ensuring a safer blood product. [PHOTO OF PALL FILTER] Pall filters are often used in the operating room to minimize transfusion complications and risks. [PHOTO ASSISTANT]

HOSPITAL PRODUCTS PATIENT PROTECTION Pall filters play a vital role protecting hospital patients receiving blood transfusions, undergoing open-heart surgery, organ transplants, intravenous feeding and breathing therapy. Our hospital products business grew by 9 percent. TRENDS TO CONTROL COSTS Pressure on health care economics continues unabated but with a new target. No longer simply a purchasing exercise, hospitals are focused on improving patient outcomes as a means to strengthen their bottom lines. Clinical data indicating that filtration is a means to improve patient outcomes and reduce health care costs continues to mount. Pall filters are the most widely used in these studies. Hospital administrators and group purchasing organizations -- an industry "born" to watch costs -- are selecting products that add value by reducing the cost of patient care. ROOM FOR GROWTH When we first entered the white blood cell filtration market, most filters were used on critically ill patients. Blood filtration opportunities in general surgical procedures, such as gall bladder surgery, hip replacement and appendectomies, are still largely untapped. PRODUCTS FOR THE PROVIDER We are addressing the needs of nursing personnel PROBLEM: Complications resulting from blood transfusions significantly increase costs, prolong hospital stays, and pose patient health problems for years to come. [PHOTO OF EZ PRIME REDUCTION FILTER] The new EZ Prime bedside leukocyte reduction filter is easier to use, while ensuring a safer blood product. [PHOTO OF PALL FILTER] Pall filters are often used in the operating room to minimize transfusion complications and risks. [PHOTO ASSISTANT] Technical assistance routinely provided by Pall is critical to the success of any leukocyte reduction program. 8

for products that are not only effective but easy to use. The recently introduced EZ Prime bedside filter is a proprietary self-priming leukocyte depletion filter that satisfies these dual requirements. MORE THAN BLOOD FILTERS A quarter of Pall revenues from hospital sales are non-blood related and equally critical to patient care. At present, ventilator-associated pneumonia ranks third as the most likely infection to contract during a hospital stay. It also ranks highest in documented costs, due to diagnostic testing, drug therapy and prolonged hospitalization. Pall's breathing circuit filters minimize the risk of infection, thereby reducing related post-infection costs. They provide extremely affordable protection and sales of Pall breathing circuit filters reflect this worldwide. NEW OPPORTUNITIES We are now focused on a wealth of new applications including filtration of salvaged blood. This is blood that has been removed, cleansed and returned to patients undergoing cardiac, or other extensive surgeries. We also anticipate continued growth from leukocyte filtration as it becomes the global standard of care for all recipients of blood transfusions. OPPORTUNITY: Studies show that each unit of donor blood received by patients during surgery increases the risk of postoperative infection by 15 percent, a figure that accumulates with every additional transfusion. For a few dollars

for products that are not only effective but easy to use. The recently introduced EZ Prime bedside filter is a proprietary self-priming leukocyte depletion filter that satisfies these dual requirements. MORE THAN BLOOD FILTERS A quarter of Pall revenues from hospital sales are non-blood related and equally critical to patient care. At present, ventilator-associated pneumonia ranks third as the most likely infection to contract during a hospital stay. It also ranks highest in documented costs, due to diagnostic testing, drug therapy and prolonged hospitalization. Pall's breathing circuit filters minimize the risk of infection, thereby reducing related post-infection costs. They provide extremely affordable protection and sales of Pall breathing circuit filters reflect this worldwide. NEW OPPORTUNITIES We are now focused on a wealth of new applications including filtration of salvaged blood. This is blood that has been removed, cleansed and returned to patients undergoing cardiac, or other extensive surgeries. We also anticipate continued growth from leukocyte filtration as it becomes the global standard of care for all recipients of blood transfusions. OPPORTUNITY: Studies show that each unit of donor blood received by patients during surgery increases the risk of postoperative infection by 15 percent, a figure that accumulates with every additional transfusion. For a few dollars per patient, Pall filters enable hospitals to remove leukocytes from donor blood. Leukocytes are the known culprit in 90 percent of transfusion complications. They transmit viruses and infectious agents, as well as contribute to immune system suppression in the recipient. A standard of care evolution is taking place in which health care providers are advocating the removal of white blood cells from all donor blood as a means to protect patients and drive costs from the overall system. With clinical studies building a convincing case for leukocyte reduction, we believe the hospital filtration market has only begun to realize its vast $600 million global potential. [PHOTO OF DOCTOR WITH YOUNG PATIENT] SOLUTION: Hospitals can dramatically minimize the threat to patients and realize cost savings by using Pall filters to reduce potentially dangerous viruses and contaminants in transfused donor blood. 9

BLOOD CENTERS THE LAUNCH OF MEDSEP Pall's blood center business grew 71 percent worldwide in fiscal 1996 as the move toward universal filtration intensifies. Central to this growth is Medsep Corporation, which was created in September 1995 following the acquisition of the Medical Plastics business of Bayer Corporation. In less than a year the benefits are showing, with an expanded range of products, technical support and service. Medsep is one of only three companies in the world licensed to sell whole blood collection systems in the U.S. MORE THAN SEMANTICS Blood centers are different from hospital blood banks and require different products and support. Pall is uniquely positioned to meet the requirements in either setting. Blood centers serve as freestanding agents for the collection and processing of donated blood, which is then sold to hospital blood banks. Hospital blood banks support the clinical needs of patients -- they inventory, issue and monitor transfusion services in the hospital. Only rarely do hospitals collect or process blood. Increasingly, blood centers are operating as licensed manufacturers of biologicals (much like a pharmaceutical producer) and as such are subject to compliance with standard operating procedures, quality assurance practices and audits by regulatory agencies. UNIVERSAL FILTRATION MOVES CLOSER Through co-marketing programs, supply contracts and educational seminars, we are PROBLEM: Blood centers must process blood efficiently, reliably and consistently prior to shipment to transfusion centers for

BLOOD CENTERS THE LAUNCH OF MEDSEP Pall's blood center business grew 71 percent worldwide in fiscal 1996 as the move toward universal filtration intensifies. Central to this growth is Medsep Corporation, which was created in September 1995 following the acquisition of the Medical Plastics business of Bayer Corporation. In less than a year the benefits are showing, with an expanded range of products, technical support and service. Medsep is one of only three companies in the world licensed to sell whole blood collection systems in the U.S. MORE THAN SEMANTICS Blood centers are different from hospital blood banks and require different products and support. Pall is uniquely positioned to meet the requirements in either setting. Blood centers serve as freestanding agents for the collection and processing of donated blood, which is then sold to hospital blood banks. Hospital blood banks support the clinical needs of patients -- they inventory, issue and monitor transfusion services in the hospital. Only rarely do hospitals collect or process blood. Increasingly, blood centers are operating as licensed manufacturers of biologicals (much like a pharmaceutical producer) and as such are subject to compliance with standard operating procedures, quality assurance practices and audits by regulatory agencies. UNIVERSAL FILTRATION MOVES CLOSER Through co-marketing programs, supply contracts and educational seminars, we are PROBLEM: Blood centers must process blood efficiently, reliably and consistently prior to shipment to transfusion centers for patient use. From the moment a unit of blood is collected, the clock, for its shelf life, begins to tick. OPPORTUNITY: Blood centers process blood for patient use in compliance with rigorous regulatory standards within severe time constraints. Platelets, for example, must be collected, processed (which includes various quality control tests), shipped and administered to patients in no more than 5 days from collection. Donor blood is now screened for the presence of cytomegalovirus (CMV) for those patients requiring CMV-negative blood products. CMV screening adds cost and time to the process. Leukocyte reduction by Pall filtration has been clinically demonstrated to be equivalent to testing of blood components for CMV. Removing cytomegalovirus through filtration obviates the need for this additional test and maximizes blood availability. Pall filtration makes CMV-safe products readily available for all patients and simultaneously enhances blood quality. We believe that, as blood centers understand not just the health benefits but the economic benefits of filtration, Pall has the inside track on a world market worth $800 million. [PHOTO OF LAB TECHNICIAN] Pall's Scientific and Laboratory Services department provides high-level customized technical support. 10

[PHOTO OF LAB TECHNICIAN WORKING ON LEUKOTRAP RC-PL SYSTEM] The Leukotrap RC-PL system, a unique in-line blood processing system, in use at the American Red Cross Blood Services, Southern Region. helping to raise awareness of the benefits of leukocyte depleted blood products. Countries around the world are beginning to put policies in place that require filtered blood. In fact, European blood centers, led by France, are the architects of universal filtration as the standard of care. France, Sweden and Switzerland have made significant progress toward universal filtration. More recently, the Austrian Red Cross selected Pall to help it meet its goal of 100 percent filtration. Germany and New Zealand are currently developing policies for 1997 and beyond. The Japanese Ministry of Health is evaluating its long-standing preference for bedside filtration and will likely let economics and blood quality determine the right balance between bedside and blood center filtration. ROOM FOR GROWTH The fact that 85 percent of donor blood worldwide is not filtered creates extraordinary

[PHOTO OF LAB TECHNICIAN WORKING ON LEUKOTRAP RC-PL SYSTEM] The Leukotrap RC-PL system, a unique in-line blood processing system, in use at the American Red Cross Blood Services, Southern Region. helping to raise awareness of the benefits of leukocyte depleted blood products. Countries around the world are beginning to put policies in place that require filtered blood. In fact, European blood centers, led by France, are the architects of universal filtration as the standard of care. France, Sweden and Switzerland have made significant progress toward universal filtration. More recently, the Austrian Red Cross selected Pall to help it meet its goal of 100 percent filtration. Germany and New Zealand are currently developing policies for 1997 and beyond. The Japanese Ministry of Health is evaluating its long-standing preference for bedside filtration and will likely let economics and blood quality determine the right balance between bedside and blood center filtration. ROOM FOR GROWTH The fact that 85 percent of donor blood worldwide is not filtered creates extraordinary opportunities for us. We're penetrating new markets with an unrivaled family of products including the Leukotrap RC-PL system, the first and only closed system that provides simultaneous pre-storage leukocyte reduction of both red cells and platelets. Our newest addition is the Leukotrap whole blood filter used to remove white cells from red cell and plasma components prior to component processing. This offers greater ease of use for blood center processing with the added value of leukocyte reduction for both components. SOLUTION: Pall offers an unmatched range of advanced filtration products for whole blood and blood components that enable blood centers to ship high-quality blood products for immediate patient use. [PHOTO OF COMPUTING PC] Pall R&D programs secure future advancements in the field of blood component processing. [PHOTO OF BAG OF DONATED BLOOD] Medsep helps blood centers provide quality blood components with the added value of leukocyte reduction. 11

PHARMACEUTICALS OPPORTUNITY: [picture of filter] Viral contamination is a very real and ever-present threat to the makers of biopharmaceuticals and blood fraction products and ultimately to the patients who receive them. Viruses can invade and destroy the cells that are the "factories" used to express these valuable products. Pall's Ultipor VF virus removal filter is part of a family of filtration and ultrafiltration products designed to lessen the threat of viruses as small as 50 nanometers (50 billionths of a meter) at every point in the production process. The Ultipor VF virus filter is already being sold -its performance supported by extensive testing and publication by the U.S. Centers for Disease Control -- as a highly effective device for the removal of some of even the smallest known viruses. Given the rapidly growing need for virus deactivation and removal, Pall filters are expected to open up, over the next five years, a $40 million global opportunity. [picture of molecule] PROBLEM: Producers of biopharmaceuticals and plasma fractions must entirely remove devastating viral contaminants from their products and processes.

PHARMACEUTICALS OPPORTUNITY: [picture of filter] Viral contamination is a very real and ever-present threat to the makers of biopharmaceuticals and blood fraction products and ultimately to the patients who receive them. Viruses can invade and destroy the cells that are the "factories" used to express these valuable products. Pall's Ultipor VF virus removal filter is part of a family of filtration and ultrafiltration products designed to lessen the threat of viruses as small as 50 nanometers (50 billionths of a meter) at every point in the production process. The Ultipor VF virus filter is already being sold -its performance supported by extensive testing and publication by the U.S. Centers for Disease Control -- as a highly effective device for the removal of some of even the smallest known viruses. Given the rapidly growing need for virus deactivation and removal, Pall filters are expected to open up, over the next five years, a $40 million global opportunity. [picture of molecule] PROBLEM: Producers of biopharmaceuticals and plasma fractions must entirely remove devastating viral contaminants from their products and processes. [picture of employees using product] Pall products are used by our pharmaceutical manufacturing customers to purify the lifesaving medicines they provide for patients. [picture of employee in decontamination suit] 10

OUTPACING THE INDUSTRY Pall products are fundamental to the production of injectable pharmaceuticals, biopharmaceuticals and therapeutic biologicals for both human and veterinary medicine. Sterilization and viral inactivation are often mandated by regulatory authority. While the pharmaceutical industry worldwide grew between 6 and 8 percent, Pall experienced double-digit growth. VIRUS REMOVAL The threat of viral contamination continues to drive the biopharmaceutical sector of this industry. Left unchecked, viruses can invade harvesting cells and can multiply and ultimately destroy valuable drugs. Regulatory agencies and producers alike prudently require virus removal. Wherever there is risk of viral contamination, the U.S. Food and Drug Administration (FDA) recommends that producers employ three separate mechanisms to remove them. With the addition of Pall Filtron last year, we now have two of the three accepted steps to offer customers. Each of these has been validated in accordance with existing FDA standards. FILTER VALIDATION Our Parametric Validation approach is helping producers of injectable pharmaceuticals and biopharmaceuticals to achieve FDArequired filter validation. Validation assures that a sterilizing filter will repeatedly achieve a pre-defined result. The primary tool used to verify filter performance is integrity testing. The Palltronic TruFlow integrity test instrument can easily be integrated into a customer's automated process. It employs state-of-the-art software and design to accurately measure filter performance and provide a record of the results. The process is further strengthened by Pall's Scientific and Laboratory Services (SLS) scientists who work closely with customers to define the parameters for filter validation testing. VALIDATION LABS We expect the demand for our validation services to increase two- to three-fold in the year ahead as customers convert to our approach to validation. In fiscal 1996, we performed more than 100 of these sensitive validation studies for customers, the results of which often accompany New Drug Applications submitted to the FDA, and other agencies around the world. SOLUTION: Pall's family of virus removal filters provide manufacturers with powerful tools to ensure total product purity.

OUTPACING THE INDUSTRY Pall products are fundamental to the production of injectable pharmaceuticals, biopharmaceuticals and therapeutic biologicals for both human and veterinary medicine. Sterilization and viral inactivation are often mandated by regulatory authority. While the pharmaceutical industry worldwide grew between 6 and 8 percent, Pall experienced double-digit growth. VIRUS REMOVAL The threat of viral contamination continues to drive the biopharmaceutical sector of this industry. Left unchecked, viruses can invade harvesting cells and can multiply and ultimately destroy valuable drugs. Regulatory agencies and producers alike prudently require virus removal. Wherever there is risk of viral contamination, the U.S. Food and Drug Administration (FDA) recommends that producers employ three separate mechanisms to remove them. With the addition of Pall Filtron last year, we now have two of the three accepted steps to offer customers. Each of these has been validated in accordance with existing FDA standards. FILTER VALIDATION Our Parametric Validation approach is helping producers of injectable pharmaceuticals and biopharmaceuticals to achieve FDArequired filter validation. Validation assures that a sterilizing filter will repeatedly achieve a pre-defined result. The primary tool used to verify filter performance is integrity testing. The Palltronic TruFlow integrity test instrument can easily be integrated into a customer's automated process. It employs state-of-the-art software and design to accurately measure filter performance and provide a record of the results. The process is further strengthened by Pall's Scientific and Laboratory Services (SLS) scientists who work closely with customers to define the parameters for filter validation testing. VALIDATION LABS We expect the demand for our validation services to increase two- to three-fold in the year ahead as customers convert to our approach to validation. In fiscal 1996, we performed more than 100 of these sensitive validation studies for customers, the results of which often accompany New Drug Applications submitted to the FDA, and other agencies around the world. SOLUTION: Pall's family of virus removal filters provide manufacturers with powerful tools to ensure total product purity. [picture of employee working with filters] Pall's Ultipor VF virus filters provide biopharmaceutical manufacturers the protection they need to assure that their products are free of viral contaminants. 11

DIAGNOSTICS AND MEMBRANE TECHNOLOGY GROWTH IN MOLECULAR BIOLOGY Pall is driving growth in this market through a remarkable range of proprietary membranes and porous media used by the diagnostics, molecular biology and health care markets. Pall membranes are available in rolls, sheets or discs for incorporation into specific customer applications. FORENSIC TESTING Few understand the consequences of inaccurate results more than the U.S. Federal Bureau of Investigation, where thousands of blood samples are analyzed each year. The FBI has specified Pall membranes to ensure accurate analysis of DNA in these samples. Pall membranes are also playing a dynamic role in molecular diagnostics for the Human Genome Project, an arduous, global research effort to decipher and map the body's intricate genetic coding system. Through our materials for sample preparation and DNA multiplex sequencing applications, we're providing researchers with a complete molecular biology package. This capability will prove particularly important to Pall in the years ahead as the market for sample preparation methodology blossoms into an estimated $4 billion a year industry. DIAGNOSTICS ADVANCES Pall is the leading provider of membranes used in glucose monitoring -- a burgeoning home testing market. Ongoing growth will be driven by the 120 million diabetics worldwide. PROBLEM: One daunting challenge for the Human Genome Project was to find a membrane that could help researchers accurately map and analyze all the genes on every chromosome in the human body. [picture of human in motion surrounded by helix] Pall membranes are playing a dynamic role in deciphering human genetics.

DIAGNOSTICS AND MEMBRANE TECHNOLOGY GROWTH IN MOLECULAR BIOLOGY Pall is driving growth in this market through a remarkable range of proprietary membranes and porous media used by the diagnostics, molecular biology and health care markets. Pall membranes are available in rolls, sheets or discs for incorporation into specific customer applications. FORENSIC TESTING Few understand the consequences of inaccurate results more than the U.S. Federal Bureau of Investigation, where thousands of blood samples are analyzed each year. The FBI has specified Pall membranes to ensure accurate analysis of DNA in these samples. Pall membranes are also playing a dynamic role in molecular diagnostics for the Human Genome Project, an arduous, global research effort to decipher and map the body's intricate genetic coding system. Through our materials for sample preparation and DNA multiplex sequencing applications, we're providing researchers with a complete molecular biology package. This capability will prove particularly important to Pall in the years ahead as the market for sample preparation methodology blossoms into an estimated $4 billion a year industry. DIAGNOSTICS ADVANCES Pall is the leading provider of membranes used in glucose monitoring -- a burgeoning home testing market. Ongoing growth will be driven by the 120 million diabetics worldwide. PROBLEM: One daunting challenge for the Human Genome Project was to find a membrane that could help researchers accurately map and analyze all the genes on every chromosome in the human body. [picture of human in motion surrounded by helix] Pall membranes are playing a dynamic role in deciphering human genetics. [picture of DNA strand] 12

In the coming fiscal year, we're expecting solid performance from the Hemasep medium with its capability to separate plasma from whole blood for use in single-step diagnostic test kits to measure blood sugar, cholesterol levels and cardiac markers. VALUE AND ECONOMY From original equipment manufacturers (OEMs) to laboratory devices to one-step diagnostics, customers use Pall products to ensure a strong competitive edge. Our wide selection of membranes, including nylon and other cast membranes, hydrophobic media and fibrous materials, allow customers to choose the most appropriate media for their specific application. In addition to the diversity of membranes, our customers recognize the value and economy of working with one vendor that can meet all of their diagnostic and analytical needs. Increasingly they are relying on Pall. [picture of sample] OPPORTUNITY: Mapping the human body's estimated 100,000 genes and understanding its biochemical structure may take 15 years. Thousands of DNA samples are prepared every day. Automated processes are then used to assemble the many millions of "letters" of DNA into a form that allows for easy access and analysis by researchers. One multiplex sequencing application is a fast, efficient and accurate method to sequence large amounts of DNA without centrifugation by transferring them to a membrane for analysis. In addition to DNA sequencing, samples need to be prepared for DNA analysis. Here, our Leukosorb and Hemasep membranes are proving to be ideal materials. As a result of this research, Pall will have played an important role in the understanding and eventual treatment of many of the 4,000 genetic diseases that afflict mankind. Aside from the $50 million potential opportunity for Pall at present, our ability to provide total customer support, from sample preparation through gene detection, could ultimately unlock a much broader market with a potential in the billions of dollars. [picture of employee looking at samples] Pall membranes for sample preparation and DNA sequencing provide researchers with accurate and consistent results.

In the coming fiscal year, we're expecting solid performance from the Hemasep medium with its capability to separate plasma from whole blood for use in single-step diagnostic test kits to measure blood sugar, cholesterol levels and cardiac markers. VALUE AND ECONOMY From original equipment manufacturers (OEMs) to laboratory devices to one-step diagnostics, customers use Pall products to ensure a strong competitive edge. Our wide selection of membranes, including nylon and other cast membranes, hydrophobic media and fibrous materials, allow customers to choose the most appropriate media for their specific application. In addition to the diversity of membranes, our customers recognize the value and economy of working with one vendor that can meet all of their diagnostic and analytical needs. Increasingly they are relying on Pall. [picture of sample] OPPORTUNITY: Mapping the human body's estimated 100,000 genes and understanding its biochemical structure may take 15 years. Thousands of DNA samples are prepared every day. Automated processes are then used to assemble the many millions of "letters" of DNA into a form that allows for easy access and analysis by researchers. One multiplex sequencing application is a fast, efficient and accurate method to sequence large amounts of DNA without centrifugation by transferring them to a membrane for analysis. In addition to DNA sequencing, samples need to be prepared for DNA analysis. Here, our Leukosorb and Hemasep membranes are proving to be ideal materials. As a result of this research, Pall will have played an important role in the understanding and eventual treatment of many of the 4,000 genetic diseases that afflict mankind. Aside from the $50 million potential opportunity for Pall at present, our ability to provide total customer support, from sample preparation through gene detection, could ultimately unlock a much broader market with a potential in the billions of dollars. [picture of employee looking at samples] Pall membranes for sample preparation and DNA sequencing provide researchers with accurate and consistent results. SOLUTION: Pall membranes were selected for their accuracy, reproducibility and ease of use in sample preparation and DNA multiplex sequencing. 13

BIOSEPARATIONS PALL FILTRON Pall's initiative into high-end separations, first applied to industrial markets two years ago, has now been expanded to the health care arena. Central to this initiative is the addition of Filtron to the Pall family, which has dramatically broadened our presence, capabilities and product offerings to include ultrafiltration membranes and cassettes. Ultrafiltration is required when fluids carry particles so small that they can be measured only by molecular weight. Pall Filtron's sophisticated ultrafiltration technology enables customers to filter to a level of 1/10,000th of one micron. TRANSLATABLE TECHNOLOGY Ultrafiltration is critical to such industries as biopharmaceuticals, blood fractionation, and food and beverage and chemical processing. Importantly, Pall had an established presence for many applications within these industries, and saw a need for a family of ultrafiltration products that would enable us to address the filtration needs of our customers at every stage of their process. Our merged technologies are also allowing us to approach new markets and applications, such as industrial latex and paint emulsions. VIRUS REDUCTION Similar to our offerings to the pharmaceuticals market (pgs. 10-11), producers of biopharmaceuticals and blood and plasma fractions have access to the broadest range of virus removal products on the market. We successfully introduced the Pall Filtron Omega 100 VR ultrafiltration cassette with the PROBLEM: Producers of paint and latex emulsions consume great quantities of water. Concerned with environmental and cost effects, they sought a method to maximize production and recycle water.

BIOSEPARATIONS PALL FILTRON Pall's initiative into high-end separations, first applied to industrial markets two years ago, has now been expanded to the health care arena. Central to this initiative is the addition of Filtron to the Pall family, which has dramatically broadened our presence, capabilities and product offerings to include ultrafiltration membranes and cassettes. Ultrafiltration is required when fluids carry particles so small that they can be measured only by molecular weight. Pall Filtron's sophisticated ultrafiltration technology enables customers to filter to a level of 1/10,000th of one micron. TRANSLATABLE TECHNOLOGY Ultrafiltration is critical to such industries as biopharmaceuticals, blood fractionation, and food and beverage and chemical processing. Importantly, Pall had an established presence for many applications within these industries, and saw a need for a family of ultrafiltration products that would enable us to address the filtration needs of our customers at every stage of their process. Our merged technologies are also allowing us to approach new markets and applications, such as industrial latex and paint emulsions. VIRUS REDUCTION Similar to our offerings to the pharmaceuticals market (pgs. 10-11), producers of biopharmaceuticals and blood and plasma fractions have access to the broadest range of virus removal products on the market. We successfully introduced the Pall Filtron Omega 100 VR ultrafiltration cassette with the PROBLEM: Producers of paint and latex emulsions consume great quantities of water. Concerned with environmental and cost effects, they sought a method to maximize production and recycle water. Ultrafiltration is required when fluids carry particles so small they can be measured only by molecular weight. [picture of fluid] [picture of paint makeup] [picture of employee looking through microscope] Our filters help paint manufacturers worldwide to improve paint quality and reduce waste water. [picture of hand painting] Pall provides solutions to difficult contamination problems through on-site testing and extensive work in its Scientific and Laboratory Services labs. 14

[picture of three paint cans pouring out into puddle] ability to remove the smallest known virus, a class known as Parvovirus. In addition, our products enable biopharmaceutical manufacturers to separate water and small molecules from biologically active components, creating stronger concentrations of vaccines, antibodies, cells, albumen and much more, all with significant cost savings to the producer. LABORATORY MARKETS Our technologies are creating significant prospects in the industrial, government and academic laboratory sector, estimated at more than $500 million globally. Pall nearly doubled its laboratory product line in fiscal 1996, and now offers ultrafiltration systems, syringe filters, the MiniKleenpak filter and the Mini-DMF dynamic membrane filter. Researchers can use lab-sized Pall products right from the beginning and can scale up to full production when ready. [picture of maxisett cassette system] OPPORTUNITY: Paint and latex emulsion producers are seeking to increase production and reuse water. Pall technology is helping them to achieve this by teaming our industrial Maxisette cassette system with their white water waste recovery efforts. When waste water meets this high-performance ultrafiltration system, two streams result. One is a

[picture of three paint cans pouring out into puddle] ability to remove the smallest known virus, a class known as Parvovirus. In addition, our products enable biopharmaceutical manufacturers to separate water and small molecules from biologically active components, creating stronger concentrations of vaccines, antibodies, cells, albumen and much more, all with significant cost savings to the producer. LABORATORY MARKETS Our technologies are creating significant prospects in the industrial, government and academic laboratory sector, estimated at more than $500 million globally. Pall nearly doubled its laboratory product line in fiscal 1996, and now offers ultrafiltration systems, syringe filters, the MiniKleenpak filter and the Mini-DMF dynamic membrane filter. Researchers can use lab-sized Pall products right from the beginning and can scale up to full production when ready. [picture of maxisett cassette system] OPPORTUNITY: Paint and latex emulsion producers are seeking to increase production and reuse water. Pall technology is helping them to achieve this by teaming our industrial Maxisette cassette system with their white water waste recovery efforts. When waste water meets this high-performance ultrafiltration system, two streams result. One is a concentrated stream of polymer that can be converted back to paint and sold. The other can either be reused within the plant or harmlessly disposed. One European customer who generated copious amounts of waste water before installing the system 2 years ago has not generated a single liter of waste water since. For Pall, this is a promising global market with a potential value of $100 million. SOLUTION: Through an application known as white water recovery, Pall is enabling these producers to meet these goals and realize significant cost savings. 15

FOOD AND BEVERAGE BEVERAGE FILTRATION Pall technology has a growing presence in the food and beverage industry, where our products are used by dominant producers of beer, wine, bottled water and other beverages. In fiscal 1996, sales to this industry grew by about 8 percent. Part of the growth impetus was our CFS cluster filter system for cold stabilization of beer. WATER FILTRATION Our Microza* ultrafiltration modules provide high-purity filtration for consumer bottled water. This market is now largest in Europe, where governments have mandated processing standards. This year we also commercialized a system for the filtration of whey. This fractionation system removes fat and bacteria from whey, so that biologically active proteins can be extracted and used as natural food additives. An integral part of this system is Pall's DMF dynamic membrane filter. THE BEER MARKET The linchpin of growth continues to be cold beer filtration as the most economic alternative to traditional heat pasteurization. Far from a fad, consumers are demanding a natural, fresher-tasting product, and brewers worldwide realize that these virtues are significantly diminished by heat pasteurization. These signs suggest that cold beer stabilization will be the platform for the future and no company is better positioned than Pall to capitalize on this rising market. *Microza is a registered trademark of ASAHI CHEMICAL INDUSTRY CO. LTD. PROBLEM: Breweries seek effective ways to improve product quality, taste and shelf life while remaining cost competitive. [picture of glass of beer] [picture of wheat] 16

FOOD AND BEVERAGE BEVERAGE FILTRATION Pall technology has a growing presence in the food and beverage industry, where our products are used by dominant producers of beer, wine, bottled water and other beverages. In fiscal 1996, sales to this industry grew by about 8 percent. Part of the growth impetus was our CFS cluster filter system for cold stabilization of beer. WATER FILTRATION Our Microza* ultrafiltration modules provide high-purity filtration for consumer bottled water. This market is now largest in Europe, where governments have mandated processing standards. This year we also commercialized a system for the filtration of whey. This fractionation system removes fat and bacteria from whey, so that biologically active proteins can be extracted and used as natural food additives. An integral part of this system is Pall's DMF dynamic membrane filter. THE BEER MARKET The linchpin of growth continues to be cold beer filtration as the most economic alternative to traditional heat pasteurization. Far from a fad, consumers are demanding a natural, fresher-tasting product, and brewers worldwide realize that these virtues are significantly diminished by heat pasteurization. These signs suggest that cold beer stabilization will be the platform for the future and no company is better positioned than Pall to capitalize on this rising market. *Microza is a registered trademark of ASAHI CHEMICAL INDUSTRY CO. LTD. PROBLEM: Breweries seek effective ways to improve product quality, taste and shelf life while remaining cost competitive. [picture of glass of beer] [picture of wheat] 16

Cluster Filter System Our cluster filter system provides a fully automated process for preserving the natural taste of beer through cold stabilization. Using our process knowledge and systems integration skills, we created a system that can integrate immediately into brewery process equipment and interface directly with its computer systems. And to ensure customer satisfaction, we have three brew masters of our own to walk customers through the new technology. The systems have been sold to breweries in Germany, Japan, Korea and Brazil. Other potential markets include China, which is expected to become the biggest beer-producing country in the world by the year 2000, and the U.S., where a growing microbrewing industry is taking a closer look at cold beer stabilization. In addition, breweries and governments alike are looking to replace diatomaceous earth (DE) which is part of the microbial sterilization process. DE is used copiously and is costly and difficult to handle and discard. In France, DE disposal is such a problem that the government will pay 50 percent of the conversion fee for beer and wine producers. In addition to CFS technology, the PallSep vibrating membrane system can also help alleviate that problem. [picture of person filtering whey through their fingers] This year Pall commercialized a system for the filtration of whey. [picture of man observing beer line] Pall's cluster filter system meets the need for effective stabilization and retention of the natural flavor of beer. [picture of beer pasteurization device] OPPORTUNITY: The brewing industry is awakening to the tremendous advantages of cold beer stabilization. Breweries and consumers around the world are recognizing the effect heat pasteurization has on beer. Cold stabilization ensures microbial control and stability while also producing a much fresher tasting product with a longer shelf life. Pall's cluster filter system is enabling breweries to enhance product quality and reduce costs. As brewing becomes

Cluster Filter System Our cluster filter system provides a fully automated process for preserving the natural taste of beer through cold stabilization. Using our process knowledge and systems integration skills, we created a system that can integrate immediately into brewery process equipment and interface directly with its computer systems. And to ensure customer satisfaction, we have three brew masters of our own to walk customers through the new technology. The systems have been sold to breweries in Germany, Japan, Korea and Brazil. Other potential markets include China, which is expected to become the biggest beer-producing country in the world by the year 2000, and the U.S., where a growing microbrewing industry is taking a closer look at cold beer stabilization. In addition, breweries and governments alike are looking to replace diatomaceous earth (DE) which is part of the microbial sterilization process. DE is used copiously and is costly and difficult to handle and discard. In France, DE disposal is such a problem that the government will pay 50 percent of the conversion fee for beer and wine producers. In addition to CFS technology, the PallSep vibrating membrane system can also help alleviate that problem. [picture of person filtering whey through their fingers] This year Pall commercialized a system for the filtration of whey. [picture of man observing beer line] Pall's cluster filter system meets the need for effective stabilization and retention of the natural flavor of beer. [picture of beer pasteurization device] OPPORTUNITY: The brewing industry is awakening to the tremendous advantages of cold beer stabilization. Breweries and consumers around the world are recognizing the effect heat pasteurization has on beer. Cold stabilization ensures microbial control and stability while also producing a much fresher tasting product with a longer shelf life. Pall's cluster filter system is enabling breweries to enhance product quality and reduce costs. As brewing becomes more of a science, CFS technology is providing a sophisticated solution that promises to open up a $110 million opportunity for Pall in brewing centers around the world. SOLUTION: Pall created the cluster filter system, a totally automated, cost-effective system that preserves natural beer taste through cold stabilization. 17

INDUSTRIAL HYDRAULICS VALUE-ADDED ROLE Pall serves a wide array of markets from automotive, steel making, pulp and paper and power generation. Our filtration and separation expertise is regularly called upon to develop and provide solutions that save our customers time and money. This value-added role contributed to sales growth in this market of 14 percent in fiscal 1996. GROWTH IN EMERGING NATIONS These gains were well distributed worldwide, and notably from emerging markets like India, China, and the Commonwealth of Independent States. Accordingly, investment in people and local partnerships to support these regions continues. The intense work occurring to build roads, power plants, telecommunications facilities and other projects to develop the infrastructure of these budding world markets is amplifying the need for our products and systems expertise. A BUSINESS MAKEOVER Greater operating and cost efficiencies continue to be the crusade for our customers. Paramount to their success are Pall products that help extend the life of process fluids and equipment such as our coreless Ultipor III filter element series, fluid cleanliness monitoring systems, and a broad range of purifiers and backwash filter systems. Our coreless Ultipor III filter, which is manufactured without metallic parts, was a strong performer in 1996 and represents a solid platform for future growth. This lightweight filter is easier to handle from a maintenance standpoint. PROBLEM:

INDUSTRIAL HYDRAULICS VALUE-ADDED ROLE Pall serves a wide array of markets from automotive, steel making, pulp and paper and power generation. Our filtration and separation expertise is regularly called upon to develop and provide solutions that save our customers time and money. This value-added role contributed to sales growth in this market of 14 percent in fiscal 1996. GROWTH IN EMERGING NATIONS These gains were well distributed worldwide, and notably from emerging markets like India, China, and the Commonwealth of Independent States. Accordingly, investment in people and local partnerships to support these regions continues. The intense work occurring to build roads, power plants, telecommunications facilities and other projects to develop the infrastructure of these budding world markets is amplifying the need for our products and systems expertise. A BUSINESS MAKEOVER Greater operating and cost efficiencies continue to be the crusade for our customers. Paramount to their success are Pall products that help extend the life of process fluids and equipment such as our coreless Ultipor III filter element series, fluid cleanliness monitoring systems, and a broad range of purifiers and backwash filter systems. Our coreless Ultipor III filter, which is manufactured without metallic parts, was a strong performer in 1996 and represents a solid platform for future growth. This lightweight filter is easier to handle from a maintenance standpoint. PROBLEM: Contaminated lubricating fluids in steel and aluminum rolling mills cause product defects and increase downtime at a cost of millions of dollars per month in lost revenues. [Graphic of Worker] Strong competition necessitates high productivity and efficiency. Pall filters help achieve the fluid cleanliness necessary to reduce defects, mill downtime and associated costs. [Graphic of filters] [Graphic of backwash filter system] OPPORTUNITY: The resurgence of the steel industry in the U.S. and in developing nations has necessitated significant capital investment to recondition and modernize existing mills. Pall's broad range of backwash filter systems, designed to customer specifications, dramatically improve fluid cleanliness, and eliminate metal sheet scratches, defects and occlusions. Spurred by the mounting competitive needs of the steel and aluminum rolling mills, Pall backwash filter systems are garnering an ever-growing slice of a $100 million application. 18

[A crane holding backwash filter] Further, the absence of metallic parts makes it more environmentally friendly and less costly to dispose of. FULL SERVICE RESPONSIBILITY Total Cleanliness Control (TCC) is a bold concept introduced globally last year. The European automotive industry has been a particularly strong proponent of TCC which sets Pall apart as a total service provider to our customers by assuming full on-site responsibility for maintaining fluid cleanliness and equipment performance throughout their processes. By taking the maintenance and monitoring burden off our customers, they save time and money. OEM PARTNERSHIPS We're also using our leading-edge products and technology expertise to forge closer ties with OEMs. This growing segment of our business is increasing our presence in regions of the world like Asia, where OEM products are likely to be shipped. Worldwide, we're educating customers about the importance of fluid cleanliness standards through our seminar series conducted at major universities. SOLUTION: Pall Septra and ProSep backwash filter systems are helping these expansive manufacturing operations to meet and exceed required cleanliness levels and increase profits.

[A crane holding backwash filter] Further, the absence of metallic parts makes it more environmentally friendly and less costly to dispose of. FULL SERVICE RESPONSIBILITY Total Cleanliness Control (TCC) is a bold concept introduced globally last year. The European automotive industry has been a particularly strong proponent of TCC which sets Pall apart as a total service provider to our customers by assuming full on-site responsibility for maintaining fluid cleanliness and equipment performance throughout their processes. By taking the maintenance and monitoring burden off our customers, they save time and money. OEM PARTNERSHIPS We're also using our leading-edge products and technology expertise to forge closer ties with OEMs. This growing segment of our business is increasing our presence in regions of the world like Asia, where OEM products are likely to be shipped. Worldwide, we're educating customers about the importance of fluid cleanliness standards through our seminar series conducted at major universities. SOLUTION: Pall Septra and ProSep backwash filter systems are helping these expansive manufacturing operations to meet and exceed required cleanliness levels and increase profits. [Man standing next to filter] 19

AEROSPACE INCREASING OPPORTUNITIES Pall's aerospace business continued to gain strength in fiscal 1996, fueled by the increase of new commercial aircraft and a battery of alliances, partnerships and long-term agreements with OEMs. As the world's leading supplier of filters to the commercial and military aircraft market, our products are meeting a wealth of applications needs. There are as many as eight main systems on a single twin-engine commercial jet that require filtration and as many as ten filters per engine. Our products are also a vital part of the vehicles that provide ground support, and are found on fuel trucks and cargo loaders. EXPANDING GLOBAL FLEET Our comprehensive applications capability is particularly important in light of anticipated future growth of the commercial airline industry. McDonnell Douglas forecasts that the worldwide fleet of passenger jet aircraft will double by the year 2013, while the volume of air traffic triples. And since newer aircraft use significantly more filters than older generations, this bodes well for Pall. At the same time, industry OEMs are actively reducing costs and overhead by relying on preferred suppliers with the requisite experience and products to augment their [Tail of an airplane] PROBLEM: The U.S. Department of Defense and Pratt and Whitney are jointly developing a cleaner burning jet fuel that allows high-temperature burning without the usual coke build up. Competing coalescers failed to remove water from the stored fuel. [Engine with build up] [Engine with reduced build up] The engine on the left developed coke build up burning traditional jet fuel. After running the same engine with the new cleaner burning fuel, the engine on the right demonstrates that the coke build up was significantly reduced. 20

[Tail of large airplane with small airplane] capabilities. These trends have already opened up tremendous prospects for Pall, whose filters are used by every commercial airline in the world. THE AFTERMARKET OPPORTUNITY One of the most attractive opportunities for Pall is the aftermarket, or

AEROSPACE INCREASING OPPORTUNITIES Pall's aerospace business continued to gain strength in fiscal 1996, fueled by the increase of new commercial aircraft and a battery of alliances, partnerships and long-term agreements with OEMs. As the world's leading supplier of filters to the commercial and military aircraft market, our products are meeting a wealth of applications needs. There are as many as eight main systems on a single twin-engine commercial jet that require filtration and as many as ten filters per engine. Our products are also a vital part of the vehicles that provide ground support, and are found on fuel trucks and cargo loaders. EXPANDING GLOBAL FLEET Our comprehensive applications capability is particularly important in light of anticipated future growth of the commercial airline industry. McDonnell Douglas forecasts that the worldwide fleet of passenger jet aircraft will double by the year 2013, while the volume of air traffic triples. And since newer aircraft use significantly more filters than older generations, this bodes well for Pall. At the same time, industry OEMs are actively reducing costs and overhead by relying on preferred suppliers with the requisite experience and products to augment their [Tail of an airplane] PROBLEM: The U.S. Department of Defense and Pratt and Whitney are jointly developing a cleaner burning jet fuel that allows high-temperature burning without the usual coke build up. Competing coalescers failed to remove water from the stored fuel. [Engine with build up] [Engine with reduced build up] The engine on the left developed coke build up burning traditional jet fuel. After running the same engine with the new cleaner burning fuel, the engine on the right demonstrates that the coke build up was significantly reduced. 20

[Tail of large airplane with small airplane] capabilities. These trends have already opened up tremendous prospects for Pall, whose filters are used by every commercial airline in the world. THE AFTERMARKET OPPORTUNITY One of the most attractive opportunities for Pall is the aftermarket, or replacement products business. Here, we expect to grow 10 to 15 percent per year through the remainder of this decade. That growth is closely tied to our global distribution capability that enables Pall to guarantee dispatch of replacement products to airline customers anywhere in the world within hours. MILITARY UPTURN Strong aftermarket sales have also helped drive growth on the military side of our aerospace business. Several factors have contributed to this worldwide trend. First, governments are using a short list of preferred suppliers to restock depleted spare parts inventories for aircraft and helicopters as well as armored vehicles and field artillery systems. Our bidding strategy, history of product performance and technical support make us likely candidates to secure future business. Second, we've aligned ourselves with OEMs and systems manufacturers who supply the military. This stimulates growth for Pall through existing products and gives us increased visibility for developing programs. Moreover, we're employing Pall technology to meet such stringent new military requirements as a 200hour life span for engine inlet filters, compared to the traditional 20 hours. SOLUTION: Pall engineers adapted our Aquasep coalescer to the application. Tests show that it effectively removes water from the military's promising new fuel. [Aquasep coalescer] OPPORTUNITY: The U.S. military's new fuel for Air Force and Navy aircraft is a breakthrough development. The new fuel ensures thermal stability, cleaner operation and significantly reduces maintenance costs. But the government didn't

[Tail of large airplane with small airplane] capabilities. These trends have already opened up tremendous prospects for Pall, whose filters are used by every commercial airline in the world. THE AFTERMARKET OPPORTUNITY One of the most attractive opportunities for Pall is the aftermarket, or replacement products business. Here, we expect to grow 10 to 15 percent per year through the remainder of this decade. That growth is closely tied to our global distribution capability that enables Pall to guarantee dispatch of replacement products to airline customers anywhere in the world within hours. MILITARY UPTURN Strong aftermarket sales have also helped drive growth on the military side of our aerospace business. Several factors have contributed to this worldwide trend. First, governments are using a short list of preferred suppliers to restock depleted spare parts inventories for aircraft and helicopters as well as armored vehicles and field artillery systems. Our bidding strategy, history of product performance and technical support make us likely candidates to secure future business. Second, we've aligned ourselves with OEMs and systems manufacturers who supply the military. This stimulates growth for Pall through existing products and gives us increased visibility for developing programs. Moreover, we're employing Pall technology to meet such stringent new military requirements as a 200hour life span for engine inlet filters, compared to the traditional 20 hours. SOLUTION: Pall engineers adapted our Aquasep coalescer to the application. Tests show that it effectively removes water from the military's promising new fuel. [Aquasep coalescer] OPPORTUNITY: The U.S. military's new fuel for Air Force and Navy aircraft is a breakthrough development. The new fuel ensures thermal stability, cleaner operation and significantly reduces maintenance costs. But the government didn't anticipate the failure of every coalescer tested with the new fuel. Pall responded with the Aquasep coalescer. In government-controlled tests, the Aquasep coalescer helped reduce aircraft maintenance costs more than 60 percent. Once the new fuel comes into general use, it promises to generate a market of enormous proportions -not just within the military, but in the commercial sector, where the global opportunities are even greater. 21

MICROELECTRONICS RAPID GROWTH INDUSTRY Pall's Microelectronics business continues to be one of our stronger markets. This is being fueled by industry growth and our ability to support it with innovative products and attentive service. The industry is acutely aware of the potential for a single microscopic contaminant to destroy valuable silicon wafers. In fiscal 1996, sales grew by 21 percent. Pall products are used at every level of semiconductor manufacturing: in the production of the high-purity chemicals, gases and silicon wafers; as a key component of semiconductor manufacturing equipment; as well as throughout the entire wafer production and waste minimization processes. As silicon wafer technology evolves, the importance of filtration and its difficulty increases commensurately. DRIVERS OF GROWTH The microelectronics industry is constantly being recharged through the introduction of next generation consumer and business products. These include cellular phones and multimedia systems with their insatiable appetite for memory devices. Demand for these products is expected to grow 25-35 percent annually through the year 2000. Personal computers and automobiles are also powerful drivers of the semiconductor market. The new "smart card" developed in France and heralded to be the ultimate replacement for cash, is heavily dependent upon "flash memory" technology. [Closeup of an intergrated circuit] PROBLEM: The semiconductor manufacturing process requires enormous amounts of ultra-high-purity water. Environmental sensitivity and cost concerns have motivated manufacturers to reduce, reuse and recycle water wherever

MICROELECTRONICS RAPID GROWTH INDUSTRY Pall's Microelectronics business continues to be one of our stronger markets. This is being fueled by industry growth and our ability to support it with innovative products and attentive service. The industry is acutely aware of the potential for a single microscopic contaminant to destroy valuable silicon wafers. In fiscal 1996, sales grew by 21 percent. Pall products are used at every level of semiconductor manufacturing: in the production of the high-purity chemicals, gases and silicon wafers; as a key component of semiconductor manufacturing equipment; as well as throughout the entire wafer production and waste minimization processes. As silicon wafer technology evolves, the importance of filtration and its difficulty increases commensurately. DRIVERS OF GROWTH The microelectronics industry is constantly being recharged through the introduction of next generation consumer and business products. These include cellular phones and multimedia systems with their insatiable appetite for memory devices. Demand for these products is expected to grow 25-35 percent annually through the year 2000. Personal computers and automobiles are also powerful drivers of the semiconductor market. The new "smart card" developed in France and heralded to be the ultimate replacement for cash, is heavily dependent upon "flash memory" technology. [Closeup of an intergrated circuit] PROBLEM: The semiconductor manufacturing process requires enormous amounts of ultra-high-purity water. Environmental sensitivity and cost concerns have motivated manufacturers to reduce, reuse and recycle water wherever possible. [Graphic of semiconductor] OPPORTUNITY: Semiconductor plants are aggressively working to reduce their waste. Two obstacles to this are the chemicalmechanical polishing (CMP) process and silicon backgrinding of wafer surfaces. Both of these processes utilize large quantities of water and polishing compounds. In the CMP process, a wafer is polished, leaving behind a flat, even surface. This smoothing, or planarization, is necessary for integrated circuit manufacturers to produce highly dense, multilevel products. This enables computers and other semiconductor products to run faster, more complex system requirements, without additional microchips or hardware space. The industry faces a dilemma in effectively disposing of, and reusing elements of the resulting waste stream. Pall engineers developed an automated waste management system that separates and retains the hazardous materials from the process fluid. The water that emerges can either be recycled for plant use or discharged safely into the environment. This novel system provides Pall with an excellent entree to the burgeoning $300 million waste water treatment market in the U.S., Europe and Asia. 22

NEW CONSTRUCTION In order to meet the demand, the microelectronics industry continues to add capacity, which creates additional opportunities for Pall. It is estimated that over 160 new semiconductor fabrication plants will be built or under construction worldwide by the year 2000. Significantly, new and existing plants are constantly being retooled and upgraded. This represents an annual market potential of more than $200 million for Pall. We have become a valuable technological partner to end users and OEMs, helping customers resolve complex particle and fluid purity problems and waste reduction challenges. HIGH-PERFORMANCE PRODUCTS At the heart of this effort are products such as our ultrafiltration membranes and Ultipleat Posidyne II filters for ultra-high-purity water and Ulti-Cheminert filters for the chemicals market. In the year ahead, we are looking to pre-wet versions of our Ulti-Cheminert and Super-Cheminert filters to further penetrate the semiconductor industry's chemicals market, a global target of $110 million. [Man with cellular phone] Improved filtration technology helps to manufacture cellular phones with increased memory.

NEW CONSTRUCTION In order to meet the demand, the microelectronics industry continues to add capacity, which creates additional opportunities for Pall. It is estimated that over 160 new semiconductor fabrication plants will be built or under construction worldwide by the year 2000. Significantly, new and existing plants are constantly being retooled and upgraded. This represents an annual market potential of more than $200 million for Pall. We have become a valuable technological partner to end users and OEMs, helping customers resolve complex particle and fluid purity problems and waste reduction challenges. HIGH-PERFORMANCE PRODUCTS At the heart of this effort are products such as our ultrafiltration membranes and Ultipleat Posidyne II filters for ultra-high-purity water and Ulti-Cheminert filters for the chemicals market. In the year ahead, we are looking to pre-wet versions of our Ulti-Cheminert and Super-Cheminert filters to further penetrate the semiconductor industry's chemicals market, a global target of $110 million. [Man with cellular phone] Improved filtration technology helps to manufacture cellular phones with increased memory. Solution: Pall designed and developed an integrated, fully-automated system for treating waste water so it can be recycled or discharged safely to the environment. [Man inside filter system lab] A Pall filter system installed on a CMP tool captures the spent slurry solution providing customers a costeffective, environmentally friendly method of disposal. 23

INDUSTRIAL PROCESS GROUP STATE-OF-THE-ART SOLUTIONS Pall serves customers in more than 50 fast-paced markets, including producers of thin-film rigid discs, printed circuit boards and magnetic storage devices, photographic film and medical x-ray film, ink jet printers and automotive coatings. While these industries are diverse, they share a common need -- to increase the quality and yield of their products while reducing overall costs. In fiscal 1996, our filtration and separations solutions continued to produce strong growth for Pall, with sales increasing 22 percent. DRIVERS OF GROWTH The computer industry continues to be one of our primary drivers of growth. While our Microelectronics team focuses its efforts on producers of microchips, we also serve the makers of the accompanying "macroelectronics" products. Pall products support the production of discs and disc drives, backup tapes, terminals, and more. Here, our Fluorodyne VA filter has been making significant customer inroads. GRAPHIC ARTS OPPORTUNITIES We are also an active participant in all stages of the graphic arts industry which represents tremendous future opportunities for Pall. Products like the Profile II filter and Ultipleat Profile filter enable photographic film and developing paper producers to [Graphic of CD's] PROBLEM: To remain competitive in rapidly changing global markets, our customers must increase the speed, yield and quality of their manufacturing operations. [Ultipleat Profile Filter] OPPORTUNITY: Whether producing photographic film, magnetic tape or computer discs, companies that manufacture fastest with the greatest precision and highest quality will ultimately be the survivors in a fiercely competitive marketplace. The Pall Ultipleat Profile filter is providing an increasing number of customers with this important advantage. Thanks to its consistent, quality performance, customers are able to increase the speed and yield of their processes. The

INDUSTRIAL PROCESS GROUP STATE-OF-THE-ART SOLUTIONS Pall serves customers in more than 50 fast-paced markets, including producers of thin-film rigid discs, printed circuit boards and magnetic storage devices, photographic film and medical x-ray film, ink jet printers and automotive coatings. While these industries are diverse, they share a common need -- to increase the quality and yield of their products while reducing overall costs. In fiscal 1996, our filtration and separations solutions continued to produce strong growth for Pall, with sales increasing 22 percent. DRIVERS OF GROWTH The computer industry continues to be one of our primary drivers of growth. While our Microelectronics team focuses its efforts on producers of microchips, we also serve the makers of the accompanying "macroelectronics" products. Pall products support the production of discs and disc drives, backup tapes, terminals, and more. Here, our Fluorodyne VA filter has been making significant customer inroads. GRAPHIC ARTS OPPORTUNITIES We are also an active participant in all stages of the graphic arts industry which represents tremendous future opportunities for Pall. Products like the Profile II filter and Ultipleat Profile filter enable photographic film and developing paper producers to [Graphic of CD's] PROBLEM: To remain competitive in rapidly changing global markets, our customers must increase the speed, yield and quality of their manufacturing operations. [Ultipleat Profile Filter] OPPORTUNITY: Whether producing photographic film, magnetic tape or computer discs, companies that manufacture fastest with the greatest precision and highest quality will ultimately be the survivors in a fiercely competitive marketplace. The Pall Ultipleat Profile filter is providing an increasing number of customers with this important advantage. Thanks to its consistent, quality performance, customers are able to increase the speed and yield of their processes. The revolutionary pleat structure of the Ultipleat Profile filter maximizes the usable filter area of the cartridge. This translates into improved flow rates and longer filter service life. For customers, the Ultipleat Profile filter is significantly reducing filtration costs, while for Pall it's creating a fast-unfolding market with a worldwide potential of $180 million. 24

furnish their commercial printing customers with reliable, defect-free products. The same Pall products also help ink formulators and equipment manufacturers to create products that ensure high-resolution reproductions. Our newly introduced Lithopure clarifiers enable commercial offset printers to minimize press downtime and the waste and labor involved in system maintenance. THE NEED FOR INNOVATION The fast-changing nature of these industries is underscored by the fact that some of the strongest markets we support today -- such as thin-film rigid discs and ink jet printing -- were barely noticeable just three years ago. To maintain our leadership position to this industry, we continue to innovate the design of existing technology into second-and-third generation families of products. To that end, we've formed strategic partnerships with a growing number of leading-edge customers. Our goal is to help these companies succeed in a range of highly competitive fields through filtration and separation products that allow them to produce more efficiently and economically. [Graph of CD's] [Lab worker] Pall products support the production of discs and disc drives, back-up tapes and terminals. SOLUTION: Pall's Ultipleat Profile filter helps customers to reduce production costs, maximize their fluid systems and increase the quality of their final products.

furnish their commercial printing customers with reliable, defect-free products. The same Pall products also help ink formulators and equipment manufacturers to create products that ensure high-resolution reproductions. Our newly introduced Lithopure clarifiers enable commercial offset printers to minimize press downtime and the waste and labor involved in system maintenance. THE NEED FOR INNOVATION The fast-changing nature of these industries is underscored by the fact that some of the strongest markets we support today -- such as thin-film rigid discs and ink jet printing -- were barely noticeable just three years ago. To maintain our leadership position to this industry, we continue to innovate the design of existing technology into second-and-third generation families of products. To that end, we've formed strategic partnerships with a growing number of leading-edge customers. Our goal is to help these companies succeed in a range of highly competitive fields through filtration and separation products that allow them to produce more efficiently and economically. [Graph of CD's] [Lab worker] Pall products support the production of discs and disc drives, back-up tapes and terminals. SOLUTION: Pall's Ultipleat Profile filter helps customers to reduce production costs, maximize their fluid systems and increase the quality of their final products. 25

HYDROCARBON PROCESSING, CHEMICAL AND POLYMER Particulate contamination in refinery processes can cripple critical equipment such as reactors, reducing their effectiveness and requiring expensive maintenance and repairs. PROBLEM: [Worker walking up stairs at refinery] [Picture of filter] OPPORTUNITY: Refineries are finding that to successfully compete in world markets, they must operate far more efficiently than they have in the past. This means jettisoning antiquated separations systems which are inadequate for today's petroleum refineries. Pall is providing the industry with a timely and powerful solution in the form of its backwash filter systems. These fully automated systems maintain high-efficiency operation (99.9 percent) to maximize solids recovery, improve product quality, and afford protection to employees, equipment and the environment. Pall backwash systems encourage consistent performance with less energy consumption, noise, maintenance costs and labor and are well positioned for growth in a global marketplace with a potential of $400 million. [Lab analyst testing filters] Using the latest in filter equipment, this lab analyst tests our backwash filters. [Pall scientist] A Pall scientist ensures product integrity. 26

RIDING THE GROWTH CURVE Pall sales to these industries showed balanced growth throughout the Western Hemisphere, Europe and Asia. Our strength -- and competitive edge -- lies in deploying advanced technology and products to serve a diverse range of industries, including petroleum refining, power generation,

HYDROCARBON PROCESSING, CHEMICAL AND POLYMER Particulate contamination in refinery processes can cripple critical equipment such as reactors, reducing their effectiveness and requiring expensive maintenance and repairs. PROBLEM: [Worker walking up stairs at refinery] [Picture of filter] OPPORTUNITY: Refineries are finding that to successfully compete in world markets, they must operate far more efficiently than they have in the past. This means jettisoning antiquated separations systems which are inadequate for today's petroleum refineries. Pall is providing the industry with a timely and powerful solution in the form of its backwash filter systems. These fully automated systems maintain high-efficiency operation (99.9 percent) to maximize solids recovery, improve product quality, and afford protection to employees, equipment and the environment. Pall backwash systems encourage consistent performance with less energy consumption, noise, maintenance costs and labor and are well positioned for growth in a global marketplace with a potential of $400 million. [Lab analyst testing filters] Using the latest in filter equipment, this lab analyst tests our backwash filters. [Pall scientist] A Pall scientist ensures product integrity. 26

RIDING THE GROWTH CURVE Pall sales to these industries showed balanced growth throughout the Western Hemisphere, Europe and Asia. Our strength -- and competitive edge -- lies in deploying advanced technology and products to serve a diverse range of industries, including petroleum refining, power generation, and chemical and polymer processing. Significantly, about 40 percent of our business in these markets in fiscal 1996 can be traced to products introduced during the past few years. MEETING THE CHALLENGES The challenges facing the industries we serve are enormous. To succeed, they must constantly increase the efficiency, reliability and safety of their operations. In the petroleum refining industry, Pall is enabling companies to reduce their cost of operations, eliminate waste and improve the quality of their end products through our advanced backwash filter and coalescing technologies. Our AquaSep and PhaseSep liquid/liquid coalescers continued their excellent growth on the strength of their ability to remove unwanted water from refinery fuels and a host of chemicals. While conventional coalescers break down in the presence of many of the additives built into today's cleaner burning fuels, Pall coalescers are able to comfortably handle the job. CHEMICALS AND POLYMERS More recently, we've transferred that coalescing expertise to other processing industries, including chemicals and polymers, where suspended water, a common contaminant, can pose serious problems for customers. Protecting catalysts is another major concern in chemicals processing. Here, Pall filters and coalescers are effective in removing both solid and liquid contaminants from various hydrocarbon processing streams. Within the chemical/polymer environment, Pall filters also protect the environment from gaseous and liquid waste discharges and ensure high product quality at the final chemical or polymer-processing stage. THE POWER GENERATION MARKET In the power generation field, Pall products are right in step with advanced new technologies for reducing the cost and increasing the availability of power to consumers. We're doing that through products like our durable Septra backwashable filters and through alliances with industry innovators, such as GE Nuclear Energy, which are allowing us to demonstrate our capabilities to the rest of the nuclear power generation market. In Tokyo, environmentally conscious refiners use Pall filters to produce cleaner and more efficient gasoline.

RIDING THE GROWTH CURVE Pall sales to these industries showed balanced growth throughout the Western Hemisphere, Europe and Asia. Our strength -- and competitive edge -- lies in deploying advanced technology and products to serve a diverse range of industries, including petroleum refining, power generation, and chemical and polymer processing. Significantly, about 40 percent of our business in these markets in fiscal 1996 can be traced to products introduced during the past few years. MEETING THE CHALLENGES The challenges facing the industries we serve are enormous. To succeed, they must constantly increase the efficiency, reliability and safety of their operations. In the petroleum refining industry, Pall is enabling companies to reduce their cost of operations, eliminate waste and improve the quality of their end products through our advanced backwash filter and coalescing technologies. Our AquaSep and PhaseSep liquid/liquid coalescers continued their excellent growth on the strength of their ability to remove unwanted water from refinery fuels and a host of chemicals. While conventional coalescers break down in the presence of many of the additives built into today's cleaner burning fuels, Pall coalescers are able to comfortably handle the job. CHEMICALS AND POLYMERS More recently, we've transferred that coalescing expertise to other processing industries, including chemicals and polymers, where suspended water, a common contaminant, can pose serious problems for customers. Protecting catalysts is another major concern in chemicals processing. Here, Pall filters and coalescers are effective in removing both solid and liquid contaminants from various hydrocarbon processing streams. Within the chemical/polymer environment, Pall filters also protect the environment from gaseous and liquid waste discharges and ensure high product quality at the final chemical or polymer-processing stage. THE POWER GENERATION MARKET In the power generation field, Pall products are right in step with advanced new technologies for reducing the cost and increasing the availability of power to consumers. We're doing that through products like our durable Septra backwashable filters and through alliances with industry innovators, such as GE Nuclear Energy, which are allowing us to demonstrate our capabilities to the rest of the nuclear power generation market. In Tokyo, environmentally conscious refiners use Pall filters to produce cleaner and more efficient gasoline. [Picture of street in Tokyo] [Picture of refinery] SOLUTION: Pall backwash filter systems offer significant improvement over existing technologies through high-efficiency separations capabilities that can reduce waste as well as costs. 27

PALL WELL TECHNOLOGY [Graph of oil refinery] PROBLEM: Increasingly advanced techniques for extracting oil and gas have clashed with an age-old problem, formation sand, which can prematurely shut wells down and require extremely costly repairs. [Picture of screens] OPPORTUNITY: The growing worldwide demand for oil has put intense pressure on the drilling industry -- not only to uncover new wells, but to ensure that existing projects are operating at full capacity. This means "reworking" or stimulating wells whose production has begun to slip. In the process, drillers often run afoul of a complex problem: formation sand intrusion. Downhole sand can wreak economic havoc on a well, forcing its premature capping or the expenditure of several million dollars for refurbishing and repairs. Pall technology has met the problem head-on with a pair of revolutionary new products: Stratapac and Stratacoil screens. These products provide unprecedented strength, flexibility and damage tolerance. For Pall, this a dynamic growth market with a

PALL WELL TECHNOLOGY [Graph of oil refinery] PROBLEM: Increasingly advanced techniques for extracting oil and gas have clashed with an age-old problem, formation sand, which can prematurely shut wells down and require extremely costly repairs. [Picture of screens] OPPORTUNITY: The growing worldwide demand for oil has put intense pressure on the drilling industry -- not only to uncover new wells, but to ensure that existing projects are operating at full capacity. This means "reworking" or stimulating wells whose production has begun to slip. In the process, drillers often run afoul of a complex problem: formation sand intrusion. Downhole sand can wreak economic havoc on a well, forcing its premature capping or the expenditure of several million dollars for refurbishing and repairs. Pall technology has met the problem head-on with a pair of revolutionary new products: Stratapac and Stratacoil screens. These products provide unprecedented strength, flexibility and damage tolerance. For Pall, this a dynamic growth market with a worldwide potential of $600 million. 28

MEETING A HUGE DEMAND Pall set a new baseline for wellbore purity in the oil and gas industry, and is starting to reap the rewards. Our biggest obstacle in fiscal 1996 was sufficient manufacturing capacity to meet the demand for Stratapac and Stratacoil screens, our breakthrough sand control products. Significantly expanding production capability has now solved that problem. EXPANDING PRODUCTS AND TECHNOLOGY Growth opportunities are increasing through broadened technology and product lines. This past year, we solved a decades-old problem of corrosion and sulfide stress cracking of well materials by introducing a new welding process for the Stratapac filter that joins dissimilar metals. On the product front is a soon to be released group of sand control products designed to filter the coarser sand found in rugged drilling environments like the North Sea. INDUSTRY STANDARD The Stratapac filter is fast becoming the industry standard for today's increasingly difficult types of drilling. Because of its unusual flexibility and damage resistance, it's proving indispensable to oil and gas companies for deep water (over 1,000 feet) drilling projects. Its use is critical in horizontal and deviated drilling that requires abrupt turns around solid formations. Stratapac screens are meeting customer demands for wells with a production lifetime of 20 years, instead of the traditional seven to ten. As for cost savings, the Stratacoil screen enabled one large oil producer to rejuvenate a near-dormant well at a cost of $380,000 -- a savings of $1.3 million from the cost of a traditional work over. MORE THAN A SUPPLIER In little more than a year, Pall has supplied over 250 drilling sites with Stratapac or Stratacoil filters. We've demonstrated the technological leadership and resources to develop and produce advanced porous media and products that solve complex customer problems. [Worker writing] The sintering process used in the manufacture of Pall's PMM filter media makes it the right approach to sand control. [Men drilling] The Stratapac screen is driven downhole into the production zone. [Worker checking joint of screen] To ensure product quality, every joint of the screen is checked before shipment to the customer. SOLUTION:

MEETING A HUGE DEMAND Pall set a new baseline for wellbore purity in the oil and gas industry, and is starting to reap the rewards. Our biggest obstacle in fiscal 1996 was sufficient manufacturing capacity to meet the demand for Stratapac and Stratacoil screens, our breakthrough sand control products. Significantly expanding production capability has now solved that problem. EXPANDING PRODUCTS AND TECHNOLOGY Growth opportunities are increasing through broadened technology and product lines. This past year, we solved a decades-old problem of corrosion and sulfide stress cracking of well materials by introducing a new welding process for the Stratapac filter that joins dissimilar metals. On the product front is a soon to be released group of sand control products designed to filter the coarser sand found in rugged drilling environments like the North Sea. INDUSTRY STANDARD The Stratapac filter is fast becoming the industry standard for today's increasingly difficult types of drilling. Because of its unusual flexibility and damage resistance, it's proving indispensable to oil and gas companies for deep water (over 1,000 feet) drilling projects. Its use is critical in horizontal and deviated drilling that requires abrupt turns around solid formations. Stratapac screens are meeting customer demands for wells with a production lifetime of 20 years, instead of the traditional seven to ten. As for cost savings, the Stratacoil screen enabled one large oil producer to rejuvenate a near-dormant well at a cost of $380,000 -- a savings of $1.3 million from the cost of a traditional work over. MORE THAN A SUPPLIER In little more than a year, Pall has supplied over 250 drilling sites with Stratapac or Stratacoil filters. We've demonstrated the technological leadership and resources to develop and produce advanced porous media and products that solve complex customer problems. [Worker writing] The sintering process used in the manufacture of Pall's PMM filter media makes it the right approach to sand control. [Men drilling] The Stratapac screen is driven downhole into the production zone. [Worker checking joint of screen] To ensure product quality, every joint of the screen is checked before shipment to the customer. SOLUTION: Pall's Stratapac and Stratacoil filters offer unprecedented control over downhole sand and help wells to produce at maximum capacity. 29

Financial Contents
Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated Statements of Earnings Independent Auditors' Report Consolidated Balance Sheets Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Financial Information About Industry Segments Financial Information About Foreign and Domestic Operations and Export Sales Notes to Consolidated Financial Statements

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Financial Contents
Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated Statements of Earnings Independent Auditors' Report Consolidated Balance Sheets Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Financial Information About Industry Segments Financial Information About Foreign and Domestic Operations and Export Sales Notes to Consolidated Financial Statements Common Stock Prices and Cash Dividends Eleven-Year Sales Eleven-Year Financial History Corporate Directory Corporate Information

31 33 33 34 35 36 37

38 39 46 47 48 49 50

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1996 Compared to 1995 Results of Operations Review of Consolidated Results Sales for fiscal 1996 increased 16 1/2% to $960 million from $823 million last year. Excluding exchange rate effects, sales would have increased by 19%. Acquisitions accounted for approximately $38 million of fiscal 1996 sales. The growth by quarters during the year, excluding the effects of exchange rates and acquisitions, was: first quarter 15%, second quarter 17%, third quarter 13 1/2% and fourth quarter 12 1/2%. Cost of sales as a percentage of sales for the year increased to 38.8% from 37.1%, principally due to: the acquisition of Medsep which brought with it lower gross margin products, the negative effect of exchange rates, mainly the Japanese Yen, as most of the products sold in Japan are sourced from the U.S. and product mix. Selling, general and administrative expenses as a percentage of sales decreased by 1.4% mainly as the increase in sales volume was not accompanied by a similar increase in selling, general and administrative expenses. During the third quarter, the Company received $6.2 million as a partial payment of a judgment awarded to it in a patent litigation with Micron Separations, Inc. Offset against this were $3.9 million of related legal fees. Also, during the quarter, the Company wrote off $1.2 million of fixed assets following the transfer of most industrial cartridge manufacturing from its Japanese plant into existing facilities elsewhere. The net pretax benefit of $1.1 million has been reflected as a reduction of selling, general and administrative expenses. Research and development as a percentage of sales showed a reduction of 0.5% compared to last year. This reduction does not constitute a decrease in research efforts by the Company but rather a reevaluation to ensure

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1996 Compared to 1995 Results of Operations Review of Consolidated Results Sales for fiscal 1996 increased 16 1/2% to $960 million from $823 million last year. Excluding exchange rate effects, sales would have increased by 19%. Acquisitions accounted for approximately $38 million of fiscal 1996 sales. The growth by quarters during the year, excluding the effects of exchange rates and acquisitions, was: first quarter 15%, second quarter 17%, third quarter 13 1/2% and fourth quarter 12 1/2%. Cost of sales as a percentage of sales for the year increased to 38.8% from 37.1%, principally due to: the acquisition of Medsep which brought with it lower gross margin products, the negative effect of exchange rates, mainly the Japanese Yen, as most of the products sold in Japan are sourced from the U.S. and product mix. Selling, general and administrative expenses as a percentage of sales decreased by 1.4% mainly as the increase in sales volume was not accompanied by a similar increase in selling, general and administrative expenses. During the third quarter, the Company received $6.2 million as a partial payment of a judgment awarded to it in a patent litigation with Micron Separations, Inc. Offset against this were $3.9 million of related legal fees. Also, during the quarter, the Company wrote off $1.2 million of fixed assets following the transfer of most industrial cartridge manufacturing from its Japanese plant into existing facilities elsewhere. The net pretax benefit of $1.1 million has been reflected as a reduction of selling, general and administrative expenses. Research and development as a percentage of sales showed a reduction of 0.5% compared to last year. This reduction does not constitute a decrease in research efforts by the Company but rather a reevaluation to ensure that various research and development related activities across the world are working in concert. The Company's pretax margin of 20.6% is about the same as last year. The Company's effective tax rate for the year has increased to 30.0% compared to 28.9% last year, due to continued reduction in the tax benefits from its Puerto Rico operations. The Company's net earnings, before the effect of the change in an accounting principle last year, increased by 16.2%. Review of Industry and Geographic Segment Results Sales in the Health Care segment increased by $82 million in local currency of which $38 million was due to acquisitions. Blood filter sales in this segment increased by 27% in local currency to $182 million. The acquisition of Medsep increased blood filter sales by $19 million. Sales in the rest of the Health Care segments also grew in excess of 10% in local currency. Sales in the Aeropower segment grew $24 million in local currency despite the fact that fiscal 1995 included a one-time sale of $9 million to the U.K. military. Aerospace sales account for 42% of total Aeropower sales. Sales in the Aerospace segment are evenly split between military and commercial sales. Sales to the U.S. military in fiscal 1996 were $32 million, an increase of 14% over fiscal 1995. Sales in the Industrial Hydraulics segment grew by 15% in local currency to $135 million. Sales in the Fluid Processing segment grew by $49 million in local currency. Microelectronics sales in this segment increased by 26% in local currency to $98 million. Microelectronics sales represent nearly 40% of the total Fluid Processing segment. Sales in the rest of the Fluid Processing segment grew in excess of 15% in local currency. The consolidated operating profit rate by segments for the current year stands at 26.5%, which is the same as last year. By segment, the Health Care profit rate is slightly lower than last year, mainly because of the Medsep acquisition which brought with it lower gross margin products. Aeropower's profit rate is 1.7% lower than last year mainly due to the one-time sale to the U.K. military in fiscal 1995. Fluid Processing's profit rate increased by 2.5% over last year, mainly due to increased sales volume that was not accompanied by similar increases in

selling, general and administrative expenses. Outside sales in the Western Hemisphere increased by 28 1/2% to $418 million. Included in this geographic segment is $38 million from acquisitions. Sales in Europe grew 8 1/2% in local currency to $368 million. Excluding the one-time shipment of $9 million last year to the U.K. military, sales would have grown by 11%. Sales in Asia and Australia grew by 11 1/2% to $175 million; in local currency sales increased by 22%. The operating profit rate in the Western Hemisphere increased by 2.0% over last year mainly because of increased sales volume. The profit rate in this geographic segment would have been higher excluding Medsep, which brought with it lower gross margin products. Europe showed a slight decline mainly due to the one-time sale to the U.K. military in fiscal 1995. The profit rate in Asia and Australia decreased by 1.4% compared to fiscal 1995 mainly due to the weakness of the Japanese Yen in fiscal 1996. Liquidity and Capital Resources The Company generated $149 million in cash from its operating activities in fiscal 1996 compared to $157 million in fiscal 1995 and $130 million in fiscal 1994. Capital expenditures in fiscal 1996 amounted to $82 million compared to $66 million in fiscal 1995. The increased expenditures will enable the Company to support its future expansion in various markets around the world. During the year the Company purchased the Medical Plastics business of Bayer Corporation (Medsep) for $45 million. The Company also bought back $10 million of its own stock in fiscal 1996 compared to $50 million in fiscal 1995 and $30 million in fiscal 1994. Cash dividends paid to stockholders in fiscal 1996 amounted to $52 million compared to $46 million in fiscal 1995 and $40 million in fiscal 1994. 31

The Company considers its existing lines of credit along with the cash it generates from its operations to be sufficient for its future growth. The Company anticipates that capital expenditures in fiscal 1997 will be about $90 million. New Accounting Standards In October 1995, the Financial Accounting Standards Board adopted Statement No. 123 (Accounting for Stock-Based Compensation), effective for fiscal years beginning after December 15, 1995. Under this Statement companies can elect, but are not required, to recognize compensation expense for all stockbased awards, using a fair value methodology. The Company will implement the disclosures-only provisions as allowed by this Statement in fiscal 1997 and will continue to measure compensation expense in accordance with Accounting Principles Board Opinion No. 25 (Accounting for Stock Issued to Employees). In March 1995, the Financial Accounting Standards Board adopted Statement No. 121 (Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of), effective for fiscal years beginning after December 15, 1995. Management does not believe that adopting Statement No. 121 in fiscal 1997 will have a material effect on the Company's financial position. Impact of Inflation The Company's financial statements are prepared on a historical cost basis and do not reflect the effect of inflation. The effect of changing prices on the financial statements is not considered to be significant. 1995 Compared to 1994 Results of Operations Review of Consolidated Results Sales for fiscal 1995 increased 17 1/2% over fiscal 1994. Had foreign exchange rates been unchanged, sales would have increased by 11%. Price increases were 1% for the year.

The Company considers its existing lines of credit along with the cash it generates from its operations to be sufficient for its future growth. The Company anticipates that capital expenditures in fiscal 1997 will be about $90 million. New Accounting Standards In October 1995, the Financial Accounting Standards Board adopted Statement No. 123 (Accounting for Stock-Based Compensation), effective for fiscal years beginning after December 15, 1995. Under this Statement companies can elect, but are not required, to recognize compensation expense for all stockbased awards, using a fair value methodology. The Company will implement the disclosures-only provisions as allowed by this Statement in fiscal 1997 and will continue to measure compensation expense in accordance with Accounting Principles Board Opinion No. 25 (Accounting for Stock Issued to Employees). In March 1995, the Financial Accounting Standards Board adopted Statement No. 121 (Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of), effective for fiscal years beginning after December 15, 1995. Management does not believe that adopting Statement No. 121 in fiscal 1997 will have a material effect on the Company's financial position. Impact of Inflation The Company's financial statements are prepared on a historical cost basis and do not reflect the effect of inflation. The effect of changing prices on the financial statements is not considered to be significant. 1995 Compared to 1994 Results of Operations Review of Consolidated Results Sales for fiscal 1995 increased 17 1/2% over fiscal 1994. Had foreign exchange rates been unchanged, sales would have increased by 11%. Price increases were 1% for the year. In the fourth quarter of fiscal 1994, the Company incurred a one-time charge of $3.7 million ($2.3 million after taxes, 2 cents per share), mainly in connection with the restructuring of its German operations, and the write-off of a bad debt in the Aerospace operations. Excluding the one-time charge referred to in the preceding paragraph, the Company's pretax margin increased to 20.4% of sales in fiscal 1995 from 19.8% in fiscal 1994. A decrease in selling, general and administrative expenses as a percentage of sales to 36.7% in 1995, from 37.3% in 1994, was the principal factor in the improved profit margin. The dollar increase in selling, general and administrative expenses resulted from higher exchange rates, the acquisition of Filtron Technology Corporation at the beginning of the third quarter, and an increase in selling costs to better support the growing volume of sales. The Company's effective tax rate increased to 28.9% in fiscal 1995 from 26.8% in fiscal 1994, such increase resulting mainly from reduced benefits of the Puerto Rico operations due to changes in the U.S. tax laws. Prior to the cumulative effect of a change in an accounting principle in 1995, and to the one-time charge in 1994, net earnings for fiscal 1995 increased 17.7% to $119.2 million from $101.3 million in 1994. In the first quarter of fiscal 1995, the Company adopted Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits). The effect of initially applying this Statement ($1.2 million pretax, $780,000 after taxes, 1 cent per share) is reported as the cumulative effect of a change in an accounting principle. Net earnings for fiscal 1995 increased 19.7% to $118.4 million from $98.9 million in fiscal 1994. Review of Industry and Geographic Segment Results

Sales in the Health Care segment increased by 13%; excluding the effects of exchange rates and the acquisition it grew by 5%. Sales in the Aeropower segment increased by 13% in local currency to $213 million. Included in fiscal 1995 sales was a one-time sale to the U. K. military of $9 million. The Industrial Hydraulics subsegment grew by 12% in local currency to $119 million. Sales in the Fluid Processing segment increased by 18 1/2% in local currency to $213 million. The Microelectronics subsegment grew by 32% in local currency to $81 million. The consolidated operating profit rate by segments for fiscal 1995 was 26.5% compared to 26.0% (excluding the one-time charge) in fiscal 1994. The Health Care profit rate in fiscal 1995 declined by 1.3% due to product mix. Aeropower's profit rate was 2.9% higher than fiscal 1994, principally due to the one-time sale to the U.K. military and increased sales volume. Fluid Processing's profit rate was 2.7% higher than fiscal 1994 year mainly due to increased sales volume. Outside sales in the Western Hemisphere increased by 8% to $325 million in fiscal 1995, which included $7.5 million from acquisition. Sales in Europe increased by 22% to $341 million; in local currency the increase was 12%. This geographic segment included the one-time sale to the U.K. military of $9 million. Sales in Asia and Australia increased by 32% to $157 million; however, in local currency the increase was 18%. All the countries in this region had growth in excess of 10% in local currency. The operating profit rate in the Western Hemisphere in fiscal 1995 declined by 3.7% mainly due to product mix. Europe's profit rate increased by 2.9% principally due to the one-time shipment to the U.K. military, increased sales volume and the favorable effect of exchange rates. The profit rate in Asia and Australia increased by 6.0% principally due to increased sales volume and the favorable effect of exchange rates. 32

CONSOLIDATED STATEMENTS OF EARNINGS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------(In thousands, except per share data) Years ---------------------August 3, 1996 July 2 - ------------------------------------------------------------------------------------------------------Revenues: Net sales $ 960,376 $ 8 Interest earned 7,021 ----------Total Revenues 967,397 8 - ------------------------------------------------------------------------------------------------------Costs and Expenses: Cost of sales 372,864 3 Selling, general and administrative expenses 338,726 3 Research and development 47,514 Interest expense 10,439 Restructuring and other charges -----------Total Costs and Expenses 769,543 6 - ------------------------------------------------------------------------------------------------------Earnings Before Income Taxes and the Cumulative Effect of an Accounting Change 197,854 1 Provisions for income taxes 59,356 - ------------------------------------------------------------------------------------------------------Earnings Before the Cumulative Effect of an Accounting Change 138,498 1 Cumulative effect of a change in accounting for postemployment benefits -- ------------------------------------------------------------------------------------------------------Net Earnings $ 138,498 $ 1 - ------------------------------------------------------------------------------------------------------Earnings Per Share: Earnings before the cumulative effect of an accounting change $ 1.21 $ Cumulative effect of a change in accounting for postemployment benefits -----------Net Earnings Per Share $ 1.21 $ - ------------------------------------------------------------------------------------------------------Average Shares Outstanding 114,839 1 - -------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF EARNINGS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------(In thousands, except per share data) Years ---------------------August 3, 1996 July 2 - ------------------------------------------------------------------------------------------------------Revenues: Net sales $ 960,376 $ 8 Interest earned 7,021 ----------Total Revenues 967,397 8 - ------------------------------------------------------------------------------------------------------Costs and Expenses: Cost of sales 372,864 3 Selling, general and administrative expenses 338,726 3 Research and development 47,514 Interest expense 10,439 Restructuring and other charges -----------Total Costs and Expenses 769,543 6 - ------------------------------------------------------------------------------------------------------Earnings Before Income Taxes and the Cumulative Effect of an Accounting Change 197,854 1 Provisions for income taxes 59,356 - ------------------------------------------------------------------------------------------------------Earnings Before the Cumulative Effect of an Accounting Change 138,498 1 Cumulative effect of a change in accounting for postemployment benefits -- ------------------------------------------------------------------------------------------------------Net Earnings $ 138,498 $ 1 - ------------------------------------------------------------------------------------------------------Earnings Per Share: Earnings before the cumulative effect of an accounting change $ 1.21 $ Cumulative effect of a change in accounting for postemployment benefits -----------Net Earnings Per Share $ 1.21 $ - ------------------------------------------------------------------------------------------------------Average Shares Outstanding 114,839 1 - -------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements. INDEPENDENT AUDITORS' REPORT Board of Directors PALL CORPORATION We have audited the accompanying consolidated balance sheets of Pall Corporation and subsidiaries as of August 3, 1996 and July 29, 1995, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the years in the three-year period ended August 3, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Pall Corporation and subsidiaries as of August 3, 1996 and July 29, 1995, and the results of their operations and their cash flows for each of the years in the three-year period ended August 3, 1996, in conformity with generally accepted accounting principles. As discussed in the Accounting Policies note to the consolidated financial statements, the Company adopted

Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits" in fiscal year 1995. KPMG Peat Marwick LLP Jericho, New York September 3, 1996 33

CONSOLIDATED BALANCE SHEETS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------(In thousands, except per share data) August - ------------------------------------------------------------------------------------------------------Assets Current Assets: Cash and cash equivalents $ Short-term investments Accounts receivable, net of allowance for doubtful accounts of $4,170 and $5,008, respectively Inventories Deferred income taxes Prepaid expenses Other current assets ---Total Current Assets - ------------------------------------------------------------------------------------------------------Property, Plant and Equipment: Land Buildings and improvements Machinery and equipment Furniture and fixtures Transportation equipment ---Less: Accumulated depreciation and amortization ---Property, Plant and Equipment, Net - ------------------------------------------------------------------------------------------------------Other Assets - ------------------------------------------------------------------------------------------------------Total Assets $ 1, - ------------------------------------------------------------------------------------------------------Liabilities and Stockholders' Equity Current Liabilities: Notes payable $ Accounts payable Accrued liabilities: Salaries and commissions Payroll taxes Interest Pension and profit sharing plans Other ---Income taxes Current portion of long-term debt Dividends payable ---Total Current Liabilities - ------------------------------------------------------------------------------------------------------Long-term Debt, Net of Current Portion Deferred Income Taxes Other Non-Current Liabilities - ------------------------------------------------------------------------------------------------------Total Liabilities - ------------------------------------------------------------------------------------------------------Stockholders' Equity: Common stock, par value $.10 per share; 500,000 shares authorized; 117,351 shares issued Capital in excess of par value Retained earnings Treasury stock, at cost (1996 -- 2,375 shares, 1995-- 2,920 shares) Foreign currency translation adjustment Minimum pension liability adjustment Stock option loans

CONSOLIDATED BALANCE SHEETS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------(In thousands, except per share data) August - ------------------------------------------------------------------------------------------------------Assets Current Assets: Cash and cash equivalents $ Short-term investments Accounts receivable, net of allowance for doubtful accounts of $4,170 and $5,008, respectively Inventories Deferred income taxes Prepaid expenses Other current assets ---Total Current Assets - ------------------------------------------------------------------------------------------------------Property, Plant and Equipment: Land Buildings and improvements Machinery and equipment Furniture and fixtures Transportation equipment ---Less: Accumulated depreciation and amortization ---Property, Plant and Equipment, Net - ------------------------------------------------------------------------------------------------------Other Assets - ------------------------------------------------------------------------------------------------------Total Assets $ 1, - ------------------------------------------------------------------------------------------------------Liabilities and Stockholders' Equity Current Liabilities: Notes payable $ Accounts payable Accrued liabilities: Salaries and commissions Payroll taxes Interest Pension and profit sharing plans Other ---Income taxes Current portion of long-term debt Dividends payable ---Total Current Liabilities - ------------------------------------------------------------------------------------------------------Long-term Debt, Net of Current Portion Deferred Income Taxes Other Non-Current Liabilities - ------------------------------------------------------------------------------------------------------Total Liabilities - ------------------------------------------------------------------------------------------------------Stockholders' Equity: Common stock, par value $.10 per share; 500,000 shares authorized; 117,351 shares issued Capital in excess of par value Retained earnings Treasury stock, at cost (1996 -- 2,375 shares, 1995-- 2,920 shares) Foreign currency translation adjustment Minimum pension liability adjustment Stock option loans Cumulative unrealized (losses) gains on investments - ------------------------------------------------------------------------------------------------------Total Stockholders' Equity - ------------------------------------------------------------------------------------------------------Total Liabilities and Stockholders' Equity $ 1, =========================================================================================================

See accompanying notes to consolidated financial statements. 34

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------(In thousands) Foreig Capital in Currenc Years Ended July 30, 1994, Common Excess of Retained Treasury Translatio July 29, 1995 and August 3, 1996 Stock Par Value Earnings Stock Adjustmen - ------------------------------------------------------------------------------------------------------Balance at July 31, 1993 $ 29,338 $ 36,166 $ 524,407 $ (24,963) $ (12,86 Net earnings 98,922 Cash dividends declared (41,336) Reduction of par value from $.25 per share to $.10 per share (17,603) 17,603 Issuance of 1,040 shares pursuant to exercise of stock options (9,605) 20,009 Purchase of 1,776 shares of Common Stock (30,190) Foreign currency translation adjustment 11,04 Minimum pension liability adjustment Change in stock option loans Net unrealized holding losses on investments - ------------------------------------------------------------------------------------------------------Balance at July 30, 1994 11,735 53,769 572,388 (35,144) (1,81 Net earnings 118,436 Cash dividends declared (46,911) Issuance of 269 shares pursuant to exercise of stock options (145) (238) 5,225 Shares exchanged in payment of stock options, 131 shares (2,648) Purchase of 2,306 shares of Common Stock (49,997) Issuance of 1,280 shares in acquisition of Filtron Technology Corporation 2,680 22,175 Foreign currency translation adjustment 14,85 Minimum pension liability adjustment Change in stock option loans Net unrealized holding gains on investments - ------------------------------------------------------------------------------------------------------Balance at July 29, 1995 11,735 56,304 643,675 (60,389) 13,03 Net earnings 138,498 Cash dividends declared (54,343) Issuance of 1,019 shares pursuant to exercise of stock options (2,535) (16) 21,136 Shares exchanged in payment of stock options, 41 shares (1,157) Purchase of 433 shares of Common Stock (10,000) Foreign currency translation adjustment (10,13 Minimum pension liability adjustment Change in stock option loans Net unrealized holding losses on investments - ------------------------------------------------------------------------------------------------------Balance at August 3, 1996 $ 11,735 $ 53,769 $ 727,814 $ (50,410) $ 2,90 =========================================================================================================

- -------------------------------------------------------------------------------(In thousands) Cumulative Stock Unrealized Total Years Ended July 30, 1994, Option (Losses) Gains Stockholders' July 29, 1995 and August 3, 1996 Loans on Investments Equity - -------------------------------------------------------------------------------Balance at July 31, 1993 $ (4,213) $-$ 542,878

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------(In thousands) Foreig Capital in Currenc Years Ended July 30, 1994, Common Excess of Retained Treasury Translatio July 29, 1995 and August 3, 1996 Stock Par Value Earnings Stock Adjustmen - ------------------------------------------------------------------------------------------------------Balance at July 31, 1993 $ 29,338 $ 36,166 $ 524,407 $ (24,963) $ (12,86 Net earnings 98,922 Cash dividends declared (41,336) Reduction of par value from $.25 per share to $.10 per share (17,603) 17,603 Issuance of 1,040 shares pursuant to exercise of stock options (9,605) 20,009 Purchase of 1,776 shares of Common Stock (30,190) Foreign currency translation adjustment 11,04 Minimum pension liability adjustment Change in stock option loans Net unrealized holding losses on investments - ------------------------------------------------------------------------------------------------------Balance at July 30, 1994 11,735 53,769 572,388 (35,144) (1,81 Net earnings 118,436 Cash dividends declared (46,911) Issuance of 269 shares pursuant to exercise of stock options (145) (238) 5,225 Shares exchanged in payment of stock options, 131 shares (2,648) Purchase of 2,306 shares of Common Stock (49,997) Issuance of 1,280 shares in acquisition of Filtron Technology Corporation 2,680 22,175 Foreign currency translation adjustment 14,85 Minimum pension liability adjustment Change in stock option loans Net unrealized holding gains on investments - ------------------------------------------------------------------------------------------------------Balance at July 29, 1995 11,735 56,304 643,675 (60,389) 13,03 Net earnings 138,498 Cash dividends declared (54,343) Issuance of 1,019 shares pursuant to exercise of stock options (2,535) (16) 21,136 Shares exchanged in payment of stock options, 41 shares (1,157) Purchase of 433 shares of Common Stock (10,000) Foreign currency translation adjustment (10,13 Minimum pension liability adjustment Change in stock option loans Net unrealized holding losses on investments - ------------------------------------------------------------------------------------------------------Balance at August 3, 1996 $ 11,735 $ 53,769 $ 727,814 $ (50,410) $ 2,90 =========================================================================================================

- -------------------------------------------------------------------------------(In thousands) Cumulative Stock Unrealized Total Years Ended July 30, 1994, Option (Losses) Gains Stockholders' July 29, 1995 and August 3, 1996 Loans on Investments Equity - -------------------------------------------------------------------------------Balance at July 31, 1993 $ (4,213) $-$ 542,878 Net earnings 98,922

Net earnings 98,922 Cash dividends declared (41,336) Reduction of par value from $.25 per share to $.10 per share -Issuance of 1,040 shares pursuant to exercise of stock options 10,404 Purchase of 1,776 shares of Common Stock (30,190) Foreign currency translation adjustment 11,045 Minimum pension liability adjustment 285 Change in stock option loans (4,219) (4,219) Net unrealized holding losses on investments (583) (583) - -------------------------------------------------------------------------------Balance at July 30, 1994 (8,432) (583) 587,206 Net earnings 118,436 Cash dividends declared (46,911) Issuance of 269 shares pursuant to exercise of stock options 4,842 Shares exchanged in payment of stock options, 131 shares (2,648) Purchase of 2,306 shares of Common Stock (49,997) Issuance of 1,280 shares in acquisition of Filtron Technology Corporation 24,855 Foreign currency translation adjustment 14,852 Minimum pension liability adjustment (434) Change in stock option loans 852 852 Net unrealized holding gains on investments 746 746 - -------------------------------------------------------------------------------Balance at July 29, 1995 (7,580) 163 651,799 Net earnings 138,498 Cash dividends declared (54,343) Issuance of 1,019 shares pursuant to exercise of stock options 18,585 Shares exchanged in payment of stock options, 41 shares (1,157) Purchase of 433 shares of Common Stock (10,000) Foreign currency translation adjustment (10,135) Minimum pension liability adjustment 516 Change in stock option loans (1,072) (1,072) Net unrealized holding losses on investments (391) (391) - -------------------------------------------------------------------------------Balance at August 3, 1996 $ (8,652) $ (228) $ 732,300 =================================================================================

See accompanying notes to consolidated financial statements. 35

CONSOLIDATED STATEMENTS OF CASH FLOWS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------Years -----------------------(In thousands) August 3, 1996 July 2 - ------------------------------------------------------------------------------------------------------Operating Activities:

CONSOLIDATED STATEMENTS OF CASH FLOWS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------Years -----------------------(In thousands) August 3, 1996 July 2 - ------------------------------------------------------------------------------------------------------Operating Activities: Net earnings $ 138,498 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization of property, plant and equipment 46,782 Amortization of intangibles 6,329 Restructuring and other charges -Deferred income taxes 6,416 Provision for doubtful accounts 989 Cumulative effect of a change in accounting for postemployment benefits -Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable Inventories Prepaid expenses Other assets Accounts payable Accrued expenses Income taxes payable Other liabilities $11 4

(35,252) (28,935) (1 (3,671) (2,887) ( 16,220 12,451 (10,529) 2,267 ----------Net Cash Provided by Operating Activities 148,678 15 - ------------------------------------------------------------------------------------------------------Investing Activities: Capital expenditures Disposals of fixed assets Short-term investments Acquisitions of license and of businesses, net of cash acquired Benefits protection trust (82,222) (6 5,405 1,400 (2 (44,545) (2,596) ( ----------Net Cash Used by Investing Activities (122,558) (8 - ------------------------------------------------------------------------------------------------------Financing Activities: Notes payable Long-term debt borrowings Payments on long-term debt Net proceeds from exercise of stock options Dividends paid Treasury stock 26,775 -2 (9,252) ( 16,356 (52,224) (4 (10,000) (4 ----------Net Cash Used by Financing Activities (28,345) (7 - ------------------------------------------------------------------------------------------------------Cash Flow for Year (2,225) ( Cash and Cash Equivalents at Beginning of Year 37,913 3 Effect of Exchange Rate Changes on Cash (1,160) - ------------------------------------------------------------------------------------------------------Cash and Cash Equivalents at End of Year $ 34,528 $ 3 ========================================================================================================= Supplemental Disclosures: Interest paid (net of amount capitalized) $ 9,918 $ Income taxes paid (net of refunds) 62,318 4 Treasury stock issued upon acquisition of Filtron Technology Corporation -2 - -------------------------------------------------------------------------------------------------------

See accompanying notes to consolidated financial statements. 36

FINANCIAL INFORMATION ABOUT FOREIGN

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------Fisca ---------------------(In thousands) 1996 - ------------------------------------------------------------------------------------------------------Sales to Unaffiliated Customers: Western Hemisphere Europe Asia and Australia 417,597 $ 325 367,534 340 175,245 157 ---------------Total $ 960,376 $ 822 - ------------------------------------------------------------------------------------------------------Transfers Between Geographic Areas: 82,514 $ 63 21,549 13 3,552 2 ---------------Total $ 107,615 $ 79 - ------------------------------------------------------------------------------------------------------Total Sales: Western Hemisphere Europe Asia and Australia Eliminations 500,111 $ 388 389,083 354 178,797 159 (107,615) (79 ---------------Total $ 960,376 $ 822 - ------------------------------------------------------------------------------------------------------Operating Profit: 120,119 $ 87 109,572 102 28,361 27 (3,644) 1 ---------------Subtotal 254,408 218 Interest income 7,021 6 Interest expense (10,439) (9 General corporate expenses (53,136) (47 ---------------Total $ 197,854 $ 167 - ------------------------------------------------------------------------------------------------------Identifiable Assets: Western Hemisphere Europe Asia and Australia Eliminations 460,713 $ 385 328,047 308 143,115 127 (16,468) (12 ---------------Subtotal 915,407 808 Corporate 269,551 266 ---------------Total $ 1,184,958 $1,074 - ------------------------------------------------------------------------------------------------------$ Western Hemisphere Europe Asia and Australia Eliminations $ $ Western Hemisphere Europe Asia and Australia $ $

a) Includes a pretax charge of $3,696 due principally to the restructuring of the German operations and to the write-off of a bad debt in the Aerospace operations (Western Hemisphere-$2,301, Europe-$1,395). Export sales to unaffiliated customers by the Company's U.S. operations totaled $53,779 in 1996 ($37,167 in 1995 and $28,907 in 1994). The Company considers its foreign operations to be of major importance to its future growth prospects, and does not believe the risk of its foreign business differs materially from its domestic business, except for the risk of currency fluctuations. Transfers between geographic areas are generally priced on the basis of a markup of manufacturing costs, to achieve an appropriate sharing of the profit between the parties.

37

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------Fisca ----------------------- ------------------------------------------------------------------------------------------------------(In thousands) 1996 1 - ------------------------------------------------------------------------------------------------------SALES TO UNAFFILIATED CUSTOMERS: 471,424 $ 396, 235,101 212, 253,851 213, ---------------Total $ 960,376 $ 822, - ------------------------------------------------------------------------------------------------------OPERATING PROFIT: Health Care Aeropower Fluid Processing 147,628 $ 126, 52,686 51, 54,094 40, ---------------Subtotal 254,408 218, Interest income 7,021 6, Interest expense (10,439) (9, General corporate expenses (53,136) (47, ---------------Total $ 197,854 $ 167, - ------------------------------------------------------------------------------------------------------IDENTIFIABLE ASSETS: Health Care Aeropower Fluid Processing 450,331 $ 399, 184,374 177, 280,702 231, ---------------Subtotal 915,407 808, Corporate 269,551 266, ---------------Total $1,184,958 $1,074, - ------------------------------------------------------------------------------------------------------CAPITAL EXPENDITURES: Health Care Aeropower Fluid Processing 38,374 $ 31, 13,193 12, 23,595 16, ---------------Subtotal 75,162 60, Corporate 7,060 6, ---------------Total $ 82,222 $ 66, - ------------------------------------------------------------------------------------------------------DEPRECIATION: 21,397 $ 17,9 8,852 8,5 12,892 10,8 --------------Subtotal 43,141 37,3 Corporate 3,641 4,3 --------------Total $ 46,782 $ 41,6 - ------------------------------------------------------------------------------------------------------Health Care Aeropower Fluid Processing $ $ $ $ Health Care Aeropower Fluid Processing $

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS Pall Corporation and Subsidiaries
- ------------------------------------------------------------------------------------------------------Fisca ----------------------- ------------------------------------------------------------------------------------------------------(In thousands) 1996 1 - ------------------------------------------------------------------------------------------------------SALES TO UNAFFILIATED CUSTOMERS: 471,424 $ 396, 235,101 212, 253,851 213, ---------------Total $ 960,376 $ 822, - ------------------------------------------------------------------------------------------------------OPERATING PROFIT: 147,628 $ 126, 52,686 51, 54,094 40, ---------------Subtotal 254,408 218, Interest income 7,021 6, Interest expense (10,439) (9, General corporate expenses (53,136) (47, ---------------Total $ 197,854 $ 167, - ------------------------------------------------------------------------------------------------------IDENTIFIABLE ASSETS: 450,331 $ 399, 184,374 177, 280,702 231, ---------------Subtotal 915,407 808, Corporate 269,551 266, ---------------Total $1,184,958 $1,074, - ------------------------------------------------------------------------------------------------------CAPITAL EXPENDITURES: Health Care Aeropower Fluid Processing 38,374 $ 31, 13,193 12, 23,595 16, ---------------Subtotal 75,162 60, Corporate 7,060 6, ---------------Total $ 82,222 $ 66, - ------------------------------------------------------------------------------------------------------DEPRECIATION: Health Care Aeropower Fluid Processing 21,397 $ 17,9 8,852 8,5 12,892 10,8 --------------Subtotal 43,141 37,3 Corporate 3,641 4,3 --------------Total $ 46,782 $ 41,6 - ------------------------------------------------------------------------------------------------------$ $ Health Care Aeropower Fluid Processing $ Health Care Aeropower Fluid Processing $ Health Care Aeropower Fluid Processing $

(a) Includes a pretax charge of $3,696 due principally to the restructuring of the German operations and to the write-off of a bad debt in the Aerospace operations (Health Care-$1,703, Aeropower-$1,503, Fluid Processing-$490). 38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS 1996, 1995 AND 1994 (In thousands, except per share data)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FISCAL YEARS 1996, 1995 AND 1994 (In thousands, except per share data) ACCOUNTING POLICIES Fiscal Year The Company's fiscal year ends on the Saturday closest to July 31, except that the Company's foreign subsidiaries are on a July 31 fiscal year. The years ended August 3, 1996, July 29, 1995 and July 30, 1994 comprise 53, 52 and 52 weeks, respectively. Basis of Consolidation The financial statements of Pall Corporation are presented in consolidation with its subsidiaries, all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assumptions and estimates that affect the reported amounts in the financial statements. Actual results could differ from those estimates. Revenue Recognition Revenue is recognized when a product is shipped or a service is performed. Translation of Foreign Currencies Financial statements of foreign subsidiaries have been translated into U.S. dollars at exchange rates as follows: (i) balance sheet accounts at year-end rates, and (ii) income statement accounts at weighted average exchange rates. Translation gains and losses are reflected in stockholders' equity, while transaction gains and losses are reflected in income. Transaction gains in the amount of $1,198 were realized in fiscal year 1996. Transaction losses in the amounts of $586 and $348 were incurred in fiscal years 1995 and 1994, respectively. The equity in, and advances to, foreign subsidiaries totaled $264,845 and $252,287 at August 3, 1996 and July 29, 1995, respectively. Cash and Cash Equivalents The Company considers all financial instruments purchased with a maturity of three months or less, other than its investments in Puerto Rico, to be cash equivalents. The Company holds all cash equivalents until maturity. Short-Term Investments Short-term investments, consisting principally of certificates of deposit and repurchase agreements secured by government obligations, are held to maturity and are carried at cost, which approximates fair value. Inventories Inventories are valued at the lower of cost (principally on the first-in, first-out method) or market. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation of plant and equipment is provided over the estimated useful lives of the respective assets, principally on the straight-line basis. Expenditures for additions, major renewals and betterments are capitalized, and expenditures for maintenance and repairs are charged to earnings as incurred. Intangible Assets Costs related to patents and trademarks are amortized using the straight-line method over the estimated useful lives, generally for periods ranging up to 17 years. Goodwill and other intangible assets are amortized over periods ranging up to 20 years. The Company periodically reviews its intangible assets to assess recoverability and to ensure that the carrying values of such intangible assets have not been impaired. Income Taxes The Company accounts for taxes on income using the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of

assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. Earnings Per Share Earnings per share was computed based on the average number of shares outstanding. Stock options were excluded from the computation since they were not materially dilutive. Capitalized Interest Interest in the amounts of $1,608 in 1996, $1,365 in 1995 and $1,641 in 1994 was capitalized. Such amounts were computed by applying the effective interest rate on the borrowing to the accumulated expenditures incurred for property, plant and equipment. Accounting Change In the first quarter of fiscal 1995, the Company adopted Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits). The effect of initially applying this Statement ($1,200 pretax, $780 after taxes, 1 cent per share) is reported as the cumulative effect of a change in an accounting principle. Reclassifications Certain prior year amounts have been reclassified to conform with current year presentation. 39

ACQUISITIONS On September 29, 1995, the Company completed its acquisition of the Medical Plastics business of Bayer Corporation for approximately $45,000. This business now operates under the name of Medsep Corporation and is a leading supplier to blood centers of specialty plastic disposable products and preservative solutions used in the collection and storage of blood components for medical purposes. The acquisition of Medsep was financed through working capital sources and is accounted for under the purchase method of accounting. As such, the results of its operations are included in the Company's financial statements from the date of acquisition. The purchase price exceeded the fair value of the tangible net assets acquired by approximately $16,000. On January 26, 1995, the Company acquired for approximately $28,000 all of the outstanding shares of Filtron Technology Corporation, a manufacturer of ultrafiltration membranes and cassettes. This acquisition was financed through issuance of 1,280 shares of the Company's treasury shares valued at approximately $25,000, and the remainder through working capital sources. The acquisition has been accounted for under the purchase method of accounting and, accordingly, the operations of Filtron are included in the Company's financial statements from the date of acquisition. The purchase price exceeded the fair value of the tangible net assets acquired by approximately $22,000. The acquisitions of Medsep and Filtron would not have materially affected the financial statements of the Company had the results of their operations been included in the Company's financial statements of prior years. RESTRUCTURING AND OTHER CHARGES In the fourth quarter of fiscal 1994, the Company recorded a one-time pretax charge for $3,696, due principally to the restructuring of the German operations and to the write-off of a bad debt in the Aerospace operations. INVENTORIES The major classes of inventory are as follows:
- -----------------------------------------------------------------------AUGUST 3, 1996 July 29, 1995 - -----------------------------------------------------------------------Raw materials and components $ 82,402 $ 61,436 Work-in-process 21,132 17,901 Finished goods 90,230 79,093 - -----------------------------------------------------------------------Total inventory $193,764 $158,430

ACQUISITIONS On September 29, 1995, the Company completed its acquisition of the Medical Plastics business of Bayer Corporation for approximately $45,000. This business now operates under the name of Medsep Corporation and is a leading supplier to blood centers of specialty plastic disposable products and preservative solutions used in the collection and storage of blood components for medical purposes. The acquisition of Medsep was financed through working capital sources and is accounted for under the purchase method of accounting. As such, the results of its operations are included in the Company's financial statements from the date of acquisition. The purchase price exceeded the fair value of the tangible net assets acquired by approximately $16,000. On January 26, 1995, the Company acquired for approximately $28,000 all of the outstanding shares of Filtron Technology Corporation, a manufacturer of ultrafiltration membranes and cassettes. This acquisition was financed through issuance of 1,280 shares of the Company's treasury shares valued at approximately $25,000, and the remainder through working capital sources. The acquisition has been accounted for under the purchase method of accounting and, accordingly, the operations of Filtron are included in the Company's financial statements from the date of acquisition. The purchase price exceeded the fair value of the tangible net assets acquired by approximately $22,000. The acquisitions of Medsep and Filtron would not have materially affected the financial statements of the Company had the results of their operations been included in the Company's financial statements of prior years. RESTRUCTURING AND OTHER CHARGES In the fourth quarter of fiscal 1994, the Company recorded a one-time pretax charge for $3,696, due principally to the restructuring of the German operations and to the write-off of a bad debt in the Aerospace operations. INVENTORIES The major classes of inventory are as follows:
- -----------------------------------------------------------------------AUGUST 3, 1996 July 29, 1995 - -----------------------------------------------------------------------Raw materials and components $ 82,402 $ 61,436 Work-in-process 21,132 17,901 Finished goods 90,230 79,093 - -----------------------------------------------------------------------Total inventory $193,764 $158,430 - ------------------------------------------------------------------------

OTHER ASSETS Other assets consist of the following:
- -----------------------------------------------------------------------AUGUST 3, 1996 July 29, 1995 - -----------------------------------------------------------------------Patents and trademarks, net of accumulated amortization of $13,184 and $10,209, respectively $ 34,552 $ 38,728 Benefits protection trust 26,701 25,848 Prepaid pension expenses 13,654 11,247 Intangible pension assets 2,385 2,964 Goodwill and other intangibles, net of accumulated amortization of $4,701 and $1,726, respectively 39,047 26,272 Other 23,509 17,165 - -----------------------------------------------------------------------Total $139,848 $122,224 - ------------------------------------------------------------------------

Patents and trademarks include costs related to successfully defending certain Pall patents, and expenditures made to register new patents and trademarks, as well as paid-up licenses for third-party patents. The benefits protection trust was established for the purpose of satisfying certain previously unfunded pension obligations, in the event of a change of control of the Company. The August 3, 1996 and July 29, 1995 balance sheets reflect related liabilities in the amounts of $28,205 and $28,240, respectively. The trust primarily holds investments in U.S. government obligations and debt obligations of corporations and financial institutions with high credit ratings. The Company considers investments held in the trust to be available-for-sale, and these investments are carried at fair value. Unrealized gains and losses are reported as a separate component of stockholders' equity, until realized. Realized gains and losses are recognized in earnings upon sale. Contractual maturity dates range from 1996-2008. Pertinent information related to the trust follows:
- -------------------------------------------------------------------1996 1995 1994 - -------------------------------------------------------------------Annual contributions $ 2,596 $ 2,599 $ 2,567 Total purchases 41,779 28,364 33,896 Total proceeds from sales 42,720 29,611 34,309 Net gains (losses) recognized 584 (712) (157)

Prepaid pension expenses represent the non-current amounts arising from the excess of cumulative employer contributions and earnings thereon, over accrued net pension expenses. Intangible pension assets represent, for certain domestic pension arrangements, the excess of unfunded accumulated benefits over unrecognized prior service costs. The August 3, 1996 and July 29, 1995 balance sheets reflect additional long-term pension liabilities of $9,506 and $10,880, respectively, and a reduction in stockholders' equity, net of deferred tax benefits, of $4,629 and $5,145, respectively. 40

Goodwill and other intangibles represent the cost in excess of the tangible net assets acquired of the Company's former distributor in Australia and of Filtron Technology Corporation and the Medical Plastics business of Bayer Corporation. NOTES PAYABLE At August 3, 1996, the Company and its subsidiaries had lines of credit totaling approximately $370,000, of which $140,000 had been drawn. Such lines of credit do not represent legal commitments on the parts of the financial institutions and no compensating balance is required. Pertinent information with respect to notes payable follows:
- ------------------------------------------------------------------------------1996 1995 1994 - ------------------------------------------------------------------------------Average month-end borrowings $138,629 $119,226 $132,252 Weighted average interest rate during the year 4.8% 5.1% 3.5% Highest level of borrowing at any month-end during the year $157,871 $160,655 $167,234 Weighted average interest rate at year-end 4.6% 5.1% 4.2% - -------------------------------------------------------------------------------

The Company had short-term investments in Puerto Rico of $71,450 at August 3, 1996 ($72,850 at July 29, 1995), at the same time it had notes payable of $139,957 ($117,489 at July 29, 1995) outside of Puerto Rico.

Goodwill and other intangibles represent the cost in excess of the tangible net assets acquired of the Company's former distributor in Australia and of Filtron Technology Corporation and the Medical Plastics business of Bayer Corporation. NOTES PAYABLE At August 3, 1996, the Company and its subsidiaries had lines of credit totaling approximately $370,000, of which $140,000 had been drawn. Such lines of credit do not represent legal commitments on the parts of the financial institutions and no compensating balance is required. Pertinent information with respect to notes payable follows:
- ------------------------------------------------------------------------------1996 1995 1994 - ------------------------------------------------------------------------------Average month-end borrowings $138,629 $119,226 $132,252 Weighted average interest rate during the year 4.8% 5.1% 3.5% Highest level of borrowing at any month-end during the year $157,871 $160,655 $167,234 Weighted average interest rate at year-end 4.6% 5.1% 4.2% - -------------------------------------------------------------------------------

The Company had short-term investments in Puerto Rico of $71,450 at August 3, 1996 ($72,850 at July 29, 1995), at the same time it had notes payable of $139,957 ($117,489 at July 29, 1995) outside of Puerto Rico. LONG-TERM DEBT
- ------------------------------------------------------------------------------AT AUGUST 3, At July 29, 1996 1995 - ------------------------------------------------------------------------------Bank loans in Japan, due in installments through 1999 $23,028 $28,501 7.23% term loan, due on June 30, 1999 20,000 20,000 7.38% sale-and-leaseback obligation 18,030 21,620 Industrial development bonds, paid in 1996 -4,320 Capitalized leases, 6.48% to 16.5% due in varying amounts through the year 2005 2,817 3,867 - -------------------------------------------------------------------------------Total long-term debt 63,875 78,308 Less: current portion 17,163 9,494 - ------------------------------------------------------------------------------Long-term debt, net of current portion $46,712 $68,814 - -------------------------------------------------------------------------------

The Company's Japanese subsidiary has entered into loan arrangements in the total amount of 2.5 billion Yen ($23,028). The loans are being amortized through the year 1999, and bear interest at rates between 1.13% and 3.6%. In July 1995, the Company entered into a sale-and-leaseback transaction for certain of its personal properties for approximately $25,000. No gain or loss was recognized on this transaction. For accounting purposes, the Company has treated this transaction as a financing arrangement. Payments are due in installments through the year 2001. Depreciation on the properties has been reflected in accordance with the Company's normal accounting practices. The aggregate annual maturities of long-term debt during the fiscal years 1997 through 2001 are approximately as follows: 1997, $17,163; 1998, $4,606; 1999, $34,225; 2000, $3,475; and 2001, $3,696. INCOME TAXES

INCOME TAXES The components of earnings before income taxes and the cumulative effect of a change in an accounting principle are as follows:
- ------------------------------------------------------------1996 1995 1994 - ------------------------------------------------------------Domestic operations $ 80,134 $ 56,708 $ 62,135 Foreign operations 117,720 110,996 72,963 - ------------------------------------------------------------Total $197,854 $167,704 $135,098 - -------------------------------------------------------------

The Company and its domestic subsidiaries file a consolidated Federal income tax return. The provisions for income taxes, excluding the cumulative effect of a change in an accounting principle, consist of the following items:
- ------------------------------------------------------------1996 1995 1994 - ------------------------------------------------------------Current: Federal and Puerto Rico $12,338 $10,155 $ 4,229 State 425 350 350 Foreign 40,177 37,762 27,191 - ------------------------------------------------------------Total 52,940 48,267 31,770 - ------------------------------------------------------------Deferred: Federal 3,636 (387) 4,585 State --75 Foreign 2,780 608 (254) - ------------------------------------------------------------Total 6,416 221 4,406 - ------------------------------------------------------------Total income tax expense $59,356 $48,488 $36,176 - -------------------------------------------------------------

41

The tax effects of temporary differences and loss carry-forwards that give rise to significant portions of the net deferred tax liability at August 3, 1996, July 29, 1995 and July 30, 1994 are as follows:
1996 1995 1994 - ------------------------------------------------------------------------------Deferred tax asset: Inventories $ 9,360 $ 9,125 $ 9,221 Pension liabilities 11,911 12,044 11,325 Accrued expenses 4,179 3,667 2,468 Other 1,495 5,642 4,584 - ------------------------------------------------------------------------------Total deferred tax asset 26,945 30,478 27,598 - ------------------------------------------------------------------------------Deferred tax liability: Plant and equipment (41,970) (41,215) (39,025) Pension assets (3,398) (2,564) (1,697) Other (1,716) (700) (1,148) - ------------------------------------------------------------------------------Total deferred tax liability (47,084) (44,479) (41,870) - ------------------------------------------------------------------------------Net deferred tax liability $(20,139) $(14,001) $(14,272) - -------------------------------------------------------------------------------

The tax effects of temporary differences and loss carry-forwards that give rise to significant portions of the net deferred tax liability at August 3, 1996, July 29, 1995 and July 30, 1994 are as follows:
1996 1995 1994 - ------------------------------------------------------------------------------Deferred tax asset: Inventories $ 9,360 $ 9,125 $ 9,221 Pension liabilities 11,911 12,044 11,325 Accrued expenses 4,179 3,667 2,468 Other 1,495 5,642 4,584 - ------------------------------------------------------------------------------Total deferred tax asset 26,945 30,478 27,598 - ------------------------------------------------------------------------------Deferred tax liability: Plant and equipment (41,970) (41,215) (39,025) Pension assets (3,398) (2,564) (1,697) Other (1,716) (700) (1,148) - ------------------------------------------------------------------------------Total deferred tax liability (47,084) (44,479) (41,870) - ------------------------------------------------------------------------------Net deferred tax liability $(20,139) $(14,001) $(14,272) - -------------------------------------------------------------------------------

A reconciliation of the provisions for income taxes, excluding the cumulative effect of a change in an accounting principle, follows:
1996 1995 1994 - -----------------------------------------------------------------------------% of % of % of Pretax Pretax Pretax Amount Earnings Earnings Earnings - -----------------------------------------------------------------------------Computed "expected" tax expense $ 69,249 35.0% 35.0% 35.0% Tax benefit of Puerto Rico operations (9,781) (4.9) (5.8) (8.9) Federal tax credits and other effects (2,364) (1.2) (0.3) -Foreign income and withholding taxes, net of U.S. foreign tax credits 1,976 1.0 (0.1) 0.5 State income taxes, net of Federal income tax benefit 276 0.1 0.1 0.2 - -----------------------------------------------------------------------------Total and effective tax rate $ 59,356 30.0% 28.9% 26.8% ==============================================================================

United States income taxes have not been provided on the retained earnings of foreign subsidiaries, which totaled $171,144, $173,544 and $161,047 at August 3, 1996, July 29, 1995 and July 30, 1994, respectively. Foreign subsidiaries have paid, and are expected to continue to pay, dividends out of accumulated earnings. Any additional U.S. taxes arising from the repatriation of such earnings, less applicable credits for taxes paid abroad, would not be material. The Company's Puerto Rico subsidiaries are organized as "possessions corporations" as defined in Section 936 of the Internal Revenue Code. A change in the provisions of Section 936 decreased the available U.S. tax credit from 100% to 55% and 60% of income for the years ended August 3, 1996 and July 29, 1995, respectively. The exemption from Puerto Rico income tax remains at 90%. Repatriation of these earnings results in Puerto Rico withholding taxes of no more than 10% being imposed. The Small Business Job Protection Act of 1996 repealed Section 936 of the Internal Revenue Code which provided a tax credit for U.S. companies with operations in certain U.S. possessions, including Puerto Rico. For

existing qualifying Puerto Rico operations, such as Pall, Section 936 will be phased out over a period of several years, with a decreasing credit being available through the last taxable year beginning before January 1, 2006. COMMON STOCK Reduction in Par Value and Increase in Number of Authorized Shares At the annual meeting held on November 18, 1993, the shareholders approved an amendment to the Certificate of Incorporation reducing the par value of the common stock from $.25 per share to $.10 per share, and increasing the number of authorized shares of common stock from 200 million to 500 million. As a result of the reduction in par value, the common stock account was reduced by $17,603 and the capital in excess of par value account was increased by the same amount. Shareholder Rights Plan On November 17, 1989, the Board of Directors adopted a Shareholder Rights Plan. Under the Plan, each shareholder received a dividend of one right for each share of the Company's outstanding common stock. Each right entitles the holder to purchase one share of common stock at an initial exercise price of $60 per share. Initially, the rights are attached to the common stock and are not exercisable. The rights become exercisable and will trade separately from the common stock ten days after any person or group acquires 20% or more of the Company's outstanding common stock, or ten business days after any person or group announces a tender offer for 20% or more of the outstanding common stock. Each right not owned by the acquiror would become exercisable for the number of shares of common stock of the Company having a market value at that time of twice the exercise price of the right. Alternatively, the Board of Directors could exchange the rights not owned by the acquiror for common stock at an exchange ratio of one share of common stock per right. The effective date of the rights dividend was December 1, 1989, to shareholders of record on that date. Such rights are also attached to common stock issued subsequent to December 1, 1989. The rights will expire on December 1, 1999, unless earlier redeemed by the Company. The rights are redeemable by the Board of Directors for .33 cents per right at any time until a 20% position has been acquired in the Company's common stock by a person or group. 42

Stock Repurchase Programs On August 3, 1993, the Company's Board of Directors authorized a program to repurchase shares of its common stock. The Board authorized the expenditure of up to $30,000, and this program was completed by the end of fiscal 1994, with 1,763 shares being acquired. On January 9, 1995, the Company's Board of Directors authorized another program to repurchase shares of its common stock. The Board authorized the expenditure of up to $50,000, and this program was completed by the end of fiscal 1995, with 2,306 shares being acquired. On February 28, 1996, the Company's Board of Directors authorized another program to repurchase shares of its common stock. The Board authorized the expenditure of up to $40,000. Through the end of fiscal 1996 the Company purchased 433 shares at an aggregate cost of $10,000. The shares repurchased under these programs are held in treasury for use in connection with the exercise of options granted under the Company's stock option plans, and for general corporate purposes. At August 3, 1996, the Company held 2,375 treasury shares. INCENTIVE COMPENSATION PLAN The plan provides additional compensation to officers and key employees of the Company and its subsidiaries based upon the achievement of specified management goals. The Compensation Committee of the Board of Directors establishes the goals on which the Company's executive officers are compensated, and management establishes the goals for other covered employees. With respect to the officers covered by the employment

Stock Repurchase Programs On August 3, 1993, the Company's Board of Directors authorized a program to repurchase shares of its common stock. The Board authorized the expenditure of up to $30,000, and this program was completed by the end of fiscal 1994, with 1,763 shares being acquired. On January 9, 1995, the Company's Board of Directors authorized another program to repurchase shares of its common stock. The Board authorized the expenditure of up to $50,000, and this program was completed by the end of fiscal 1995, with 2,306 shares being acquired. On February 28, 1996, the Company's Board of Directors authorized another program to repurchase shares of its common stock. The Board authorized the expenditure of up to $40,000. Through the end of fiscal 1996 the Company purchased 433 shares at an aggregate cost of $10,000. The shares repurchased under these programs are held in treasury for use in connection with the exercise of options granted under the Company's stock option plans, and for general corporate purposes. At August 3, 1996, the Company held 2,375 treasury shares. INCENTIVE COMPENSATION PLAN The plan provides additional compensation to officers and key employees of the Company and its subsidiaries based upon the achievement of specified management goals. The Compensation Committee of the Board of Directors establishes the goals on which the Company's executive officers are compensated, and management establishes the goals for other covered employees. With respect to the officers covered by the employment contracts referred to in the Contingencies and Commitments footnote, any incentive compensation payable to an officer under the incentive compensation arrangement described in this paragraph is reduced by the incentive compensation payable under the formula contained in his/her employment contract. The aggregate amounts charged to expense in connection with the plan were $9,330, $7,786 and $6,958 in fiscal years 1996, 1995 and 1994, respectively. STOCK OPTION PLANS The Company has adopted several plans that provide for the granting of stock options to officers, employees and non-employee directors, at option prices equal to the market price of the common stock at date of grant, which results in no charge to earnings. The forms of option adopted provide that the options may not be exercised within one year from the date of grant, and expire if not completely exercised within five years from the date of grant. For the most part, in any year after the first year, the options can be exercised with respect to only up to 25% of the shares subject to the option, computed cumulatively.
At August 3, At July 29, 1996 1995 - -------------------------------------------------------------------------------Options exercisable 2,570 2,222 Options available for grant 3,236 1,322

Changes in the options outstanding during fiscal years 1994, 1995 and 1996 are summarized in the following table:
Number of Shares Price Per Share - -------------------------------------------------------------------------------Balance--July 31, 1993 3,153 $ 9.40 - $ 22.31 Fiscal 1994: Options granted 3,375 15.25 19.81 Options exercised (1,040) 9.40 18.38 Options terminated (245) 10.13 18.50 - -------------------------------------------------------------------------------Balance--July 30, 1994 5,243 9.60 22.31 Fiscal 1995: Options granted 194 16.00 21.44 Options exercised (269) 9.60 18.81

Options terminated (92) 18.25 22.31 - -------------------------------------------------------------------------------Balance--July 29, 1995 5,076 11.69 21.44 Fiscal 1996: Options granted 2,455 21.50 27.25 Options exercised (1,019) 11.69 19.88 Options terminated (73) 18.38 24.25 - -------------------------------------------------------------------------------Balance--August 3, 1996 6,439 15.25 27.25 - --------------------------------------------------------------------------------

As of August 3, 1996, 9,675 shares of common stock of the Company were reserved for the exercise of stock options. To the extent treasury shares are used to satisfy option exercises, these reserved shares will not be issued. Since June 1992, the Company has issued treasury shares upon the exercise of stock options. PENSION AND PROFIT SHARING PLANS AND ARRANGEMENTS Pension Plans The Company and its subsidiaries provide substantially all domestic and foreign employees with pension benefits. Pension costs charged to operations totaled $10,532, $9,018 and $8,638 in fiscal years 1996, 1995 and 1994, respectively. The Company's pension plans provide benefits based on salary and length of service. Funding policy for domestic plans is in accordance with ERISA funding standards; for foreign plans, funding is determined by local tax laws and regulations. Plan assets are invested primarily in common stocks, bonds and cash instruments. 43

Net periodic pension cost for these plans in fiscal years 1996, 1995 and 1994 was:
U.S. Plans Forei ------------------------------------------------------1996 1995 1994 1996 - ------------------------------------------------------------------------------------------------------Service cost $ 3,449 $ 2,665 $ 2,651 $ 4,074 $ 4 Interest cost on projected benefit obligation 5,700 5,308 4,851 4,279 3 Return on plan assets (5,684) (7,472) (763) (5,362) (5 Net amortization and deferrals 3,458 5,198 (1,383) (863) - ------------------------------------------------------------------------------------------------------Net periodic pension cost $ 6,923 $ 5,699 $ 5,356 $ 2,128 $ 1 - -------------------------------------------------------------------------------------------------------

The following table presents the plans' funded status and amounts recognized on the Company's consolidated balance sheets at August 3, 1996 and July 29, 1995:
Assets Exceed Ac Accumulated Benefits ---------------------------------------------------U.S. Plans Foreign Plans U.S. Plan ---------------------------------------------------1996 1995 1996 1995 1996 1 - ------------------------------------------------------------------------------------------------------Actuarial present value of benefit obligations: Vested benefit obligation $ 5,021 $ 4,471 $ 42,781 $ 36,070 $ 61,382 $ 56, Accumulated benefit obligation 5,274 4,696 43,525 36,153 64,668 60, Projected benefit obligation 5,274 4,696 48,140 40,252 75,080 69, Plan assets 5,413 4,937 75,993 59,775 41,470 37, - ------------------------------------------------------------------------------------------------------Projected benefit obligation (in excess of) or less than plan assets 139 241 27,853 19,523 (33,610) (32, Unrecognized net (gain) or loss (555) (456) (10,889) (5,738) 10,663 11, Unrecognized prior service cost 936 970 179 204 2,021 2, Unrecognized net obligation or (asset) at date of adoption (465) (507) (3,544) (2,990) (1,434) (1, Additional minimum liability 0 0 0 0 (9,506) (10,

Net periodic pension cost for these plans in fiscal years 1996, 1995 and 1994 was:
U.S. Plans Forei ------------------------------------------------------1996 1995 1994 1996 - ------------------------------------------------------------------------------------------------------Service cost $ 3,449 $ 2,665 $ 2,651 $ 4,074 $ 4 Interest cost on projected benefit obligation 5,700 5,308 4,851 4,279 3 Return on plan assets (5,684) (7,472) (763) (5,362) (5 Net amortization and deferrals 3,458 5,198 (1,383) (863) - ------------------------------------------------------------------------------------------------------Net periodic pension cost $ 6,923 $ 5,699 $ 5,356 $ 2,128 $ 1 - -------------------------------------------------------------------------------------------------------

The following table presents the plans' funded status and amounts recognized on the Company's consolidated balance sheets at August 3, 1996 and July 29, 1995:
Assets Exceed Ac Accumulated Benefits ---------------------------------------------------U.S. Plans Foreign Plans U.S. Plan ---------------------------------------------------1996 1995 1996 1995 1996 1 - ------------------------------------------------------------------------------------------------------Actuarial present value of benefit obligations: Vested benefit obligation $ 5,021 $ 4,471 $ 42,781 $ 36,070 $ 61,382 $ 56, Accumulated benefit obligation 5,274 4,696 43,525 36,153 64,668 60, Projected benefit obligation 5,274 4,696 48,140 40,252 75,080 69, Plan assets 5,413 4,937 75,993 59,775 41,470 37, - ------------------------------------------------------------------------------------------------------Projected benefit obligation (in excess of) or less than plan assets 139 241 27,853 19,523 (33,610) (32, Unrecognized net (gain) or loss (555) (456) (10,889) (5,738) 10,663 11, Unrecognized prior service cost 936 970 179 204 2,021 2, Unrecognized net obligation or (asset) at date of adoption (465) (507) (3,544) (2,990) (1,434) (1, Additional minimum liability 0 0 0 0 (9,506) (10, - ------------------------------------------------------------------------------------------------------Prepaid pension cost (liability) in the consolidated balance sheets $ 55 $ 248 $ 13,599 $ 10,999 $(31,866) $(30, - ------------------------------------------------------------------------------------------------------The assumptions used were: Discount rate 7.75% 7.75% 5.5-8.5% 5.5-8.5% 7.75% 7 Rate of compensation increase 4.25-5.25% 4.25-5.25% 2.9-5.5% 2.8-5.5% 4.25-5.25% 4.25-5

The long-term rate of return for the U.S. plans was 9.0% in each year, and for the foreign plans ranged from 5.5% to 9.0% in each year. The Company and its subsidiaries also participate in certain pension plans, primarily for the benefit of its employees who are union members. Contributions to these plans were $1,481, $1,417 and $1,307 for fiscal years 1996, 1995 and 1994, respectively. Profit Sharing Plan The Company's profit sharing plan covers substantially all domestic employees of the Company and its participating subsidiaries, other than those employees covered by a union retirement plan. The plan provides that, unless the Board of Directors decides otherwise, the Company contribute annually the lesser of (a) the amount which, when added to forfeitures for the year, equals 7.5% of the amount by which the consolidated net operating income before income taxes of the Company and its participating subsidiaries exceeds $500, or (b) the amount deductible for Federal income tax purposes. The profit sharing expense for fiscal years 1996, 1995 and 1994 was $6,092, $4,293 and $4,683, respectively. 44

OTHER NON-CURRENT LIABILITIES This consists primarily of accruals for deferred compensation plans and arrangements, the benefits of which are, and will continue to be, paid to covered officers and employees. CONTINGENCIES AND COMMITMENTS On April 19, 1995, a jury verdict for $7,000 in damages was rendered against the Company in a product disparagement action. The Company's appeal is now pending. In the opinion of management, including insurance recoveries, the Company does not expect the loss, if any, resulting from this matter to have a material effect on its financial position. Certain locations of the Company are involved in environmental proceedings. The situations at these sites are similar, in that they relate to the acts of third parties and are not related to ongoing Company operations. The Company's insurers have been notified and are evaluating coverage. In the opinion of management these proceedings will not have a material effect on the Company's financial position. The Company and its subsidiaries are subject to certain other legal actions that arise in the normal course of business. It is management's opinion that these other actions will not have a material effect on the Company's financial position. The Company and its subsidiaries lease office and warehouse space, automobiles, computers and office equipment. Rent expense for all operating leases amounted to approximately $15,000 in 1996, $13,100 in 1995 and $11,000 in 1994. Future minimum rental commitments at August 3, 1996 for all noncancelable operating leases with initial terms exceeding one year are $10,200 in 1997; $7,200 in 1998; $5,000 in 1999; $3,000 in 2000; $1,300 in 2001; and $400 thereafter. The Company has employment agreements with its executive officers, the terms of which expire at various times through July 31, 1999. Such agreements, which have been revised from time to time, provide for minimum salary levels, adjusted annually for cost-of-living changes, as well as for incentive bonuses that are payable if specified management goals are attained. The aggregate commitment for future salaries at August 3, 1996, excluding bonuses, was approximately $9,000. FINANCIAL INSTRUMENTS AND RISKS AND UNCERTAINTIES The Company enters into forward exchange contracts, generally with terms of 90 days or less, to manage its foreign currency transaction exposures. Effects of changes in currency rates on those transactions are therefore minimized and hedges are accounted for as part of the underlying transactions. The total value of open contracts at year-end was not material. The Company sells its products to a diverse group of customers in the Health Care, Aeropower and Fluid Processing industries throughout the world and as such does not consider itself exposed to concentration of credit risks. These risks are further minimized by placing credit limits, ongoing monitoring of the customers' account balances, and assessment of the customers' financial strengths. The Company's cash and cash equivalents and investments are placed with a wide array of financial institutions with high credit ratings. This investment policy limits the Company's exposure to concentration of credit risks. The Company considers the fair value of all financial instruments to be not materially different from their carrying value at year-end. The Company manufactures and markets filtration and separations products and systems within three segments, Health Care, Aeropower and Fluid Processing, throughout the world, and as such, is subject to certain risks and uncertainties as a result of changes in general economic conditions, sources of supply, competition, foreign exchange rates, tax reform, litigation and regulatory developments. The diversity and breadth of the Company's products and geographic operations mitigate significantly the risk that adverse changes in any event would materially affect the Company's operating results. The Company's segment information by industry and geographic areas is disclosed on pages 37 and 38.

45

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
First Second Third Fourth Quarter Quarter Quarter Quarter - ------------------------------------------------------------------------------------------------------1996: NET SALES $191,550 $239,316 $247,874 $281,636 $ GROSS PROFIT 115,996 143,828 152,321 175,367 EARNINGS BEFORE INCOME TAXES 25,726 46,502 53,205 72,421 NET EARNINGS 17,752 32,086 37,965 50,695 EARNINGS PER SHARE .16 .28 .33 .44 1995: Net sales $159,195 $192,847 $217,309 $253,472 $ Gross profit 97,207 119,682 140,184 160,463 Earnings before income taxes and the cumulative effect of an accounting change 19,012 37,827 47,575 63,290 Net earnings 12,529(a) 26,481 33,508 45,918 Earnings per share 0.11(a) 0.23 0.29 0.40 - -------------------------------------------------------------------------------------------------------

(a) Includes a charge against earnings of $780 after income taxes (1 cent per share) as a result of adopting the Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits). COMMON STOCK PRICES AND CASH DIVIDENDS Pall Corporation's Common Stock is listed on the New York and London Stock Exchanges. The table below sets forth quarterly data relating to the Company's Common Stock prices and cash dividends declared per share for the past two fiscal years.
Cash dividends FISCAL 1996 Fiscal 1995 per common share - ----------------------------------------------------------------------------------Price per share HIGH LOW High Low 1996 1995 - ----------------------------------------------------------------------------------QUARTER: First $24.50 $20.13 $18.38 $15.75 $0.1050 $0.0925 Second 27.75 23.25 20.25 17.13 0.1225 0.1050 Third 29.38 25.63 23.63 18.63 0.1225 0.1050 Fourth 28.63 19.63 24.00 20.38 0.1225 0.1050 - -----------------------------------------------------------------------------------

There are approximately 6,800 holders of record of the Company's Common Stock. 46

ELEVEN-YEAR SALES
(In thousands, to nearest $25,000) 1996 1995 1994 1993 1992 1991 1990 - ------------------------------------------------------------------------------------------------------Health Care $471,425 $396,900 $351,850 $353,200 $331,550 $267,625 $214,125 $1 Aeropower (without NBC) 235,100 212,800 179,300 176,125 204,725 232,200 191,100 1 Fluid Processing (without Air Dryers) 253,850 213,125 169,700 157,900 148,800 157,150 159,275 1 - ------------------------------------------------------------------------------------------------------Subtotal 960,375 822,825 700,850 687,225 685,075 656,975 564,500 4 Air Dryers -------NBC Canisters -------- ------------------------------------------------------------------------------------------------------Total $960,375 $822,825 $700,850 $687,225 $685,075 $656,975 $564,500 $4

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
First Second Third Fourth Quarter Quarter Quarter Quarter - ------------------------------------------------------------------------------------------------------1996: NET SALES $191,550 $239,316 $247,874 $281,636 $ GROSS PROFIT 115,996 143,828 152,321 175,367 EARNINGS BEFORE INCOME TAXES 25,726 46,502 53,205 72,421 NET EARNINGS 17,752 32,086 37,965 50,695 EARNINGS PER SHARE .16 .28 .33 .44 1995: Net sales $159,195 $192,847 $217,309 $253,472 $ Gross profit 97,207 119,682 140,184 160,463 Earnings before income taxes and the cumulative effect of an accounting change 19,012 37,827 47,575 63,290 Net earnings 12,529(a) 26,481 33,508 45,918 Earnings per share 0.11(a) 0.23 0.29 0.40 - -------------------------------------------------------------------------------------------------------

(a) Includes a charge against earnings of $780 after income taxes (1 cent per share) as a result of adopting the Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits). COMMON STOCK PRICES AND CASH DIVIDENDS Pall Corporation's Common Stock is listed on the New York and London Stock Exchanges. The table below sets forth quarterly data relating to the Company's Common Stock prices and cash dividends declared per share for the past two fiscal years.
Cash dividends FISCAL 1996 Fiscal 1995 per common share - ----------------------------------------------------------------------------------Price per share HIGH LOW High Low 1996 1995 - ----------------------------------------------------------------------------------QUARTER: First $24.50 $20.13 $18.38 $15.75 $0.1050 $0.0925 Second 27.75 23.25 20.25 17.13 0.1225 0.1050 Third 29.38 25.63 23.63 18.63 0.1225 0.1050 Fourth 28.63 19.63 24.00 20.38 0.1225 0.1050 - -----------------------------------------------------------------------------------

There are approximately 6,800 holders of record of the Company's Common Stock. 46

ELEVEN-YEAR SALES
(In thousands, to nearest $25,000) 1996 1995 1994 1993 1992 1991 1990 - ------------------------------------------------------------------------------------------------------Health Care $471,425 $396,900 $351,850 $353,200 $331,550 $267,625 $214,125 $1 Aeropower (without NBC) 235,100 212,800 179,300 176,125 204,725 232,200 191,100 1 Fluid Processing (without Air Dryers) 253,850 213,125 169,700 157,900 148,800 157,150 159,275 1 - ------------------------------------------------------------------------------------------------------Subtotal 960,375 822,825 700,850 687,225 685,075 656,975 564,500 4 Air Dryers -------NBC Canisters -------- ------------------------------------------------------------------------------------------------------Total $960,375 $822,825 $700,850 $687,225 $685,075 $656,975 $564,500 $4 =========================================================================================================

ELEVEN-YEAR SALES
(In thousands, to nearest $25,000) 1996 1995 1994 1993 1992 1991 1990 - ------------------------------------------------------------------------------------------------------Health Care $471,425 $396,900 $351,850 $353,200 $331,550 $267,625 $214,125 $1 Aeropower (without NBC) 235,100 212,800 179,300 176,125 204,725 232,200 191,100 1 Fluid Processing (without Air Dryers) 253,850 213,125 169,700 157,900 148,800 157,150 159,275 1 - ------------------------------------------------------------------------------------------------------Subtotal 960,375 822,825 700,850 687,225 685,075 656,975 564,500 4 Air Dryers -------NBC Canisters -------- ------------------------------------------------------------------------------------------------------Total $960,375 $822,825 $700,850 $687,225 $685,075 $656,975 $564,500 $4 =========================================================================================================

(In thousands, to nearest $25,000) 1987(a) 1986 - -----------------------------------------------Health Care $129,325 $ 96,225 Aeropower (without NBC) 137,125 132,650 Fluid Processing (without Air Dryers) 86,575 66,550 - -----------------------------------------------Subtotal 353,025 295,425 Air Dryers 31,250 31,025 NBC Canisters 5,800 5,600 - -----------------------------------------------Total $390,075 $332,050 ================================================

(a) Restated to reflect the acquisition of RAI Research Corporation on September 30, 1988, accounted for as a pooling of interests. Prior years have not been restated, due to immateriality. 47

ELEVEN-YEAR FINANCIAL HISTORY
(In millions, except per share data and number of employees) 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------------RESULTS FOR THE YEAR: Sales 960.4 822.8 700.8 687.2 685.1 Cost of sales 372.9 305.3 257.6 249.6 262.1 Selling, general and administrative expenses 338.7 301.7 261.3 262.6 253.0 Research and development 47.5 45.1 41.3 40.0 34.8 Interest expense (net) 3.4 3.0 1.8 4.0 5.3 Other charge (income) --3.7(d) 26.7(e) 3.7(f) Earnings before taxes 197.9 167.7 135.1 104.3 126.2 Income taxes 59.4 48.5 36.2 26.0 36.0 Accounting change -(0.8)(g) --2.5(h) Net earnings 138.5 118.4 98.9 78.3 92.7 Earnings per share (a) 1.21 1.03(g) .86(d) .68(e) .79(h) Dividends declared per share (a) .47 .41 .36 .31 .26 Capital expenditures 82.2 66.5 73.4 62.6 56.2 Depreciation 46.8 41.7 36.8 35.2 34.4 - ------------------------------------------------------------------------------------------------------YEAR-END POSITION: Working capital 251.0 237.0 213.6 192.5 223.3 Property, plant and equipment (net) 463.9 427.9 397.6 357.6 366.1 Total assets 1,185.0 1,074.9 959.6 902.3 912.9 Long-term debt 46.7 68.8 54.1 24.5 59.0 Total liabilities 452.7 423.1 372.4 359.4 367.3 Equity 732.3 651.8 587.2 542.9 545.6 - -------------------------------------------------------------------------------------------------------

ELEVEN-YEAR FINANCIAL HISTORY
(In millions, except per share data and number of employees) 1996 1995 1994 1993 1992 - ------------------------------------------------------------------------------------------------------RESULTS FOR THE YEAR: Sales 960.4 822.8 700.8 687.2 685.1 Cost of sales 372.9 305.3 257.6 249.6 262.1 Selling, general and administrative expenses 338.7 301.7 261.3 262.6 253.0 Research and development 47.5 45.1 41.3 40.0 34.8 Interest expense (net) 3.4 3.0 1.8 4.0 5.3 Other charge (income) --3.7(d) 26.7(e) 3.7(f) Earnings before taxes 197.9 167.7 135.1 104.3 126.2 Income taxes 59.4 48.5 36.2 26.0 36.0 Accounting change -(0.8)(g) --2.5(h) Net earnings 138.5 118.4 98.9 78.3 92.7 Earnings per share (a) 1.21 1.03(g) .86(d) .68(e) .79(h) Dividends declared per share (a) .47 .41 .36 .31 .26 Capital expenditures 82.2 66.5 73.4 62.6 56.2 Depreciation 46.8 41.7 36.8 35.2 34.4 - ------------------------------------------------------------------------------------------------------YEAR-END POSITION: Working capital 251.0 237.0 213.6 192.5 223.3 Property, plant and equipment (net) 463.9 427.9 397.6 357.6 366.1 Total assets 1,185.0 1,074.9 959.6 902.3 912.9 Long-term debt 46.7 68.8 54.1 24.5 59.0 Total liabilities 452.7 423.1 372.4 359.4 367.3 Equity 732.3 651.8 587.2 542.9 545.6 - ------------------------------------------------------------------------------------------------------OTHER RATIOS AND STATISTICS: Net earnings (excluding other items and accounting changes) as % of: Sales 14.4 14.5 14.4 13.9 13.5 Average total assets 12.3 11.7 10.9 10.5 10.9 Average equity 20.0 19.2 17.9 17.6 18.0 Average shares outstanding (a) 114.8 115.2 115.7 115.9 116.9 Equity per share (a) 6.37 5.70 5.09 4.68 4.72 Number of employees at year-end 7,700 6,500 6,200 6,300 6,400 Price range of stock during the year (a): High 29.38 24.00 21.25 23.16 24.09 Low 19.63 15.75 13.63 16.38 16.50 ========================================================================================================= (In millions, except per share data and number of employees) 1989(b) 1988(b,c) 1987(c) 1986 - ------------------------------------------------------------------------------------------RESULTS FOR THE YEAR: Sales 497.0 434.0 390.1 332.0 Cost of sales 190.2 175.2 157.6 142.5 Selling, general and administrative expenses 190.3 163.0 139.8 115.8 Research and development 20.1 17.0 14.9 12.3 Interest expense (net) 5.8 5.0 9.8 6.8 Other charge (income) 6.5 (10.2) --Earnings before taxes 84.1 84.0 68.0 54.6 Income taxes 26.4 27.2 19.7 13.7 Accounting change ----Net earnings 57.7 56.8 48.3 40.9 Earnings per share (a) .50 .50 .43 .37 Dividends declared per share (a) .15 .13 .11 .09 Capital expenditures 66.2 50.2 35.6 39.2 Depreciation 24.7 21.2 18.0 13.6 - ------------------------------------------------------------------------------------------YEAR-END POSITION: Working capital 173.4 159.1 136.6 102.0 Property, plant and equipment (net) 255.8 220.8 199.4 176.9 Total assets 717.0 581.8 532.5 440.6 Long-term debt 40.4 41.2 41.2 42.2 Total liabilities 345.9 252.8 256.7 219.7 Equity 371.1 329.0 275.8 220.9

- ------------------------------------------------------------------------------------------OTHER RATIOS AND STATISTICS: Net earnings (excluding other items and accounting changes) as % of: Sales 12.4 12.3 12.4 12.3 Average total assets 9.5 9.6 9.9 10.2 Average equity 17.6 17.7 19.4 20.8 Average shares outstanding (a) 114.9 113.9 113.1 109.4 Equity per share (a) 3.21 2.88 2.43 2.01 Number of employees at year-end 6,200 5,600 5,400 5,100 Price range of stock during the year (a): High 11.42 11.79 11.66 11.22 Low 8.33 6.50 8.09 6.00 ===========================================================================================

(a) Reflects all stock splits since January 1, 1984. (b) The air dryer and NBC canister lines were disposed of in fiscal 1988 and 1989, respectively. Fiscal 1989 pretax earnings were reduced by a payment of $6.5 million (4 cents per share) in settlement of an indemnification obligation pertaining to the Gore-Garlock patent infringement lawsuit. Fiscal 1988 pretax earnings included a $10.2 million gain on the sale of the air dryer line (6 cents per share) and a charge in connection with an inventory takeback resulting from the reorganization of certain distribution arrangements of $4.6 million (3 cents per share). (c) Restated to reflect the acquisition of RAI Research Corporation on September 30, 1988, accounted for as a pooling of interests. Prior years have not been restated, due to immateriality. (d) Represents principally the cost ($2.3 million after taxes, 2 cents per share) of restructuring the German operations and of writing off a bad debt in the Aerospace operations. (e) Represents principally the cost ($17.3 million after taxes, 15 cents per share) of downsizing and further integrating the military portion of the Aeropower business with the Industrial Fluid Power business. (f) Represents a charge from the settlement of certain promissory notes received in connection with the sale of the air dryer business in a leveraged buyout reported in fiscal 1988. (g) Represents a decrease in earnings (1 cent per share) as a result of adopting Financial Accounting Standards Board Statement No. 112 (Employers' Accounting for Postemployment Benefits) in the first quarter of fiscal 1995. (h) Represents an increase in earnings (2 cents per share) as a result of adopting Financial Accounting Standards Board Statement No. 109 (Accounting for Income Taxes) in the first quarter of fiscal 1992. 48

CORPORATE DIRECTORY SENIOR OFFICERS Eric Krasnoff Chairman and Chief Executive Officer Jeremy Hayward-Surry President, Treasurer and Chief Financial Officer Derek Williams Executive Vice President and Chief Operating Officer

CORPORATE DIRECTORY SENIOR OFFICERS Eric Krasnoff Chairman and Chief Executive Officer Jeremy Hayward-Surry President, Treasurer and Chief Financial Officer Derek Williams Executive Vice President and Chief Operating Officer GROUP VICE PRESIDENTS Clifton Hutchings Gerhard Weich Arnold Weiner Samuel Wortham SECRETARY Peter Schwartzman SENIOR VICE PRESIDENTS Dr. Joseph Adiletta Peter Cope Dr. Peter Degen Dr. Thomas Gsell Erwin Kirnbauer Paul Kohn John Miller Akio Satake Robert Simkins Donald Stevens Gilbert Weiner VICE PRESIDENTS Dr. Leonard Bensch Jane Block Thomas Bormann Claude Broussy Steven Chisolm Jack Cole John Farris Terry Flack Stephen Geibel Charles Grimm Dr. Martin Hirsch Patricia Iannucci Sakae Isohata Dr. Hyman Katz Neil MacDonald

William Palmer Clarence Treppa Marcus Wilson Charles Wolowitz DIRECTORS Abraham Appel Ulric Haynes, Jr. Jeremy Hayward-Surry Eric Krasnoff Dr. Edwin Martin, Jr. Dr. David Pall Katharine Plourde Chesterfield Seibert Heywood Shelley Alan Slifka Dr. James Watson Derek Williams 49

CORPORATE INFORMATION CORPORATE HEADQUARTERS 2200 Northern Boulevard East Hills, New York 11548-1289 Telephone: 516-484-5400 Fax: 516-484-3529 PRINCIPAL PLANTS Glen Cove, East Hills, Port Washington, Hauppauge and Cortland, New York Pinellas Park, New Port Richey and Fort Myers, Florida Covina, California Putnam, Connecticut Northborough, Massachusetts Fajardo, Puerto Rico Portsmouth, Ilfracombe, Newquay and Redruth, England Tsukuba, Japan COUNSEL Carter, Ledyard & Milburn New York, New York

CORPORATE INFORMATION CORPORATE HEADQUARTERS 2200 Northern Boulevard East Hills, New York 11548-1289 Telephone: 516-484-5400 Fax: 516-484-3529 PRINCIPAL PLANTS Glen Cove, East Hills, Port Washington, Hauppauge and Cortland, New York Pinellas Park, New Port Richey and Fort Myers, Florida Covina, California Putnam, Connecticut Northborough, Massachusetts Fajardo, Puerto Rico Portsmouth, Ilfracombe, Newquay and Redruth, England Tsukuba, Japan COUNSEL Carter, Ledyard & Milburn New York, New York PATENT COUNSEL Leydig, Voit & Mayer Chicago, Illinois AUDITORS KPMG Peat Marwick LLP Jericho, New York REGISTRAR AND TRANSFER AGENT Wachovia Bank of North Carolina, N.A. Winston-Salem, North Carolina 1-800-633-4236 Written shareholder correspondence and requests for transfer should be sent to: Wachovia Bank of North Carolina, N.A. P.O. Box 8217 Boston, Massachusetts 02266-8217 ANNUAL SHAREHOLDERS' MEETING Tuesday, November 19, 1996 2:30 p.m., The Garden City Hotel

Garden City, New York 11530 Dividend Reinvestment Plan Shareholders have a convenient opportunity for automatic reinvestment of cash dividends and voluntary cash investments in the Company's stock through the Dividend Reinvestment Plan. Participating shareholders pay no brokerage commissions or other charges on purchases of shares under the Plan; all such commissions and charges are paid by the Company. You must own at least 50 shares of Pall Common Stock to join the Dividend Reinvestment Plan (or to rejoin if your participation in the Plan has terminated). As a Plan participant, whether or not you have elected to reinvest your dividends, you can make voluntary cash contributions of $100 or more at any time subject to a maximum of $5,000 a month. Direct Deposit of Cash Dividends Shareholders can choose to have dividend payments automatically deposited to checking, savings or money market accounts at any financial institution that participates in the Automated Clearing House system. The Deposit will occur on the dividend payment date, thus providing immediate access to funds. The Direct Deposit of Cash Dividends Service is provided free of charge. Shareholders interested in participating in either the Dividend Reinvestment Plan or the Direct Deposit of Cash Dividends Service should contact our Registrar and Transfer Agent. INVESTOR RELATIONS Pall Corporation Investor Communications Manager 25 Harbor Park Drive Port Washington, NY 11050-4630 Telephone: 1-800-205-7255 In New York State: 516-484-3600 Fax: 516-484-3649 E-Mail Address: invrel@pall.com TRADEMARKS All product names appearing in type form different from that of the surrounding text are trademarks owned by Pall Corporation or its subsidiaries. ADDITIONAL INFORMATION Pall Corporation is an equal opportunity employer and maintains affirmative action programs covering minorities, women, the handicapped, disabled veterans and veterans of the Vietnam era. [recycle logo] This report has been printed on recycled paper. The papers used in this annual report were manufactured in mills that use Pall filters on their paper machines. INTERNET To visit Pall Corporation's web site on the Internet, go to URL:http://www.pall.com 50

BOARD OF DIRECTORS

BOARD OF DIRECTORS [PHOTO OF BOARD MEMBERS] Alan Slifka Managing Principal Halcyon/Alan B. Slifka Management Co., LLC Eric Krasnoff(1) Chairman and Chief Executive Officer of Pall Corporation Abraham Appel(2,3,4) President, Appel Consultants, Inc. Toronto, Canada Dr. David Pall(1) Founder Chairman of Pall Corporation Derek Williams Executive Vice President and Chief Operating Officer of Pall Corporation Dr. James Watson(2) President, Cold Spring Harbor Laboratory Cold Spring Harbor, New York [PHOTO OF BOARD MEMBERS] Chesterfield Seibert(2,4) Retired Chairman and Chief Executive Officer, Marietta Corporation, Cortland, New York; Retired Executive Vice President of Pall Corporation Jeremy Hayward-Surry(1) President, Treasurer and Chief Financial Officer of Pall Corporation Heywood Shelley Partner, Carter Ledyard & Milburn, Attorneys, New York, New York Ulric Haynes(3) Dean, The Frank G. Zarb School of Business at Hofstra University Hempstead, New York Katharine Plourde(2) Principal, Donaldson, Lufkin & Jenrette Inc. New York, New York Dr. Edwin Martin, Jr.(3,4) President Emeritus, The National Center for Disability Services, Albertson, New York

Board Committees (1) Executive (2) Audit (3) Compensation (4) Nominating

[PALL LOGO] FILTRATION. SEPARATION. SOLUTION.(TM) Pall Corporation 2200 Northern Boulevard East Hills, NY 11548

EXHIBIT 21 SUBSIDIARIES OF PALL CORPORATION Pall Corporation owns 100% of the outstanding capital stock of those companies listed below, except where otherwise noted:
State or Other Jurisdiction of Incorporation ------------Delaware Delaware Delaware Delaware Delaware Delaware Delaware Massachusetts Canada England Germany Germany Italy France France France Switzerland Austria Spain Sweden The Netherlands Poland Japan Singapore South Korea China Hong Kong Jamaica

Name of Company --------------Medsep Corporation Pall Aeropower Corporation Pall Biomedical, Inc. Pall International Corporation Pall Puerto Rico, Inc. Pall Stratapac Ltd. Russell Associates Inc. Pall Filtron Corporation Pall Pall Pall Pall (Canada) Limited Europe Limited Deutschland GmbH Holding GmbH (a)

Pall Italia S.R.L. Institut de Formation a la Filtration Pall (b) Pall Biomedical France (b) Pall France S.A. Pall Pall Pall Pall (Schweiz) A.G. Austria Filter Ges.m.b.H. Espana S.A. Filtron AB(d)

Pall Filtron Technology B.V. (d) Pall Poland Limited (a) Nihon Pall Ltd. Pall Filtration Pte. Ltd. Pall Pall Pall Pall Korea Limited Filter (Beijing) Co., Ltd. Asia International Ltd. Export Sales Corp., Limited (c)

[PALL LOGO] FILTRATION. SEPARATION. SOLUTION.(TM) Pall Corporation 2200 Northern Boulevard East Hills, NY 11548

EXHIBIT 21 SUBSIDIARIES OF PALL CORPORATION Pall Corporation owns 100% of the outstanding capital stock of those companies listed below, except where otherwise noted:
State or Other Jurisdiction of Incorporation ------------Delaware Delaware Delaware Delaware Delaware Delaware Delaware Massachusetts Canada England Germany Germany Italy France France France Switzerland Austria Spain Sweden The Netherlands Poland Japan Singapore South Korea China Hong Kong Jamaica

Name of Company --------------Medsep Corporation Pall Aeropower Corporation Pall Biomedical, Inc. Pall International Corporation Pall Puerto Rico, Inc. Pall Stratapac Ltd. Russell Associates Inc. Pall Filtron Corporation Pall Pall Pall Pall (Canada) Limited Europe Limited Deutschland GmbH Holding GmbH (a)

Pall Italia S.R.L. Institut de Formation a la Filtration Pall (b) Pall Biomedical France (b) Pall France S.A. Pall Pall Pall Pall (Schweiz) A.G. Austria Filter Ges.m.b.H. Espana S.A. Filtron AB(d)

Pall Filtron Technology B.V. (d) Pall Poland Limited (a) Nihon Pall Ltd. Pall Filtration Pte. Ltd. Pall Pall Pall Pall Korea Limited Filter (Beijing) Co., Ltd. Asia International Ltd. Export Sales Corp., Limited (c)

(a) 100% owned by Pall Deutschland GmbH Holding. (b) 100% owned by Pall France S.A. (c) 100% owned by Pall International Corporation. (d) 100% owned by Pall Filtron Corporation. All subsidiaries listed above are included in the consolidated financial statements for the fiscal years 1996, 1995 and 1994, or, in the case of corporations organized since August 1 1993, from the date of incorporation. The

EXHIBIT 21 SUBSIDIARIES OF PALL CORPORATION Pall Corporation owns 100% of the outstanding capital stock of those companies listed below, except where otherwise noted:
State or Other Jurisdiction of Incorporation ------------Delaware Delaware Delaware Delaware Delaware Delaware Delaware Massachusetts Canada England Germany Germany Italy France France France Switzerland Austria Spain Sweden The Netherlands Poland Japan Singapore South Korea China Hong Kong Jamaica

Name of Company --------------Medsep Corporation Pall Aeropower Corporation Pall Biomedical, Inc. Pall International Corporation Pall Puerto Rico, Inc. Pall Stratapac Ltd. Russell Associates Inc. Pall Filtron Corporation Pall Pall Pall Pall (Canada) Limited Europe Limited Deutschland GmbH Holding GmbH (a)

Pall Italia S.R.L. Institut de Formation a la Filtration Pall (b) Pall Biomedical France (b) Pall France S.A. Pall Pall Pall Pall (Schweiz) A.G. Austria Filter Ges.m.b.H. Espana S.A. Filtron AB(d)

Pall Filtron Technology B.V. (d) Pall Poland Limited (a) Nihon Pall Ltd. Pall Filtration Pte. Ltd. Pall Pall Pall Pall Korea Limited Filter (Beijing) Co., Ltd. Asia International Ltd. Export Sales Corp., Limited (c)

(a) 100% owned by Pall Deutschland GmbH Holding. (b) 100% owned by Pall France S.A. (c) 100% owned by Pall International Corporation. (d) 100% owned by Pall Filtron Corporation. All subsidiaries listed above are included in the consolidated financial statements for the fiscal years 1996, 1995 and 1994, or, in the case of corporations organized since August 1 1993, from the date of incorporation. The list does not include inactive subsidiaries.

EXHIBIT 23 {LETTERHEAD} CONSENT OF INDEPENDENT AUDITORS Board of Directors Pall Corporation:

EXHIBIT 23 {LETTERHEAD} CONSENT OF INDEPENDENT AUDITORS Board of Directors Pall Corporation: We consent to incorporation by reference in Pall Corporation's Registration Statements Nos. 33-25640, 3344399, 33-51151 and 33-64751 on Form S-8, and Registration Statements Nos. 33-39655 and 33-57507 on Form S-3, of our reports dated September 3, 1996, relating to the consolidated balance sheets of Pall Corporation and subsidiaries as of August 3, 1996 and July 29, 1995 and the related consolidated statements of earnings, stockholders' equity and cash flows and related schedule for each of the years in the three-year period ended August 3, 1996, which reports are incorporated by reference or appear in this annual report on Form 10K of Pall Corporation for the fiscal year ended August 3, 1996. Our reports refer to the Company's adoption of Statement of Financial Accounting Standards No. 112, "Employers Accounting for Postemployment Benefits" in fiscal year 1995.
/s/ KPMG Peat Marwick LLP ------------------------------KPMG PEAT MARWICK LLP Jericho, New York October 24, 1996

ARTICLE 5 MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME

12 MOS AUG 03 1996 AUG 03 1996 34,528 71,450 246,327 4,170 193,764 581,205 754,213 290,308 1,184,958 330,221 0 0 0 11,735 720,565 1,184,958 960,376 967,397 372,864 769,543 0 0 10,439 197,854 59,356 138,498 0 0 0 138,498

ARTICLE 5 MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

12 MOS AUG 03 1996 AUG 03 1996 34,528 71,450 246,327 4,170 193,764 581,205 754,213 290,308 1,184,958 330,221 0 0 0 11,735 720,565 1,184,958 960,376 967,397 372,864 769,543 0 0 10,439 197,854 59,356 138,498 0 0 0 138,498 1.21 1.21