Notice & Proxy

DEF 14A 1 ddef14a.htm NOTICE & PROXY Notice & Proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

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Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to 167;240.14a-12

CUNO INCORPORATED

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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[LOGO OF CUNO]

Notice of

Annual Meeting

Stockholders

March 6, 2003

and

Proxy Statement

CUNO Incorporated

400 Research Parkway

Meriden, Connecticut 06450

[LOGO OF CUNO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD MARCH 6, 2003

To our Stockholders:

You are cordially invited to attend the Annual Meeting of the Stockholders of CUNO Incorporated at the Radisson Hotel & Conference Center, 100 Berlin Road, Cromwell, Connecticut on Wednesday, March 6, 2003, at 10:00 a.m. At the Annual Meeting, the Stockholders will vote to:

1. Elect three Class I Directors, each for a three-year term expiring in 2006.

2. Approve the 1996 Stock Incentive Plan Second Amendment.

3. Approve the Non-Employee Directors’ Stock Option Plan Second Amendment.

4. Reapprove the performance goals in the Executive Management Incentive Plan.

5. Approve the appointment of Ernst & Young LLP as independent auditors.

6. Transact other business which may be properly brought before the meeting.

The Board of Directors has determined that stockholders of record at the close of business on January 22, 2003, are entitled to notice of and to vote at the meeting. A list of stockholders of the Company as of the close of business on January 22, 2003 will be available for inspection during business hours commencing February 24, 2003 at the Company’s offices at 400 Research Parkway, Meriden, Connecticut and will also be available at the Annual Meeting.

YOUR VOTE IS IMPORTANT

Please vote all proxies you receive. Stockholders of record can vote any one of three ways:

•

By Telephone: Call the toll-free number on your proxy card to vote by phone.

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Via Internet: Visit the web site on your proxy card to vote via the Internet.

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By Mail: Mark, sign, date and mail your proxy card in the enclosed postage-paid envelope.

The method by which you decide to vote will not limit your right to vote at the Annual Meeting. If you later decide to attend the Annual Meeting in person, you may vote your shares even if you previously have submitted a proxy.

An admission ticket, which is required for entry into the Annual Meeting, is attached to your proxy card. If you plan to attend the Annual Meeting, please vote your proxy but keep the admission ticket and bring it to the Annual Meeting. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the Meeting.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ John A. Tomich
JOHN A. TOMICH General Counsel and Secretary

January 28, 2003

PROXY STATEMENT

Annual Meeting of Stockholders

March 6, 2003

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of CUNO Incorporated (the “Company”) to be used at the Company’s 2003 Annual Meeting of Stockholders (the “Annual Meeting”) and at any adjournments or postponements thereof. The meeting will be held at the Radisson Hotel & Conference Center, 100 Berlin Road, Cromwell, Connecticut on Wednesday, March 6, 2003, at 10:00 a.m. The accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement are first being mailed to stockholders on or about January 28, 2003.

VOTING SHARES

The Board of Directors has fixed the close of business on January 22, 2003,as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. Only stockholders of record at the close of business on that date will be entitled to vote at the Annual Meeting or any adjournments or postponements thereof. The Company’s voting securities outstanding on January 22, 2003, consisted of 16,622,596 shares of its $.001 par value common stock (“Common Stock”). Each share of Common Stock is entitled to one vote on all matters to come before the Annual Meeting. A plurality of the votes cast in person or by proxy is required to elect the nominees for director. The affirmative vote of a majority of the shares present in person or by proxy is required to (i) approve the Second Amendment to the Company’s 1996 Stock Incentive Plan; (ii) approve the Second Amendment to the Company’s Non-Employee Directors’ Stock Option Plan; (iii) reapprove the performance goals in the Company’s Executive Management Incentive Plan (“EMIP”); and (iv) approve the appointment of Ernst & Young LLP as independent auditors of the Company’s financial statements for fiscal year ending October 31, 2003.

You may revoke your proxy at any time before it is actually voted at the Annual Meeting by (i) delivering written notice of revocation to the Secretary of the Company, (ii) submitting a subsequently dated proxy, or (iii) attending the meeting and withdrawing the proxy. Each unrevoked proxy card properly executed and received prior to the close of the voting will be voted as indicated. Where specific instructions are not indicated, the proxy will be voted FOR the election of all directors as nominated, FOR the approval of the Second Amendment to the Company’s 1996 Stock Incentive Plan, FOR the approval of the Second Amendment to the Company’s Non-Employee Directors’ Stock Option Plan, FOR the reapproval of the performance goals in the EMIP, and FOR the approval of Ernst & Young LLP as auditors.

All shares represented by effective proxies marked “abstain” will be counted as present for purposes of reaching a quorum at the Annual Meeting or any adjournments or postponements thereof. Abstentions will be treated as shares present and entitled to vote for any proposal presented at the Annual Meeting or any adjournments or postponements thereof. With respect to any matter brought before the Annual Meeting or any adjournments or postponements thereof, an abstention will have the same effect as a vote cast against a proposal. If a broker indicates on a proxy that it does not have discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter and will have no effect on the vote on such matter.

PROPOSAL 1

ELECTION OF DIRECTORS

The Company’s Board of Directors is divided into three classes that serve staggered three-year terms and are as nearly equal in number as possible.

Directors of Class I, whose terms of office expire at the Annual Meeting on March 6, 2003, are Mr. Joel B. Alvord, Dr. Charles L. Cooney and Mr. John M. Galvin. The Board has nominated these three candidates for reelection as directors for a term ending at the 2006 Annual Meeting and they have consented to serve if elected. It is the intention of the persons named in the enclosed form of proxy to vote such proxy as specified and, if no specification is made on a signed and returned proxy, to vote such proxy FOR the election as directors the nominees listed in the table below to serve for a term of three years and until a successor shall be elected and qualified. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE ELECTION OF THE NOMINEES NAMED IN THIS PROXY STATEMENT TO SERVE AS DIRECTORS OF THE COMPANY.

The Board of Directors has no reason to believe that the persons nominated will not be available. If a vacancy or vacancies among the original nominees occurs prior to the Annual Meeting, shares represented by the proxies so appointed may be voted for a substitute nominee or nominees designated by the Board of Directors and will be voted for the remaining nominees, if any. In any event, the shares represented by the proxy will be voted for the election of the nominees unless instructed to the contrary.

Each stockholder will be entitled to vote the number of shares of Common Stock held as of the record date by such stockholder for the number of directors to be elected. Stockholders will not be allowed to cumulate their votes in the election for directors.

INFORMATION ABOUT THE NOMINEES

		Joel B. Alvord, age 64 – Director since 1996
		Class I Director (present term expires in 2003)

[Photo]		Mr. Alvord has been a director of the Company since August 1996. He is President and Managing Director of Shawmut Capital Partners. Prior to joining Shawmut Capital Partners, he was Chairman of Fleet Financial Group for two years, after it was merged with Shawmut National Corporation. Mr. Alvord served as Chief Executive Officer of Shawmut National Corporation from 1987 to 1995. He was educated at Loomis Chaffee School and Dartmouth College, where he holds a bachelor’s degree in History and a master’s degree in Business Administration from the Amos Tuck School of Business Administration. He is a director of Fleet Financial Group. He has been a member of the Board of the Federal Reserve Bank of Boston, HSB Group, and Swiss Reinsurance Company of North America. He is a trustee of the Wang Center for the Performing Arts and the American Repertory Theater.

		Dr. Charles L. Cooney, age 58 – Director since 1996
		Class I Director (present term expires in 2003)

[Photo]		Dr. Cooney has been a director of the Company since August 1996. He has been a Professor of Chemical and Biochemical Engineering at the Massachusetts Institute of Technology (“MIT”) since 1982. At MIT he is the Faculty Director of the Deshpande Center for Technological Innovation and co-director of the Program on the Pharmaceutical Industry. Since 1989, he has served as the regional editor of Bioseparations, and in 1992, Dr. Cooney became a founding Fellow for the American Institute for Medical and Biological Engineering. He holds a bachelor of science degree in Chemical Engineering from the University of Pennsylvania and a master’s degree and a Ph.D. in Biochemical Engineering from MIT. Dr. Cooney is also a director of Genzyme Corporation.

		John M. Galvin, age 70 – Director since 1993
		Class I Director (present term expires in 2003)

[Photo]		Mr. Galvin has been a director of the Company since 1993, when the Company was a subsidiary of Commercial Intertech Corp. Since his retirement in 1992 from The Irvine Company, a major landowner and developer that also owns a major portfolio of income property, Mr. Galvin has been a private investor and consultant. From 1987 until 1992, he was Vice Chairman and Director of The Irvine Company. He holds a bachelor’s degree in Business Administration from Indiana University.

INFORMATION ABOUT THE OTHER DIRECTORS

		Mark G. Kachur, age 59 – Director since 1996
		Class II (present term expires in 2004)

[Photo]		Mr. Kachur has been a director of the Company since July 1996, Chairman of the Board since November 1, 1999, President and Chief Executive Officer of the Company since December 1, 1997, and President and Chief Operating Officer of the Company from September 1996 until December 1, 1997. Since joining the Company in 1994, Mr. Kachur has been President of the Company. From 1992 until 1994, he was President and CEO of Biotage, Inc., and from 1971 to 1991, he was with Pall Corporation, the last seven years as a Group Vice President. He holds a bachelor of science degree in Mechanical Engineering from Purdue University and a master’s degree in Business Administration from the University of Hartford. Mr. Kachur is also a director of Connecticut Water Service, Inc.

		David L. Swift, age 66 – Director since 1996
		Class II (present term expires in 2004)

[Photo]		Mr. Swift has been a director of the Company since August 1996. Mr. Swift retired in 1996 from Acme-Cleveland Corporation, a manufacturer of communications, motion control and measurement products, where he served as Chairman of the Board since 1993 and Chief Executive Officer and President since 1988. He holds a bachelor of science degree from Ball State University and a juris doctorate from the Salmon P. Chase College of Law. Mr. Swift is also a director of Twin Disc, Incorporated.

		Frederick C. Flynn, Jr., age 52 – Director since 1999
		Class III Director (present term expires in 2005)

[Photo]		Mr. Flynn has been a director of the Company, Senior Vice President – Finance and Administration, Chief Financial Officer, Controller, and Assistant Secretary of the Company since January 1999. From 1997 through 1998, he served as Senior Vice President – Finance and Chief Financial Officer of GE Capital Information Technology Solutions, a computer systems distributor and service provider. In 1996 he was Senior Vice President – Finance of National Medical Care, Inc., a healthcare services provider, and from 1979 to 1995 he was with United Technologies Corporation, the last six years as Vice President – Treasurer. He holds a bachelor of science degree in Economics from Boston College and a master’s degree in Business Administration from the University of Connecticut.

		C. Edward Midgley, age 66 – Director since 1995
		Class III Director (present term expires in 2005)

[Photo]		Mr. Midgley has been a director of the Company since 1995, when the Company was a subsidiary of Commercial Intertech Corp. Mr. Midgley is an independent financial consultant. He retired as a Senior Advisor with UBS Warburg in 2002. From 1995 until November 2000, he was an Advisory Director of PaineWebber Incorporated. From 1992 until 1995, he was Co-Head of Investment Banking, Executive Managing Director, Head of Mergers and Acquisitions and a Member of the Board of Directors of Kidder, Peabody & Co. Incorporated. He holds a bachelor of arts degree in Economics from Princeton University and a master’s degree in Business Administration from Harvard Business School.

BOARD MEETINGS AND COMMITTEE INFORMATION

The Board of Directors held six meetings during fiscal 2002 and established committees to assist in the discharge of its responsibilities. The attendance at the meetings of the Board of Directors and committee meetings during the year was 98%. All directors attended 75% or more of the aggregate meetings of the Board and the Board committees to which they were assigned.

During fiscal 2002, the Board had the following committees: Audit, Pension and Nominating, and Compensation. Membership and principal responsibilities of the Board committees are described below.

The Audit Committee consisted of the following four members: Messrs. Galvin (Chairman), Midgley, Swift, and Dr. Cooney. During the fiscal year, the Audit Committee held three meetings with the auditors and also held two teleconferences with the auditors to review the Company’s quarterly financial results. The Audit Committee has the primary responsibility of overseeing the Company’s financial reporting process on behalf of the Board and reports the results of its activities to the Board. In fulfilling its oversight responsibilities, the Audit Committee selects and evaluates the qualifications and performance of the independent auditors; preapproves all auditing and non-audit services provided by the independent auditors; reviews with such auditors, prior to the commencement of or during such audit for each fiscal year, the scope of the audit to be made; reviews with such auditors and with management the results of the audits, any changes in accounting policies and the services rendered by such auditors (including management consulting fees, if any, and the effect of such services on the independence of such auditors); reviews the Company’s internal audit and control functions; reviews financial statements and reports with management and the auditors; considers such matters relating to the audits and to the accounting procedures employed by the Company, as the Audit Committee may deem appropriate; and reports to the full Board of Directors regarding all of the foregoing. The Audit Committee comprises at least three directors, all of whom are financially literate, and at least one member has accounting or related financial management expertise. Each of the members of the Audit Committee is independent (as defined in Rule 4200(a)(15) of the National Association of Securities Dealers’ listing standards). See the “Audit Committee Report.” The Audit Committee operates under a written charter adopted by the Company’s Board of Directors.

In fiscal 2002 the Pension and Nominating Committee consisted of the following three members: Messrs. Alvord (Chairman), Kachur, and Swift. During the year, the Committee held three meetings. The

Pension and Nominating Committee had the responsibility of identifying, recruiting and nominating prospective members of the Board of Directors.

In fiscal 2003, the Board replaced the Pension and Nominating Committee with the Corporate Governance and Nominating Committee, consisting of the following five members: Messrs. Alvord (Chairman), Galvin, Midgley, Swift and Dr. Cooney. Each of the members of the Corporate Governance and Nominating Committee is independent, as defined by NASDAQ. The Committee shall have the responsibility to review and administer the corporate governance guidelines of the Company. In addition, the Committee shall have the responsibility to identify the criteria for Board membership; identify, recruit, review and nominate prospective members of the Board of Directors; evaluate the effectiveness of the Board on a continuing basis and report to the Board any observed deficiency; recommend to the Board the assignment of Board members and Committee chairmen to various Committees; and periodically review the compensation for the Board and make recommendations to the Board regarding any changes in such compensation. The Committee will consider matters of corporate governance and review and publish, periodically, to the extent required or considered desirable, the Company’s corporate governance guidelines, Code of Conduct and Code of Ethics for Senior Financial Officers (as required by applicable NASDAQ listing requirements and rules adopted by Securities and Exchange Commission); and review, periodically, any plans adopted by the Company that might impact the rights of shareholders or the election of directors. The Committee will make recommendations on the structure of Board meetings and oversee the Company’s processes for providing information to the Board. Any stockholder may nominate a person for election to the Board of Directors by contacting the Chairman of the Corporate Governance and Nominating Committee and making a recommendation or through the procedures outlined in Section 2.4 of the Company’s By-Laws.

In fiscal 2002, the Compensation Committee consisted of the following five members: Messrs. Midgley (Chairman), Alvord, Galvin, Swift and Dr. Cooney. During the fiscal year, the Compensation Committee held four meetings. The Compensation Committee had the authority to determine annual salaries and bonuses for all elected officers and senior management, except the Chairman and Chief Executive Officer; had the authority to approve incentive and deferred compensation plans, and funding arrangements related thereto, for elected officers and senior management; and administered such plans. The Compensation Committee recommended to the non-employee members of the Board of Directors the annual salary, bonus, stock options, performance shares and restricted shares for the Chairman and Chief Executive Officer. None of the members of the Compensation Committee were an employee or former employee of the Company. See “Compensation Committee Report on Executive Compensation.”

In fiscal 2003, the Compensation Committee was replaced by the Compensation and Pension Committee, consisting of the following five members: Messrs. Midgley (Chairman), Alvord, Galvin, Swift and Dr. Cooney. Each of the members of the Compensation and Pension Committee is independent, as defined by NASDAQ. In addition to the responsibilities previously held by the Compensation Committee, the Compensation and Pension Committee also has the responsibility of overseeing and evaluating the investments of the Company’s pension plan trusts, selecting fund managers and reviewing their performance and designating the proportion of pension contributions to be assigned to such managers.

Directors’ Compensation

All Directors who are not employees or officers of the Company receive an annual retainer fee in the amount of $36,000. The Chairman of the Audit Committee receives an additional annual retainer fee in the amount of $5,000. The retainer fees are paid quarterly on the last day of each fiscal quarter. Non-employee directors have the option to make an election to receive the retainer in deferred stock units instead of cash. Those directors who opt for the stock unit alternative for a 3-year deferral period will receive a 15% premium in stock units versus the cash option, a 20% premium for a 4-year deferral period, and a 25% premium for a 5-year deferral period. Directors are also reimbursed for reasonable travel and other expenses related to meetings of the Board and committees. Non-employee directors receive non-qualified stock options to purchase 2,000 shares of Common Stock annually. Directors who are employees or officers of the Company do not receive compensation for serving as directors or members of committees. Mr. Kachur and Mr. Flynn, as officers of the Company, are not compensated for serving as directors or members of committees of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the Company’s

directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission (the “SEC”) initial reports of beneficial ownership and reports of changes in beneficial ownership of Common Stock. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended October 31, 2002, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were met.

EXECUTIVE COMPENSATION

This table shows the compensation paid to the Chief Executive Officer and the other four most highly paid executive officers for the past three fiscal years ending October 31 (each, a “Named Executive Officer”).

Summary Compensation Table

					Long-Term Compensation
	Annual Compensation				Awards		Payouts
	Year	Salary ($)	Bonus ($)	Other Annual Compensation ($)	Restricted Stock Awards¹ ($)	Securities Underlying Options (#)	LTIP Payouts ($)	All Other Compensation ($)²
Mark G. Kachur Chairman, President and Chief Executive Officer	2002 2001 2000	429,625 418,154 395,769	245,150 227,500 225,000	15,180 15,180 15,180	342,458 847,991 281,259	35,708 30,330 20,000	-0- -0- 701,250	5,500 5,250 5,250
Frederick C. Flynn, Jr. Senior Vice President - Finance & Administration, Chief Financial Officer, and Controller	2002 2001 2000	276,596 269,440 259,154	114,750 -0-³ -0-³	14,300 14,300 14,300	283,950 268,255 250,011	19,806 20,220 12,000	-0- -0- -0-	5,500 5,250 5,250
Thomas J. Hamlin Senior Vice President - Research & Development	2002 2001 2000	186,113 181,354 173,731	150,000 111,000 50,000	9,660 9,660 9,660	66,120 -0- 62,523	7,923 10,110 9,000	-0- -0- 11,641	5,500 5,250 5,212
Timothy B. Carney Vice President - General Manager, President - North America Water Group	2002 2001 2000	176,909 172,724 154,809	82,500 60,000 62,000	9,660 9,660 9,660	34,397 25,008 19,394	6,932 8,600 16,500	-0- -0- 83,750	5,063 5,198 4,644
Anthony C. Doina Vice President - General Manager - U.S. Process	2002 2001 2000	189,692 185,177 181,408	48,000 38,160 28,000	9,660 9,660 9,660	15,019 5,320 8,761	6,932 7,590 9,000	-0- -0- 31,176	5,024 5,250 5,442

¹ This column shows the market value of restricted share awards on the date of grant. The aggregate holdings/value of restricted stock held on October 31, 2002, by the individuals listed in this table, not including awards which were earned after the end of the fiscal year as part of the Company’s EMIP or the Company’s Management Incentive Plan (“MIP”) and were elected to be taken in the form of restricted stock, as described in the Compensation Committee Report on Executive Compensation were: Mark G. Kachur – 91,013 shares/$2,828,684; Frederick C. Flynn, Jr., – 48,646 shares/$1,511,918; Thomas J. Hamlin – 2,305 shares/$71,639; Timothy B. Carney – 1,594 shares/$49,542; and Anthony C. Doina 650 shares/$20,513.

² Company matching contributions pursuant to the Company 401(k) Plan.

³ Pursuant to the Company’s MIP, Mr. Flynn elected to take 100% of his bonus in restricted stock.

The following table sets forth, for each of the Named Executive Officers, options granted on Common Stock during fiscal year 2002 pursuant to the CUNO Incorporated 1996 Stock Incentive Plan.

Option Grants In Last Fiscal Year

	Individual Grants						Potential Realizable Value at Assumed Annual Rate of Stock Price Appreciation for Option Term
	Number of Securities Underlying Options Granted (#)¹	% of Total Options Granted to Employees In Fiscal Year		Exercise or Base Price ($/Share)		Expiration Date	5% ($)²	10% ($)²
Mark G. Kachur	29,708	14.06	%	$	29.15	11/30/11	529,119	1,380,385
Mark G. Kachur	6,000	2.84	%	$	36.00	04/16/12	131,976	344,304
Frederick C. Flynn, Jr.	19,806	9.38	%	$	29.15	11/30/11	352,758	920,288
Thomas J. Hamlin	7,923	3.75	%	$	29.15	11/30/11	141,114	368,143
Timothy B. Carney	6,932	3.28	%	$	29.15	11/30/11	123,463	322,096
Anthony C. Doina	6,932	3.28	%	$	29.15	11/30/11	123,463	322,096

¹ The options were granted subject to a three-year vesting period, with 50% of the options granted becoming exercisable on the second anniversary of the grant date and 50% on the third anniversary. No stock appreciation rights were granted. The exercisability of the options may be accelerated in the event of a change in control.

² The dollar amounts indicated in these columns are the result of calculations assuming 5% and 10% growth rates as required by the rules of the Securities and Exchange Commission (“SEC”). These growth rates are not intended by CUNO Incorporated to forecast future appreciation, if any, of the price of CUNO Incorporated Common Stock. The actual value, if any, realized by an executive officer will depend on the excess of the market price of the shares over the exercise price on the date the option is exercised.

The following table sets forth, for each of the Named Executive Officers, information regarding the exercise of options on the Common Stock during fiscal year 2002 and unexercised options held as of the end of fiscal year 2002 pursuant to the CUNO Incorporated 1996 Stock Incentive Plan.

Aggregated Option Exercises In Fiscal Year 2002 And

Fiscal Year-End 2002 Option Values

Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options at FY-End (#)	Value of Unexercised In-the-Money Options at FY-End ($)¹
			Exercisable/ Unexercisable	Exercisable/ Unexercisable
Mark G. Kachur	-0-	-0-	257,536/70,038	4,240,800/465,344
Frederick C. Flynn, Jr.	-0-	-0-	19,000/46,026	265,645/171,011
Thomas J. Hamlin	-0-	-0-	12,500/22,533	183,625/98,679
Timothy B. Carney	2,000	38,470	19,250/23,782	232,790/99,727
Anthony C. Doina	2,500	47,213	15,500/19,022	233,990/88,690

¹ The value per option is calculated by subtracting the exercise price from the October 31, 2002, closing price of the Common Stock on the NASDAQ National Market of $31.08.

The following table sets forth, for each of the Named Executive Officers, long-term incentive awards made during fiscal year 2002 pursuant to the CUNO Incorporated 1996 Stock Incentive Plan.

Long-Term Incentive Plan Awards In Last Fiscal Year

The Company made no long term incentive awards during fiscal year 2002.

Employees may retire from the Company with unreduced benefits under the Company’s retirement plans at age 65 or older with 25 or more years of service. The table below shows the estimated annual pension benefits provided under the Company’s defined benefit retirement plans for employees in higher salary classifications retiring at age 65 or later.

Estimated Total Annual Retirement Benefits Under The Pension Plan For

Salaried Employees And Supplemental Executive Retirement Plans

	Years of Service
Remuneration	15	20	25	30	35
200,000	53,408	71,484	89,014	93,553	98,092
300,000	83,408	111,484	139,014	146,053	153,092
400,000	113,408	151,484	189,014	198,553	208,092
500,000	143,000	191,484	239,014	251,053	263,092
600,000	173,000	231,484	289,014	303,553	318,092
700,000	203,000	271,484	339,014	356,053	373,092
800,000	233,000	311,484	389,114	408,553	428,092

Benefits under the plans are calculated generally under a formula of 50% of the participant’s final average compensation reduced by 50% of the participant’s estimated social security benefits, reflected in the table in the form of a straight life annuity. The compensation covered by the pension plan is base salary as set forth in the Salary column of the Summary Compensation Table above. The compensation covered by the supplemental executive retirement plan is also base salary for Mr. Kachur, the only participant in such plan. As of December 31, 2002, Mr. Kachur had eight years of credited service, Mr. Flynn, Jr. had three years of credited service, Mr. Hamlin had nineteen years of credited service, Mr. Carney had eighteen years of credited service, and Mr. Doina had eight years of credited service with the Company.

REPORT ON EXECUTIVE COMPENSATION

Overall Policy and Administration

The Company’s executive compensation as developed and administered by the Compensation and Pension Committee of the Board of Directors (the “Compensation Committee”) is designed to preserve and enhance stockholder value in the context of a progressive, global technology and manufacturing company. The executive compensation program links executive and stockholder financial interests by:

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Motivating executives toward longer term strategic management of assets and operations through stock programs that focus executive attention on increasing stockholder value;

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Recognizing and rewarding individual contributions and achievements as well as overall business performance via annual incentives tied to the achievement of annual operating, financial and strategic objectives; and

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Providing a competitive base salary structure and total compensation opportunity to attract and retain the executive, research, technical and other management talent necessary to ensure the Company’s continued profitable growth and maintenance of high technological standards.

The Compensation Committee establishes salaries for corporate officers and administers the Company’s Executive Management Incentive Plan (“EMIP”), Management Incentive Plan (“MIP”), and the 1996 Stock Incentive Plan. In its decision-making process, the Compensation Committee selects and uses independent compensation consultants and may periodically seek input from appropriate Company executives.

Base Salaries

In the aggregate, the Compensation Committee establishes base salaries at or near the market median (50^th percentile) of senior executives and other corporate officers in comparably sized technology and manufacturing companies. In addition, other factors may be considered when setting individual salary levels, which may result in salaries above or below the stated target. These factors may include:

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Availability of talent.

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The recruiting requirements of the particular situation.

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Specific research and technical backgrounds.

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Experience.

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Anticipated performance.

Any adjustments in the base salaries of senior executives and other corporate officers will normally occur as of December 1 each year and are dependent on such factors as:

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The executive’s current responsibilities, experience, and performance.

•

Competitive compensation practices at comparably sized technology and manufacturing companies.

•

The Compensation Committee’s assessment regarding the executive’s overall contribution.

Annual Incentive Compensation

The Compensation Committee administers two annual incentive plans covering management participants. The EMIP was approved by stockholders in 1996 and is a performance-based plan in which payouts are set in accordance with the requirements of Internal Revenue Code (“IRC”) Section 162(m). It provides annual incentive compensation opportunities to the Company’s Chief Executive Officer based solely on the achievement of predetermined financial performance objectives. For a description of the proposal to reapprove the performance goals in the EMIP, see Proposal 4. Target awards, as a percent of base salary, range from 45 to 60% for the participant.

In addition, the Compensation Committee also administers the MIP, which provides compensation that is not performance based as defined in Code Section 162(m), but which is based on Company performance as well as objective and subjective evaluations of individual executive performance. The MIP provides opportunities for Company executives to earn annual incentives based on the achievement of a combination of important financial goals (such as operating and net income, earnings per share, return on sales, return on assets and/or cash flow) for the Company as well as individual objectives. A threshold net income level must be achieved before any payments are made. Bonus targets, as a percent of base salary, range from 10% to 60% for plan participants.

Participants for fiscal 2002 included 126 individuals with target incentive award opportunities primarily based on:

•

Individual responsibility levels.

•

Market median data for comparably sized technology and manufacturing companies.

To enhance the Company’s objectives of encouraging additional stock ownership and increasing Company cash flow, certain participants in the EMIP and the MIP may elect to receive up to 100% of their award in restricted stock. If the participant elects to receive restricted stock, the Company increases the award by 25%. The vesting period associated with the stock award is four years and the shares are forfeited in the event a participant voluntarily leaves the Company or is terminated “for cause.”

The 1996 Stock Incentive Plan

The 1996 Stock Incentive Plan allows for the grant of a variety of stock incentive instruments, including non-qualified and incentive stock options, stock appreciation rights, restricted stock and

performance shares. The Compensation Committee has made grants of stock options to the Company’s key executives to create a direct link between stockholder and executive interests, specifically by focusing executive attention on increasing stockholder value. The Committee also made a grant of stock options to key executives in fiscal 2002 in furtherance of aligning the executives’ interests with those of the stockholder.

Also in fiscal 2002, the Compensation Committee granted restricted stock to Messrs. Kachur, Flynn and Hamlin in accordance with their Employment Agreements. The restricted stock contains a four-year vesting period, and is forfeitable if the recipient leaves the Company under certain conditions. The restricted stock grant is intended to provide a long-term retention incentive to the recipient.

In determining stock option and restricted stock awards, the Committee considers such factors as:

•

Median competitive award levels for comparable companies.

•

The need to attract, motivate, and retain managers, technical, and research and development talent as well as other professionals.

•

Company and individual performance.

The Company also awards time-lapse restricted stock grants in special circumstances, such as to attract and retain newly hired executives and in other similar non-recurring situations.

Chief Executive Officer Compensation

Mr. Kachur was paid a base salary of $429,625 for fiscal 2002.

For performance in fiscal 2002, Mr. Kachur received a payment under the EMIP of $258,300. This payment was calculated from a predetermined formula based on Corporate net income set by the Compensation Committee and certified by the Compensation Committee in accordance with the provisions of IRC Section 162(m). In addition, Mr. Kachur received a payment from the MIP of $232,000 based on the Compensation Committee’s judgment on his achievement of individual goals and objectives during 2002. Mr. Kachur elected to receive a portion of these awards in restricted stock.

Mr. Kachur received 1,000 time-lapsed restricted shares and multi-year stock option grants of 35,708 shares in fiscal 2002. In determining this grant, the Compensation Committee wanted to ensure that Mr. Kachur’s long-term incentive compensation was delivered through stock price appreciation in order to establish a strong financial link between Mr. Kachur and the Company’s shareholders.

Internal Revenue Code Section 162(m)

A 1993 IRC amendment caps the allowable federal income tax deduction for compensation paid to each of the proxy-reported officers of a public company. The deduction limit, effective since 1994, does not apply to compensation paid under a plan that meets certain requirements for performance-based compensation. These requirements include:

•

Compensation payable based upon the attainment of one or more pre-established objective performance goals;

•

Performance goals established by a Compensation Committee of the Board of Directors that is comprised solely of two or more “outside directors;”

•

The terms of the compensation and the performance criteria are disclosed to and approved by stockholders before payment;

•

The Compensation Committee certifies in writing that the performance goals have been satisfied before payment.

The Compensation Committee’s general policy is to structure the major components of the Company’s incentive compensation programs to satisfy the requirements of performance-based compensation and preserve the deductibility of compensation paid to executive officers on an ongoing basis.

To implement the above policy, the Company sought and received stockholder approval of the 1996 Stock Incentive Plan and the EMIP. Furthermore, in 1999, the Company sought and received stockholder approval to increase the number of shares available for awards under the 1996 Stock Incentive Plan. Such approvals preserved the tax deductibility of stock options, performance shares and annual incentive awards awarded to the Company’s executive officers under the EMIP. The 1996 Stock Incentive Plan links compensation to the achievement of key financial objectives to motivate employees and increase stockholder value.

By: The Compensation and Pension Committee

C. Edward Midgley, Chairman		Dr. Charles L. Cooney		David L. Swift
Joel B. Alvord		John M. Galvin

Employment Agreements

On December 1, 2000, the Company entered into a written agreement to employ Mark G. Kachur as President and Chief Executive Officer. Mr. Kachur’s Employment Agreement expires on November 30, 2004. The Employment Agreement provides for the payment of a base salary of $420,000, which can be increased at the discretion of the Company. Additionally, Mr. Kachur will be eligible to (1) receive annual incentives as part of the EMIP and the MIP; and (2) participate in other incentive, stock option, profit sharing and similar plans maintained by the Company for the benefit of its executives. In addition, the Employment Agreement with Mr. Kachur provides that, in the event of his termination without cause (as defined in his Employment Agreement), Mr. Kachur will receive a lump sum payment equal to two times his then recent annual cash compensation. Finally, Mr. Kachur will be included in all other employee benefit plans to the extent that he is eligible. Such plans include, but are not limited to, group life insurance plans, hospitalization and medical plans and long-term disability plans.

On December 1, 2001, the Company entered into a written agreement to employ Frederick C. Flynn, Jr. as Senior Vice President-Finance & Administration and Chief Financial Officer. Mr. Flynn’s Employment Agreement expires on November 30, 2005. The Employment Agreement provides for the payment of a base salary of $277,160, which can be increased at the discretion of the Company. Additionally, Mr. Flynn will be eligible to (1) receive annual cash incentives as part of the MIP; and (2) participate in other incentive, stock option, profit sharing and similar plans maintained by the Company for the benefit of its executives. In addition, the Employment Agreement with Mr. Flynn provides that, in the event of his termination without cause (as defined in his Employment Agreement), Mr. Flynn will receive a lump sum payment equal to two times his then recent annual cash compensation. Finally, Mr. Flynn will be included in all other employee benefit plans to the extent that he is eligible. Such plans include, but are not limited to, group life insurance plans, hospitalization and medical plans, and long-term disability plans.

On December 1, 2001, the Company entered into a written agreement to employ Thomas J. Hamlin as Senior Vice President-Research & Development. Mr. Hamlin’s Employment Agreement expires on November 30, 2005. The Employment Agreement provides for the payment of a base salary of $186,500, which can be increased at the discretion of the Company. Additionally, Mr. Hamlin will be eligible to (1) receive annual cash incentives as part of the MIP; and (2) participate in other incentive, stock option, profit sharing and similar plans maintained by the Company for the benefit of its executives. In addition, the Employment Agreement with Mr. Hamlin provides that, in the event of his termination without cause (as defined in his Employment Agreement), Mr. Hamlin will receive a lump sum payment equal to two times his then recent annual cash compensation. Finally, Mr. Hamlin will be included in all other employee benefit plans to the extent that he is eligible. Such plans include, but are not limited to, group life insurance plans, hospitalization and medical plans, and long-term disability plans.

Change of Control Agreements

The Company has entered into change of control agreements (“Agreements”) with Messrs. Kachur, Flynn, Hamlin, Carney, Doina and 5 other key executives (the “Executives”). Under the Agreements, following a “Change of Control” (as defined in the Agreements), if the Executives are terminated without cause or if the Executives terminate their own employment for certain reasons, the Executives could receive (in addition to certain other benefits described below) (i) accrued and unpaid base salary and a pro rata portion of either their current annual incentive or the average of their two highest annual incentives during the five preceding years; (ii) two or three times the sum of their base salary and either their current annual incentive or the average of their two highest annual incentives during the five preceding years; (iii) the value of any shares, dividends or other property payable assuming maximum performance with respect to any performance shares held by the Executives; (iv) the actuarial value of accrued benefits under the supplemental executive retirement plan; (v) all vested nonforfeitable amounts owing under any comprehensive benefit plans; (vi) continuation of certain benefits for two or three years, such as medical benefits; and (vii) certain other benefits and payments. If a Change of Control occurs, the Company is obligated to set aside, in trust, sufficient assets to fund all obligations under the Agreements. In addition, payments received by the Executives in connection with a Change of Control could be “grossed up” for any excise taxes imposed by the “parachute payment” provisions of the IRC. Under the Agreements, each of the Executives has agreed not to compete with the Company for a stated period of time or to reveal proprietary information.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of directors (the “Audit Committee”) is comprised of the four directors named below. Each member of the Committee is an independent director as defined by the NASDAQ rules. The Committee has a written charter which has been approved by the Board of Directors. The Audit Committee has reviewed and discussed the audited financial statements with management, which has the primary responsibility for the financial statements, and also with the independent auditors. The Committee has discussed with the independent auditors the matters that are required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). The Audit Committee has received written disclosures and a letter from the independent auditors regarding the auditors’ independence, as required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the Committee has discussed with the auditors their independence. Based upon the review and discussions of the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the last fiscal year.

By: The Audit Committee

John M. Galvin, Chairman		C. Edward Midgley
Dr. Charles L. Cooney		David L. Swift

PERFORMANCE GRAPH

The following graph shows a comparison of cumulative total returns during the period commencing on October 31, 1997 and ending on October 31, 2002, for the Company, the Russell 2000 Index, and the Company’s Peer Group. The comparison assumes $100 was invested on October 31, 1997, in the Common Stock, the Russell 2000, and the Peer Group and assumes the reinvestment of all dividends, if any.

	October 31, 1997	October 31, 1998	October 31, 1999	October 31, 2000	October 31, 2001	October 31, 2002
CUNO	100.00	89.71	117.65	149.27	152.59	182.83
RUSSELL 2000¹	100.00	88.37	101.57	119.46	104.48	92.40
PEER GROUP²	100.00	93.78	94.03	108.66	112.00	86.07

The Russell 2000 Index is a market-weighted index comprising approximately 2,000 common stocks issued by a wide range of smaller capitalization U.S. companies.

The Peer Group Index represents public companies against which the Company competes and includes Calgon Carbon Corporation, Ionics Inc., Millipore Corp., Osmonics Inc., and Pall Corporation.

SECURITY OWNERSHIP OF MANAGEMENT

The directors, nominees for the office of director, the Named Executive Officers, and all directors and executive officers as a group were the beneficial owners of Common Stock, as of December 31, 2002, as set forth below:

	Amount and Nature of Beneficial Ownership		Percent of Voting Shares
Joel B. Alvord	41,193	⁽²⁾	*
Timothy B. Carney	43,750	^(1)(2)(3)	*
Charles L. Cooney	12,838	⁽²⁾	*
Anthony C. Doina	28,467	⁽¹⁾⁽²⁾	*
Frederick C. Flynn, Jr.	107,936	⁽¹⁾⁽²⁾	*
John M. Galvin	36,044	⁽²⁾	*
Thomas J. Hamlin	34,070	⁽¹⁾⁽²⁾	*
Mark G. Kachur	403,876	⁽¹⁾⁽²⁾	2.43	%
C. Edward Midgley	64,892	⁽²⁾⁽⁴⁾	*
David L. Swift	28,688	⁽²⁾	*
All Directors and Executive Officers as a group (11 people)	822,902		4.96	%

Less than 1%.

(1)

Includes the following number of shares of Common Shares (fractional shares not shown) credited to the accounts of the above-mentioned beneficial owners by the trustee acting under the provisions of the Company 401(k) Plan: Mr. Carney 2,523 shares, Mr. Doina 1,386 shares; Mr. Flynn 2,019 shares; Mr. Hamlin 170 shares; and Mr. Kachur 1,459 shares.

(2)

Includes shares of Common Stock acquirable within 60 days of December 31, 2002, upon exercise of options issued under the Company’s 1996 Stock Incentive Plan as follows: Mr. Alvord 8,000 shares; Mr. Carney 28,050 shares; Dr. Cooney 4,000 shares; Mr. Doina 23,795 shares; Mr. Flynn 35,110 shares; Mr. Galvin 8,000 shares; Mr. Hamlin 22,055 shares; Mr. Kachur 282,701 shares; Mr. Midgley 8,000 shares; and Mr Swift 8,000 shares.

(3)

Does not include 500 shares of Common Stock owned by Mr. Carney’s wife.

(4)

Does not include 10,000 shares of Common Stock owned by Mr. Midgley’s wife.

The following table provides information as of October 31, 2002 related to our equity compensation plans in effect at that time.


	Equity Compensation Plan Information⁽¹⁾
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-average Exercise Price of Outstanding Options, Warrants and Rights		Number of securities Remaining Available for Future Issuance Under Equity Compensation Plans
	(a)	(b)		(c)
Equity Compensation Plans Approved by Security Holders	1,052,974	$	21.42	287,819
Equity Compensation Plans Not Approved by Security Holders	-0-		-0-	-0-

Total	1,052,974	$	21.42	287,819

⁽¹⁾ This table does not include any shares that may become issuable under the proposed amendments to the 1996 Stock Incentive Plan and the Non-Employee Directors’ Stock Option Plan (“Proposed Amendments”). The Board of Directors has not granted any options to purchase shares of common stock under the Proposed Amendments.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership⁽¹⁾		Percent of Class
Common	David L. Babson & Co., Inc. One Memorial Drive Cambridge, MA 02142-1300	1,507,235	⁽²⁾	9.08	%
Common	Liberty Wanger Asset Manager 227 West Monroe Suite 3000 Chicago, IL 60606	1,083,000		6.53	%
Common	T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202	991,000	⁽³⁾	5.97	%
Common	Gamco (Gabelli Asset Management) One Corporate Center Rye, NY 10580	880,779	⁽⁴⁾	5.31	%
Common	Brown Capital Management 1201 North Calvert Street Baltimore, MD 21202	874,830		5.27	%

(1)

The information contained in this Table was obtained from Schedules 13F’s, 13G’s, or from information provided by the Beneficial Owner.

(2)

David L. Babson & Co. has sole voting power over 1,506,755 shares and sole investment power over 1,507,235 shares.

(3)

T. Rowe Price Associates, Inc. has sole voting power over 401,600 shares and sole investment power over 991,000 shares.

(4)

Gamco (Gabelli Asset Management) has sole voting power over 867,279 shares, no voting power of 13,500 shares, and sole investment power over 81,000 shares.

PROPOSAL 2

APPROVAL OF THE 1996 STOCK INCENTIVE PLAN

SECOND AMENDMENT

Background

Effective September 10, 1996, and amended March 25, 1999, the Board of Directors adopted the CUNO Incorporated 1996 Stock Incentive Plan (the “Stock Plan”) pursuant to which various opportunities to acquire up to 1,700,000 shares of Common Stock may be available (plus any unused shares under the CUNO Incorporated Non-Employee Directors’ Stock Plan) pursuant to the grant or exercise of stock options, stock appreciation rights, restricted stock, performance shares, annual incentive bonuses or deferred stock (collectively referred to as “Awards”) on the terms described below.

On January 22, 2003, the Board of Directors agreed to present the Second Amendment to the Stock Plan (the “Stock Plan Amendment”) in the form attached hereto as Exhibit A, for stockholder approval at the Annual Meeting. The Stock Plan Amendment authorizes and reserves an additional 1,100,000 shares for the Stock Plan, all of which are reserved for participants under the Plan (“Participants”). Assuming the adoption of Proposal 2, if 2,800,000 shares of Common Stock available under the Stock Plan were issued, such shares would constitute approximately 16.89% of the issued and outstanding Common Stock as of October 31, 2002. The Stock Plan Amendment will not be implemented if it is not approved by a majority of the votes cast, in person or by proxy, at the Annual Meeting. The Board believes that the size of the Stock Plan, as amended, is appropriate.

The Stock Plan Amendment will replenish the shares available for award under the Stock Plan so that the Company may continue to provide incentives to the Participants to attract and retain qualified individuals for service to the Company. The Board of Directors believes that the Company, as a progressive, global technology and manufacturing company, should continue to offer awards under the Stock Plan as a meaningful part of the compensation for Participants. The Board of Directors believes that the well-recognized benefits of stock incentive plans outweigh any burden on or dilution of the Common Stock as a result of the award of stock options, including: (i) the encouragement of the acquisition

by key employees of a proprietary interest in the Company; (ii) the ability to fashion attractive incentive awards based upon the performance of the Company and the price for Common Stock; and (iii) better alignment of the interests of officers, employees and consultants with the interests of the Company’s stockholders. In adopting the Stock Plan Amendment, the Board of Directors noted that many other companies have adopted equity plans to compensate their officers, employees and consultants with grants comparable in size to that to be effected by the Stock Plan Amendment. The affirmative vote of a majority of the shares cast in person or by proxy is required for stockholder approval of the Stock Plan Amendment. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE STOCK PLAN AMENDMENT, AND BELIEVES THAT THE STOCK PLAN AMENDMENT IS APPROPRIATE TO COMPENSATE THE PLAN PARTICIPANTS.

The following brief summary of certain features of the Stock Plan is qualified in its entirety by reference to the full text of the Stock Plan, which is attached as Exhibit B.

Summary of Provisions

Stock Options may be either “incentive stock options” (within the meaning of Section 422 of the Code) or nonstatutory stock options (collectively, “Stock Options”). The exercise price per share purchasable under a Stock Option shall be determined at the time of grant by the Compensation Committee and shall be the fair market value on the grant date. While the Compensation Committee has the ability to grant “incentive stock options,” it has not done so. Generally, Participants will be given ten years in which to exercise a Stock Option or a shorter period for vested options once a Participant terminates employment. Payment may be made in cash or in the form of unrestricted shares the Participant already owns or by other means. The right to exercise an option may be conditioned upon the completion of a period of service or other conditions. No more than half the shares of Common Stock reserved under the Stock Plan may be granted to any Participant during a three-calendar year period. The terms of any Stock Option granted under the Plan may not be amended to reduce the option price. Neither may the Compensation Committee, without the approval of the stockholders, cancel any stock option and grant a new stock option with a lower option price, such that the effect would be the same as reducing the option price.

Stock Appreciation Rights (“SARs”) entitle a Participant to receive an amount in cash, shares or both, equal to (i) the excess of the fair market value of one share over the fair market value on the date of grant multiplied by (ii) the number of shares to which the SAR relates. The right to exercise an SAR may be conditioned upon the completion of a period of service or other conditions. Generally, Participants will be given ten years in which to exercise an SAR or a shorter period once a Participant terminates employment.

Shares of Restricted Stock (“Restricted Stock”) may also be awarded under the Stock Plan, which is the grant of shares of Common Stock that requires the completion of a period of service or the attainment of specified performance goals by the Participant or the Company or a subsidiary, division or department of the Company or such other criteria as the Compensation Committee may determine in order to retain the shares. Upon a Participant’s Termination of Employment (as defined in the Stock Plan), the Restricted Stock still subject to restriction generally will be forfeited by the Participant. The Compensation Committee may waive these restrictions in the event of hardship or other special circumstances.

Performance Share Awards (“Performance Shares”) are grants of shares of Common Stock or the right to receive shares in the future that are subject to restrictions on transfer and retention based on satisfaction of certain performance criteria by the Company, the Participant or both. If the specified performance objectives established by the Committee are attained during the time period specified by the Committee (which will generally be at least a two-year period), and if the Participant continues in employment through the performance period, the restrictions on transfer and retention will be removed.

Depending on a Participant’s responsibilities, the performance criteria will be based on any of the following, either alone or in any combination, and either on a consolidated or business unit level, as the Committee may determine: sales, net asset turnover, earnings per share, cashflow, cashflow from operations, operating profits or income, operating margin, net-income margin, return on net assets, return on total assets, return on common equity, return on total capital and total stockholder return. The

Committee will specifically determine these criteria, and may include or exclude any or all of the following items: extraordinary, unusual or nonrecurring items; effects of accounting changes; effects of financing activities; expenses for restructuring or productivity initiatives; non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation or settlements. Capital gains may be included or excluded. The maximum number of Performance Shares that may be awarded to any Participant under the Stock Plan for any year is one half of the Shares of Common Stock reserved under the Stock Plan. Performance Shares in respect of which the Company’s deduction is subject to Section 162(m) of the Code, may only be paid if the performance objectives are achieved, except where the Participant’s employment is terminated for an extraordinary reason, in which case the Participant may receive a proportionate award.

Deferred Stock (“Deferred Stock”) is stock that can be awarded to a Participant delivered in the future, at a specified time and under specified conditions. The Compensation Committee will determine the Participants to whom, and the time or times at which, any Deferred Stock shall be awarded, the number of shares of Deferred Stock to be awarded to any Participant, the duration of the period during which and the conditions under which receipt of the shares will be deferred and any other terms and conditions of the Deferred Stock.

Annual Incentive Awards (“Annual Incentives”) are awards each fiscal year granted by the Committee and based on the satisfaction of specified bonus targets. The targets are based on Company performance measurements (on either a consolidated or business unit level), as determined by the Committee, and may include the following either alone or in any combination: sales, net asset turnover, earnings per share, cash flow, cash flow from operations, operating profits or income, net income, operating margin, net income margin, return on total assets, return on common equity, return on total capital and total stockholder return. The Committee will specifically determine these criteria and may include or exclude any or all of the following items: extraordinary, unusual or nonrecurring items; effects of accounting changes; effects of financing activities; expenses for restructuring or productivity initiatives; non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation or settlements. Capital gains may be included or excluded. The Committee will determine each year whether the objectives have been satisfied and awards will be paid only if the deduction is subject to Section 162(m) of the Code, except for an extraordinary reason for a termination of employment.

Payment of the Annual Incentive Award may be made in cash or at the election of the eligible Participant in the form of Restricted Stock. If Restricted Stock is chosen, it will be subject to limitation on transfer and risk of forfeiture for a designated period (generally, four years), and may have a value of as much as 130% of the cash value of the Annual Incentive Award had it been paid in cash. The maximum compensation that any Participant may receive in connection with an Annual Incentive Award, including Restricted Stock or Deferred Stock worth 130% of the cash value, is $1.5 million.

Amendments and Modifications. The Stock Plan, as adopted, is not limited as to its duration. The Board may amend, alter, or discontinue the Stock Plan, subject to certain limits.

Change in Control. In the event of a Change in Control of the Company (as defined in the Stock Plan):

(1) any SAR and Stock Options outstanding as of the date of such Change in Control which are not then exercisable and vested will become fully exercisable and vested to the full extent of the original grant; and

(2) the restrictions and deferred limitations applicable to any shares of Restricted Stock and Deferred Stock will lapse, and such shares of Restricted Stock and Deferred Stock will become free of all restrictions and become fully vested and transferable to the full extent of the original grant. Also, the performance goals and other restrictions with respect to any outstanding award of Performance Shares or Annual Incentives may be deemed to be satisfied in full and fully distributable.

A Change in Control includes any transaction which would result in any person owning, directly or indirectly, 20% or more of the outstanding Common Stock of the Company or the voting power of the

Company; certain changes in the members of the board of directors; certain corporate transactions (such as a merger); and the sale of substantially all of the Company’s assets.

As of October 31, 2002, employees of the Company were granted an aggregate of 1,121,413 Stock Options at a price equal to the fair market value of the Common Stock on the date of the grant, an aggregate of 197,500 Performance Shares, and an aggregate of 372,084 Deferred and Restricted Shares.

Effect of Federal Income Taxation

The following summary of tax consequences with respect to the awards granted under the Stock Plan is not comprehensive and is based upon laws and regulations in effect on November 1, 2002. Such laws and regulations are subject to change. The summary is intended for the information of stockholders considering how to vote and not as tax guidance to Participants in the Stock Plan. Participants in the Stock Plan should consult their own tax advisors as to the tax consequences of participation.

Stock options granted under the Stock Plan may be either incentive stock options qualified under Section 422 of the Code (“ISO’s”) or options that are not ISO’s, referred to herein as “NQSOs”. There are generally no Federal income tax consequences either to the option holder or to the Company upon the grant of a stock option. On exercise of an ISO, the option holder will not recognize any income and the Company will not be entitled to a deduction for tax purposes, although such exercise may give rise to liability for the option holder under the alternative minimum tax provisions of the Code. Generally, if the option holder disposes of shares acquired upon exercise of an ISO within two years of the date of grant or one year of the date of exercise, the option holder will recognize compensation income and the Company will be entitled to a deduction for tax purposes in the amount of the excess of the fair market value of the shares on the date of exercise over the option exercise price (or the gain on sale, if less). Otherwise, the Company will not be entitled to any deduction for tax purposes upon disposition of such shares, and the entire gain for the option holder will be treated as a capital gain. On exercise of an NQSO, the amount by which the fair market value of the shares on the date of exercise exceeds the option exercise price will generally be taxable to the option holder as compensation subject to income and payroll taxes, and will generally be deductible for tax purposes by the Company. The dispositions of shares acquired upon exercise of an NQSO will generally result in a capital gain or loss for the option holder with the holding period commencing on the date of the exercise, but will have no consequences for the Company.

Stock Appreciation Rights – Upon the grant of an SAR, the Participant will not recognize any taxable income and the Company will not be entitled to a deduction. Upon the exercise of an SAR, the consideration paid to the Participant upon exercise of the SAR will constitute compensation taxable to the Participant as ordinary income. The amount of the consideration paid to the Participant upon the exercise of an SAR for the Company Common Stock is the fair market value of the shares on the date of exercise less the fair market value on the date of grant. The Company, in computing its Federal income tax, generally will be entitled to a deduction in an amount equal to the compensation taxable to the Participant (including payroll taxes thereon).

Other Awards – With respect to awards granted under the Stock Plan that result in the payment or issuance of cash or shares of the Common Stock or other property that is either not restricted as to transferability or not subject to a substantial risk of forfeiture, the Participant must generally recognize ordinary income equal to the cash or the fair market value of shares or other property received on the date any such restrictions lapse. Thus, deferral of the time of payment or issuance will generally result in the deferral of the time the Participant will be liable for income taxes with respect to such payment or issuance. The Company generally will be entitled to a deduction in an amount equal to the ordinary income received by the Participant. With respect to awards involving the issuance of shares of the Company Common Stock or other property that is restricted as to transferability and subject to a substantial risk of forfeiture, the Participant must generally recognize ordinary income equal to the fair market value of the shares or other property received as of the first time the shares or other property becomes transferable or not subject to a substantial risk of forfeiture, whichever occurs earlier. The Company will be entitled to a deduction in an amount equal to ordinary income received by the Participant. A Participant may elect to be taxed at the time of receipt of shares or other property rather than upon lapse of restrictions on transferability or the substantial risk of forfeiture, but if the Participant subsequently forfeits such shares or property he would not be entitled to any tax deduction, including as a capital loss, for the value of the shares or property on

which he previously paid tax. The Participant must file such election with the Internal Revenue Service within 30 days of the receipt of the shares or other restricted property.

Section 162(m) of the Code – Section 162(m) of the Code generally disallows a public company’s tax deduction for compensation to the Named Executive Officers in excess of $1,000,000 in any tax year. Compensation that qualifies as “performance-based compensation” is excluded from the $1,000,000 deductibility cap, and therefore remains fully deductible by the Company that pays it.

The Company intends that options, SARs granted with an exercise price or grant price equal to at least 100% of fair market value of the underlying shares at the date of grant, and Annual Incentives and Performance Share Awards granted to employees whom the Committee expects to be Named Executive Officers at the time a deduction arises in connection with such Awards, qualify as “performance-based compensation.” Accordingly, such awards will not be subject to the Section 162(m) deductibility cap of $1,000,000 upon receipt of stockholder approval of the Stock Plan Amendment. Other Awards may be granted under the Stock Plan which will not so qualify, so that compensation paid to persons who are Named Executive Officers in connection with such awards will, to the extent such compensation and other compensation subject to the Section 162(m) deductibility cap in a given year exceeds $1,000,000, be subject to the Section 162(m) deductibility cap. A principal objective of the Board of Directors of the Company in recommending the Stock Plan for stockholder approval is to secure corporate tax deductions under Section 162(m) while preserving the flexibility to approve, when appropriate, compensation arrangements which the Committee deems in the best interests of the Company and its stockholders, but which may not always qualify for tax deductibility under Section 162(m) or other sections of the Code.

Parachute Payments – In the event any payments or rights accruing to a Participant upon a Change in Control, or any other payments awarded under the Stock Plan, constitute “parachute payments” under Section 280G of the Code, depending upon the amount of such payments accruing and the other income of the Participant from the Company, the Participant may be subject to an excise tax (in addition to ordinary income tax) and the Company may be disallowed a deduction for the amount of the actual payment.

PROPOSAL 3

APPROVAL OF THE CUNO INCORPORATED

NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

SECOND AMENDMENT

Background

Effective September 10, 1996, and amended March 25, 1999, the Board of Directors adopted the CUNO Incorporated Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”) pursuant to which various opportunities to acquire up to 300,000 shares of Common Stock may be available on the terms described below.

On January 22, 2003, the Board of Directors agreed to present the Second Amendment to the Directors’ Plan (the “Directors’ Amendment”) in the form attached hereto as Exhibit C, for stockholder approval at the Annual Meeting. The Directors’ Amendment provides for an additional 100,000 shares to the Directors’ Plan, all of which are reserved for non-employee directors (“Participants”). Assuming the adoption of Proposal 3, if 400,000 shares of Common Stock available under the Directors’ Plan were issued, such shares would constitute approximately 2.41% of the issued and outstanding Common Stock as of October 31, 2002. The Directors’ Amendment will not be implemented if it is not approved by a majority of the votes cast, in person or by proxy, at the Annual Meeting. The Board believes that the size of the Directors’ Amendment is appropriate.

The Directors’ Amendment will replenish the shares available for award under the Directors’ Plan so that the Company may continue to provide incentives to the Participants to attract and retain qualified individuals for service to the Company. The Board of Directors believes that the Company, as a progressive, global technology and manufacturing company, should continue to offer awards under the Directors’ Plan as a meaningful part of the compensation for Participants. The Board of Directors

believes that the well recognized benefits of stock option plans outweigh any burden to the stockholders attendant to the award of stock options, and include: (i) the encouragement of the acquisition of non-employee directors of a proprietary interest in the Company; and (ii) better alignment of the interests of non-employee directors with the interests of the Company’s stockholders. In adopting the Directors’ Amendment, the Board of Directors noted that many other companies have adopted equity plans to compensate their non-employee directors with grants comparable in size to that to be effected by the Directors’ Amendment. The affirmative vote of a majority of the shares cast in person or by proxy is required for stockholder approval of the Directors’ Amendment. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE DIRECTORS’ AMENDMENT, AND BELIEVES THAT THE DIRECTORS’ AMENDMENT IS APPROPRIATE TO COMPENSATE NON-EMPLOYEE DIRECTORS.

The following brief summary of certain features of the Directors’ Plan is qualified in its entirety by reference to the full text of the Directors’ Plan, which is set forth in Exhibit D.

Summary of Provisions

Stock Options are limited to nonstatutory stock options (“Stock Options” or “NQSOs”). The exercise price per share purchasable under a Stock Option shall be determined at the time of grant by the Compensation Committee and shall be the fair market value on the grant date. The Compensation Committee has never granted Stock Options below the fair market value on the grant date. Generally, Participants will be given ten years in which to exercise a Stock Option, or a shorter period for vested options once a Participant ceases to be a director. Payment may be made in cash or, if approved by the Compensation Committee, in the form of unrestricted shares the Participant already owns or by other means. The right to exercise an option shall be conditioned upon the completion of one year of service after the grant or other conditions as specified by the Compensation Committee in the grant. The terms of any Stock Option granted under the Plan may not be amended to reduce the option price. Neither may the Compensation Committee, without the approval of the stockholders, cancel any stock option and grant a new stock option with a lower option price, such that the effect would be the same as reducing the option price.

Performance Share Awards (“Performance Shares”) are grants of shares of Common Stock or the right to receive shares in the future that are subject to restrictions on transfer and retention based on satisfaction of certain performance criteria by the Company or an operating group. If the specified performance objectives established by the Compensation Committee are attained during the time period specified by the Compensation Committee (which will generally be at least a two-year period), and if the Participant continues as a director through the performance period, the restrictions on transfer and retention will be removed.

The performance criteria will be based on any of the following, either alone or in any combination, and either on a consolidated or business unit level, as the Compensation Committee may determine: sales, net asset turnover, earnings per share, cashflow, cashflow from operations, operating profits or income, operating margin, net-income margin, return on net assets, return on total assets, return on common equity, return on total capital and total stockholder return. The Compensation Committee will specifically determine these criteria, and may include or exclude any or all of the following items: extraordinary, unusual or nonrecurring items; effects of accounting changes; effects of financing activities; expenses for restructuring or productivity initiatives; non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation or settlements. Capital gains may be included or excluded. The maximum number of Performance Shares that may be awarded to any Participant under the Directors’ Plan for any year is one half of the Shares of Common Stock reserved under the Directors’ Plan.

conditions of the Deferred Stock. A Participant may elect to receive his retainer (and other cash compensation) for services as a director in the form of Deferred Stock.

Amendments and Modifications. The Directors’ Plan, as adopted, is not limited as to its duration. The Board may amend, alter, or discontinue the Directors’ Plan, subject to certain limits.

Change in Control. In the event of a Change in Control of the Company (as defined in the Directors’ Plan):

(1) any Stock Options outstanding as of the date of such Change in Control which are not then exercisable and vested will become fully exercisable and vested to the full extent of the original grant; and

(2) the restrictions and deferred limitations applicable to any shares of Deferred Stock will lapse, and such shares of Deferred Stock will become free of all restrictions and become fully vested and transferable to the full extent of the original grant. Also, the performance goals and other restrictions with respect to any outstanding award of Performance Shares may be deemed to be satisfied in full and fully distributable.

A Change in Control includes any transaction which would result in any person owning, directly or indirectly, 20% or more of the outstanding Common Stock of the Company or the voting power of the Company; certain changes in the members of the board of directors; certain corporate transactions (such as a merger); and the sale of substantially all of the Company’s assets.

Non-employee directors receive non-qualified stock options to purchase 2,000 shares of Common Stock annually. No other directors, officers, employees, or consultants are eligible to receive awards under the Directors’ Plan. As of October 31, 2002, the non-employee directors of the Company were granted an aggregate of 58,000 Stock Options at a price equal to the fair market value of the Common Stock on the date of the grant, an aggregate of 49,000 Performance Shares and an aggregate of 50,445 shares of Deferred Stock.

NEW PLAN BENEFITS

1996 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

Name	Dollar Value ($)(1)	Number of Units
Mark G. Kachur, Chairman, President and Chief Executive Officer	-0-	-0-
Frederick C. Flynn, Jr., Senior Vice President – Finance & Administration, Chief Financial Officer, and Controller	-0-	-0-
Thomas J. Hamlin, Senior Vice President – Research and Development	-0-	-0-
Timothy B. Carney, Vice President – General Manager, President – North America Water Group	-0-	-0-
Anthony C. Doina, Vice President – General Manager – U.S. Process	-0-	-0-
Executive Group	-0-	-0-
Nonemployee Director Group	-0-	10,000
Non-Executive Officer Employee Group	-0-	-0-

(1)

The dollar value of the stock option grants is indeterminate at this time as these grants are subject to a vesting schedule and the value of the grants are dependent on the price of the Common Stock achieving levels above the grant price. All of the grants will be granted at the fair market value of the Common Stock on the date of grant.

Effect of Federal Income Taxation

The following summary of tax consequences with respect to the awards granted under the Directors’ Plan is not comprehensive and is based upon laws and regulations in effect on November 1, 2002. Such laws and regulations are subject to change. The summary is intended for the information of stockholders considering how to vote and not as tax guidance to Participants in the Directors’ Plan. Participants in the Directors’ Plan should consult their own tax advisors as to the tax consequences of participation.

Stock options granted under the Directors’ Plan are nonstatutory options, referred to herein as “NQSOs”. There are generally no Federal income tax consequences either to the option holder or to the Company upon the grant of a stock option. On exercise of an NQSO, the amount by which the fair market value of the shares on the date of exercise exceeds the option exercise price will generally be taxable to the option holder as compensation, subject to income taxes, and will generally be deductible for tax purposes by the Company. The dispositions of shares acquired upon exercise of an NQSO will generally result in a capital gain or loss for the option holder with the holding period commencing on the date of exercise, but will have no consequences for the Company.

Other Awards – With respect to awards granted under the Directors’ Plan that result in the payment or issuance of cash or shares of the Common Stock or other property that is either not restricted as to transferability or not subject to a substantial risk of forfeiture, the Participant must generally recognize ordinary income equal to the cash or the fair market value of shares or other property received on the date any such restrictions lapse. Thus, deferral of the time of payment or issuance will generally result in the deferral of the time the Participant will be liable for income taxes with respect to such payment or issuance. The Company generally will be entitled to a deduction in an amount equal to the ordinary income received by the Participant. With respect to awards involving the issuance of shares of the Company Common Stock or other property that is restricted as to transferability and subject to a substantial risk of forfeiture, the Participant must generally recognize ordinary income equal to the fair market value of the shares or other property received as of the first time the shares or other property becomes transferable or not subject to a substantial risk of forfeiture, whichever occurs earlier. The Company will be entitled to a deduction in an amount equal to ordinary income received by the Participant. A Participant may elect to be taxed at the time of receipt of shares or other property rather than upon lapse of restrictions on transferability or the substantial risk of forfeiture, but if the Participant subsequently forfeits such shares or property he would not be entitled to any tax deduction, including as a capital loss, for the value of the shares or property on which he previously paid tax. The Participant must file such election with the Internal Revenue Service within 30 days of the receipt of the shares or other restricted property.

PROPOSAL 4

REAPPROVAL OF PERFORMANCE GOALS IN THE EMIP

As described under “Executive Compensation – Annual Incentive Compensation,” the EMIP is a performance-based plan in which payouts are set in accordance with the requirements of Section 162(m) of the IRC. In accordance with the requirements of regulations under Section 162(m) of the IRC, the performance goals are being submitted to the stockholders for reapproval.

The EMIP provides annual incentive compensation opportunities to selected senior executives based solely on the achievement of predetermined financial performance objectives, including corporate operating and net income, return on net sales, return on assets and/or cash flow. The Compensation Committee is responsible for selecting the financial performance objective or objectives to be used for each award under the EMIP. The Compensation Committee establishes the specific target to be achieved for each goal specified in an award in order for a payment to be made and the percentage (up to 100%) of base salary that would be paid if that goal is achieved (the “Award Target”). If 80% of the pre-established goal is achieved, the minimum payment of 25% of the Award Target would be paid. For performance above the target for the goal, the Compensation Committee can increase the percentage of the Award Target paid to the participant up to a maximum of 200% of the Award Target in respect to any fiscal year for achievement of 150% of the goal for that financial performance objective. Mr. Kachur is currently the only participant in the EMIP.

If this proposal is approved, the performance goals described in the preceding paragraph will continue to be used by the Compensation Committee in administering the EMIP.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF REAPPROVAL OF THE PERFORMANCE GOALS IN THE EMIP.

PROPOSAL 5

SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected Ernst & Young LLP to audit the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending October 31, 2003. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting with the opportunity to make a statement if such representative so desires and will also be available to respond to appropriate questions from stockholders.

Unless contrary instructions are noted on the proxy, it will be voted to ratify the selection by the Board of Directors of Ernst & Young LLP as independent auditors for the fiscal year ending October 31, 2003. The affirmative vote of the holders of a majority of the voting shares represented at the Annual Meeting is required for such ratification. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF RATIFICATION OF THE SELECTION OF AUDITORS.

Audit Fees

The aggregate fees billed by Ernst & Young LLP for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended October 31, 2002 and for the reviews of the financial statements included in the Company’s Quarterly Reports on Form 10-Q for that fiscal year were $216,660 plus $62,036 for audit related fees.

Financial Information Systems Design and Implementation Fees

There were no fees billed to the Company by Ernst & Young LLP for the fiscal year ended October 31, 2002 for financial information systems design and implementation.

All Other Fees

All other fees billed to the Company by Ernst & Young LLP for the fiscal year ended October 31, 2002 amounted to $90,685 ($70,335 of which was for tax-related services). The Audit Committee has determined that the fees paid to Ernst & Young LLP for services other than auditing are compatible with maintaining Ernst & Young LLP’s independence.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF RATIFICATION OF THE SELECTION OF AUDITORS.

ANNUAL REPORT TO STOCKHOLDERS

The annual report of the Company and its subsidiaries for the fiscal year ended October 31, 2002, including financial statements reflecting the financial position and operations of the Company and its subsidiaries for that year, is being mailed to stockholders simultaneously with this Proxy Statement. The annual report is not deemed to have been filed with the Securities and Exchange Commission and is not part of this proxy.

2004 ANNUAL MEETING OF STOCKHOLDERS

The deadline for receipt by the Company of stockholders’ proposals for inclusion in the Company’s proxy statement and form of proxy for its 2004 annual meeting of stockholders (the “2004 Meeting”) is September 30, 2003. No stockholder proposal will be considered at the 2004 Meeting unless proper notice is received by the Company between November 14, 2004 and December 14, 2004 in compliance with the Company’s Bylaws. The Company form of proxy for the 2004 Meeting will confer discretionary authority upon the persons named as proxies to vote on any untimely stockholder proposals; and, the proxy statement will advise how the proxies intend to vote on any timely stockholder proposals which are not included in the Company’s proxy statement and form of proxy.

FORM 10-K

A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 31, 2002, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED BY STOCKHOLDERS AFTER JANUARY 27, 2003, WITHOUT CHARGE, ON WRITTEN REQUEST DIRECTED TO THE SECRETARY, CUNO INCORPORATED, 400 RESEARCH PARKWAY, MERIDEN, CONNECTICUT 06450.

OTHER MATTERS

The Board of Directors does not know of any matters of business to be presented for action at the Annual Meeting other than as set forth above. The enclosed proxy does, however, confer discretionary authority upon the persons named therein, or their substitutes, to take action with respect to any other matters that may properly be brought before the Annual Meeting.

SOLICITATION OF PROXIES

The enclosed form of proxy is solicited by the Board of Directors. Shares represented by the proxy will be voted at the Annual Meeting in accordance with the shareholder’s written instructions. The cost of preparing, printing, assembling and mailing will be paid by the Company. Officers, directors or other employees of the Company, without additional remuneration, may solicit proxies personally or by other appropriate means, if deemed advisable. The Company will also request brokers, banks and other nominees to send proxy material to and obtain proxies from their principals, and it will reimburse such persons for their expenses in so doing. In addition, the Company has retained Morrow & Co., Inc. to assist in the solicitation of proxies. Morrow & Co., Inc. will request brokerage houses and other nominees, fiduciaries and custodians nominally holding shares of the Company’s Common Stock of record to forward proxy solicitation material to the beneficial owners of such shares. For these services, the Company will pay Morrow & Co., Inc. a fee estimated not to exceed $6,000 plus reimbursement of expenses.

Please promptly vote your proxy to ensure that your shares will be voted at the Annual Meeting. Your proxy may be voted by telephone, Internet, or mail, as indicated on the proxy card. We also hope that you will attend the Annual Meeting.

BY THE ORDER OF THE BOARD OF DIRECTORS

/s/ John A. Tomich JOHN A. TOMICH General Counsel and Secretary

Meriden, Connecticut

January 28, 2003

EXHIBIT A

SECOND AMENDMENT TO CUNO INCORPORATED

1996 STOCK INCENTIVE PLAN

The CUNO Incorporated 1996 Stock Incentive Plan (the “Plan”), having an Effective Date of September 10, 1996,amended March 25, 1999, is hereby amended, subject to the approval of its stockholders and the satisfaction of the other requirements for amending the Plan described in Section 14.1 of the Plan, effective as of the date of completion of such required approvals, as follows:

Section 4.1 of the Plan hereby is amended to read in its entirety:

“4.1 Number of Shares. Subject to the adjustment under Section 4.6, the total number of shares of Common Stock reserved and available for distribution pursuant to Awards under the Plan shall be 2,800,000 shares of Common Stock authorized for issuance on the Effective Date, plus any unused shares under, or shares allocated by the Committee from, the Company’s Non-Employee Directors’ Stock Option Plan. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares. Stock Appreciation Rights, Restricted Stock, Deferred Stock, Performance Shares, Incentive Stock Options, and Annual Incentive Awards issued after March 6, 2003, shall not represent more than 400,000 shares of Common Stock.”

Section 6.1 of the Plan is hereby amended to read in its entirety:

“6.1 General. The Committee shall have authority to grant Options under this Plan at any time or from time to time. Stock Options may be granted alone or in addition to other Awards and may be either Incentive Stock Options or Non-Qualified Stock Options. An Option shall entitle the Participant to receive shares of Common Stock upon exercise of such Option, subject to the Participant’s satisfaction in full of any conditions, restrictions or limitations imposed in accordance with this Plan or an Agreement (the terms and provisions of which may differ from other Agreements) including without limitation, payment of the Option Price. During any three-calendar-year period, Options for no more than one-half of all shares of Common Stock available for grant under the Plan shall be granted to any Participant. The terms of any Stock Option granted under the Plan may not be amended to reduce the Option Price; nor may the Compensation Committee, without the approval of the stockholders, cancel any Stock Option and grant a new Stock Option with a lower option price such that the effect would be the same as reducing the option price.”

Page 1 of 2

III

Section 6.3(b) of the Plan is hereby amended to read in its entirety:

“(b) Option Price. The Option Price per share of the Common Stock purchasable under an Option shall be determined by the Committee but shall not be less than the Fair Market Value per share on the date the Option is granted. If such Option is intended to qualify as an Incentive Stock Option, the Option Price per share shall not be less than the Fair Market Value per share on the date the Option is granted, or where granted to an individual who owns or who is deemed to own stock possessing more than ten percent (10%) of the combined voting power of all classes of stock of the Company, a corporation which is a parent corporation of the Company or any subsidiary of the Company (each as defined in Section 424 of the Code), not less than one hundred ten percent (110%) of such Fair Market Value per share.”

In all other respects, the Plan shall continue in full force and effect.

Page 2 of 2

EXHIBIT B

CUNO INCORPORATED

1996 STOCK INCENTIVE PLAN

(As Amended March 25, 1999)

TABLE OF CONTENTS

ARTICLE I

ESTABLISHMENT
1.1	Purpose	B-1

ARTICLE II

DEFINITIONS
2.1	Affiliate	B-1
2.2	Agreement or Award Agreement	B-1
2.3	Annual Incentive Award	B-1
2.4	Award	B-1
2.5	Beneficiary	B-1
2.6	Board of Directors or Board	B-2
2.7	Cause	B-2
2.8	Change in Control	B-2
2.9	Code or Internal Revenue Code	B-2
2.10	Commission	B-2
2.11	Committee	B-2
2.12	Common Stock	B-2
2.13	Company	B-2
2.14	Covered Employee	B-2
2.15	Deferred Stock	B-2
2.16	Disability	B-3
2.17	Effective Date	B-3
2.18	Exchange Act	B-3
2.19	Extraordinary Termination of Employment	B-3
2.20	Fair Market Value	B-3
2.21	Grant Date	B-3
2.22	Incentive Stock Option	B-3
2.23	Non-Qualified Stock Option	B-3
2.24	Option Period	B-3
2.25	Option Price	B-3
2.26	Participant	B-4
2.27	Performance Shares	B-4

2.28	Plan	B-4
2.29	Representative	B-4
2.30	Restricted Stock	B-4
2.31	Retirement	B-4
2.32	Rule 16b-3 and Rule 16a-1(c)(3)	B-4
2.33	Stock Appreciation Right	B-4
2.34	Stock Option	B-5
2.35	Termination of Employment	B-5

ARTICLE III

ADMINISTRATION
3.1	Committee Structure and Authority	B-5

ARTICLE IV

STOCK SUBJECT TO PLAN
4.1	Number of Shares	B-8
4.2	Release of Shares	B-8
4.3	Restrictions on Shares	B-8
4.4	Stockholder Rights	B-8
4.5	Best Efforts to Register	B-9
4.6	Anti-Dilution	B-9

ARTICLE V

ELIGIBILITY
5.1	Eligibility	B-10

ARTICLE VI

STOCK OPTIONS
6.1	General	B-10
6.2	Grant and Exercise	B-10
6.3	Terms and Conditions	B-11
6.4	Termination by Reason of Death	B-13
6.5	Termination by Reason of Disability	B-13
6.6	Other Termination	B-14
6.7	Cashing Out of Option	B-14

ARTICLE VII

STOCK APPRECIATION RIGHTS
7.1	General	B-14
7.2	Grant	B-14
7.3	Terms and Conditions	B-15

ARTICLE VIII

RESTRICTED STOCK
8.1	General	B-16
8.2	Awards and Certificates	B-16
8.3	Terms and Conditions	B-17
ARTICLE IX

DEFERRED STOCK
9.1	General	B-18
9.2	Terms and Conditions	B-19
ARTICLE X

PERFORMANCE SHARES
10.1	General	B-20
10.2	Price	B-20
10.3	Performance Share Agreement	B-20
10.4	Performance Period	B-20
10.5	Performance Goals	B-20
10.6	Earning of Performance Shares	B-21
10.7	Termination of Employment Due to Death, Disability, or Retirement or at the Request of the Company Without Cause	B-21
10.8	Termination of Employment for Other Reasons	B-22
10.9	Non-transferability	B-22
ARTICLE XI

ANNUAL INCENTIVE AWARDS
11.1	Eligibility	B-22
11.2	Earning of Annual Incentive Awards	B-23
11.3	Payments and Election	B-23
11.4	Amendment of Awards	B-24
11.5	Performance Threshold	B-24
11.6	Maximum Awards	B-24
ARTICLE XII

PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THIS PLAN
12.1	Limited Transfer During Offering	B-24
12.2	No Company Obligation	B-25

iii

ARTICLE XIII

CHANGE IN CONTROL PROVISIONS
13.1	Impact of Event	B-25
13.2	Definition of Change in Control	B-26
13.3	Change in Control Price	B-27
ARTICLE XIV

MISCELLANEOUS
14.1	Amendments and Termination	B-28
14.2	Unfunded Status of Plan	B-28
14.3	Status of Awards Under Code Section 162(m)	B-28
14.4	General Provisions	B-28
14.5	Mitigation of Excise Tax	B-30
14.6	Rights with Respect to Continuance of Employment	B-31
14.7	Awards in Substitution for Awards Granted by Other Corporations	B-31
14.8	Procedure for Adoption	B-31
14.9	Procedure for Withdrawal	B-31
14.10	Delay	B-31
14.11	Headings	B-32
14.12	Severability	B-32
14.13	Successors and Assigns	B-32
14.14	Entire Agreement	B-32

ARTICLE I

ESTABLISHMENT

1.1 Purpose. The CUNO Incorporated 1996 Stock Incentive Plan (“Plan”) is hereby established by CUNO Incorporated (“Company”). The purpose of this Plan is to promote the overall financial objectives of the Company and its stockholders by motivating those persons selected to participate in this Plan to achieve long-term growth in stockholder equity in the Company and by retaining the association of those individuals who are instrumental in achieving this growth.

ARTICLE II

DEFINITIONS

For purposes of this Plan, the following terms are defined as set forth below:

2.1 “Affiliate” means any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company including, without limitation, any member of an affiliated group of which the Company is a common parent corporation as provided in Section 1504 of the Code.

2.2 “Agreement” or “Award Agreement” means any agreement entered into pursuant to this Plan pursuant to which an Award is granted to a Participant.

2.3 “Annual Incentive Award” means an award granted pursuant to Article XI.

2.4 “Award” means any Stock Option, Stock Appreciation Right, Restricted Stock, Deferred Stock, Performance Share or Annual Incentive Award granted to a Participant under the Plan.

2.5 “Beneficiary” means the person, persons, trust or trusts which have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefit specified under the Plan to the extent permitted. If there is no designated beneficiary, then the term means the person or persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.

2.6 “Board of Directors” or “Board” means the Board of Directors of the Company.

B-1

2.7 “Cause” shall mean, for purposes of whether and when a Participant has incurred a Termination of Employment for Cause, any act or omission which permits the Company to terminate the written agreement or arrangement between the Participant and the Company or an Affiliate for Cause as defined in such agreement or arrangement, or in the event there is no such agreement or arrangement or the agreement or arrangement does not define the term “cause,” then Cause shall mean (a) any act or failure to act deemed to constitute cause under the Company’s established practices, policies or guidelines applicable to the Participant or (b) the Participant’s act or omission constituting gross misconduct with respect to the Company or an Affiliate in any material respect.

2.8 “Change in Control” and “Change in Control Price” have the meanings set forth in Sections 13.2 and 13.3, respectively.

2.9 “Code” or “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, final Treasury Regulations thereunder and any subsequent Internal Revenue Code.

2.10 “Commission” means the Securities and Exchange Commission or any successor agency.

2.11 “Committee” means the person or persons appointed by the Board of Directors to administer this Plan, as further described herein; provided, however, the Committee shall consist of directors who are “disinterested” persons or “non-employees” within the meaning of Rule 16b-3 and each of whom is an “outside” director under Section 162(m) of the Code.

2.12 “Common Stock” means the shares of the regular voting Common Stock, $.001 par value per share, whether presently or hereafter issued, and any other stock or security resulting from adjustment thereof as described hereinafter or the common stock of any successor to the Company which is designated for the purpose of this Plan.

2.13 “Company” means CUNO Incorporated, a Delaware corporation, and includes any successor or assignee corporation or corporations into which the Company may be merged, changed or consolidated; any corporation for whose securities all or substantially all of the securities of the Company shall be exchanged; and any assignee of or successor to substantially all of the assets of the Company.

2.14 “Covered Employee” means a Participant who is a “covered employee” within the meaning of Section 162(m) of the Code.

2.15 “Deferred Stock” means an award made pursuant to Article IX to receive Common Stock at the end of a specified period.

B-2

2.16 “Disability” means a mental or physical illness that entitles the Participant to receive benefits under the long term disability plan of the Company or an Affiliate, or if the Participant is not covered by such a plan or the Participant is not an employee of the Company or an Affiliate, a mental or physical illness that renders a Participant totally and permanently incapable of performing the Participant’s duties for the Company or an Affiliate. Notwithstanding the foregoing, a Disability shall not qualify under this Plan if it is the result of (i) a willfully self-inflicted injury or willfully self-induced sickness; or (ii) an injury or disease contracted, suffered, or incurred, while participating in a criminal offense. The determination of Disability shall be made by the Committee. The determination of Disability for purposes of this Plan shall not be construed to be an admission of disability for any other purpose.

2.17 “Effective Date” means August 28, 1996.

2.18 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2.19 “Extraordinary Termination of Employment” means the Termination of Employment of the Participant due to death, Disability or Retirement.

2.20 “Fair Market Value” means the fair market value of Common Stock, Awards or other property as determined by the Committee or under procedures established by the Committee. Unless otherwise determined by the Committee, the Fair Market Value per share by Common Stock as of any date shall be the closing sale price per share reported on a consolidated basis for stock listed on the principal stock exchange or market on which the Common Stock is traded on the date as of which such value is being determined or, if there is no sale on that date, then on the last previous day on which a sale was reported.

2.21 “Grant Date” means the date that as of which an Award is granted pursuant to this Plan.

2.22 “Incentive Stock Option” means any Stock Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code.

2.23 “Non-Qualified Stock Option” means an Option to purchase Common Stock in the Company granted under this Plan the taxation of which is pursuant to Section 83 of the Code.

2.24 “Option Period” means the period during which the Option shall be exercisable in accordance with the Agreement and Article VI.

2.25 “Option Price” means the price at which the Common Stock may be purchased under an Option as provided in Section 6.3.

B-3

2.26 “Participant” means a person who satisfies the eligibility conditions of Article V and to whom an Award has been granted by the Committee under this Plan, and in the event a Representative is appointed for a Participant or another person becomes a Representative, then the term “Participant” shall mean such Representative. The term shall also include a trust for the benefit of the Participant, a partnership the interest of which is by or for the benefit of the Participant, the Participant’s parents, spouse or descendants, or a custodian under a uniform gifts to minors act or similar statute for the benefit of the Participant’s descendants, to the extent permitted by the Committee and not inconsistent with the Rule 16b-3 or the status of the Option as an Incentive Stock Option to the extent intended. Notwithstanding the foregoing, the term “Termination of Employment” shall mean the Termination of Employment of the employee.

2.27 “Performance Shares” means a right, granted under Article X, to receive Awards based upon criteria specified by the Committee.

2.28 “Plan” means this CUNO Incorporated 1996 Stock Incentive Plan, as the same may be amended from time to time.

2.29 “Representative” means (a) a person or entity acting as the executor or administrator of a Participant’s estate pursuant to the last will and testament of a Participant or pursuant to the laws of the jurisdiction in which the Participant had the Participant’s primary residence at the date of the Participant’s death; (b) the person or entity acting as the guardian or temporary guardian of a Participant; (c) the person or entity which is the Beneficiary of the Participant upon or following the Participant’s death; or (d) any person to whom an Option has been transferred with the permission of the Committee or by operation of law; provided that only one of the foregoing shall be the Representative at any point in time as determined under applicable law and recognized by the Committee.

2.30 “Restricted Stock” means an award of Common Stock under Article VIII that is subject to certain restrictions and a risk of forfeiture.

2.31 “Retirement” means the Participant’s Termination of Employment after attaining either the normal retirement age or the early retirement age as defined in the principal (as determined by the Committee) tax-qualified plan of the Company or an Affiliate, if the Participant is covered by such plan, and if the Participant is not covered by such a plan, then age 65, or age 55 with the accrual of 10 years of service.

2.32 “Rule 16b-3 and Rule 16a-1(c)(3)” means Rule 16b-3 and Rule 16a- 1(c)(3), as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act.

2.33 “Stock Appreciation Right” means a right granted under Article VII.

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2.34 “Stock Option” or “Option” means a right to purchase stock on specified conditions granted under Article VI.

2.35 “Termination of Employment” means the occurrence of any act or event whether pursuant to an employment agreement or otherwise that actually or effectively causes or results in the person’s ceasing, for whatever reason, to be an officer, independent contractor, director or employee of the Company or of any Affiliate, or to be an officer, independent contractor, director or employee of any entity that provides services to the Company or an Affiliate, including without limitation, death, Disability, dismissal, severance at the election of the Participant, Retirement, or severance as a result of the discontinuance, liquidation, sale or transfer by the Company or its Affiliates of all businesses owned or operated by the Company or its Affiliates. With respect to any person who is not an employee with respect to the Company or an Affiliate, the Agreement shall establish what act or event shall constitute a Termination of Employment for purposes of this Plan. A transfer of employment from the Company to an Affiliate, or from an Affiliate to the Company, shall not be a Termination of Employment, unless expressly determined by the Committee. A Termination of Employment shall occur to an employee who is employed by an Affiliate if the Affiliate shall cease to be an Affiliate and the Participant shall not immediately thereafter become an employee of the Company or an Affiliate.

In addition, certain other terms used herein have definitions given to them in the first place in which they are used.

ARTICLE III

ADMINISTRATION

3.1 Committee Structure and Authority. This Plan shall be administered by the Committee which shall be comprised of one or more persons. The Committee shall be the Compensation Committee of the Board of Directors, unless such committee does not exist or the Board establishes a committee whose purpose is the administration of this Plan. In the absence of an appointment, the Board or the portion that qualifies as the Committee shall be the Committee. A majority of the Committee shall constitute a quorum at any meeting thereof (including telephone conference) and the acts of a majority of the members present, or acts approved in writing by a majority of the entire Committee without a meeting, shall be the acts of the Committee for purposes of this Plan. The Committee may authorize any one or more of its members or an officer of the Company to execute and deliver documents on behalf of the Committee. A member of the Committee shall not exercise any discretion respecting himself or herself under this Plan. The Board shall have the authority to remove, replace or fill any vacancy of any member of the Committee upon notice to the Committee and the affected member. Any member of the Committee may resign upon notice to the Board. The Committee may allocate among one or more of it members, or may delegate to one or more of its agents, such duties and responsibilities as it determines.

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Among other things, the Committee shall have the authority, subject to the terms of this Plan:

(a) to select those persons to whom Awards may be granted from time to time;

(b) to determine whether and to what extent Awards are to be granted hereunder;

(d) to determine the terms and conditions of any Award granted hereunder (including, but not limited to, the Option Price, the Option Period, any exercise restriction or limitation; any exercise acceleration or forfeiture waiver or any performance criteria regarding any Award and the shares of Common Stock relating thereto);

(e) to adjust the terms and conditions, at any time or from time to time, of any Award, subject to the limitations of Section 14.1;

(f) to determine to what extent and under what circumstances Common Stock and other amounts payable with respect to an Award shall be deferred;

(g) to determine under what circumstances an Award may be settled in cash or Common Stock;

(h) to provide for the forms of Agreement to be utilized in connection with this Plan;

(i) to determine whether a Participant has a Disability or a Retirement;

(j) to determine what securities law requirements are applicable to this Plan, Awards, and the issuance of shares of Common Stock and to require of a Participant that appropriate action be taken with respect to such requirements;

(k) to cancel, with the consent of the Participant or as otherwise provided in this Plan or an Agreement, outstanding Awards;

(l) to interpret and make a final determination with respect to the remaining number of shares of Common Stock available under this Plan;

(m) to require as a condition of the exercise of an Award or the issuance or transfer of a certificate of Common Stock, the withholding from a Participant of the amount of any federal, state or local taxes as may be necessary

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in order for the Company or any other employer to obtain a deduction or as may be otherwise required by law;

(n) to determine whether and with what effect an individual has incurred at Termination of Employment;

(o) to determine whether the Company or any other person has a right or obligation to purchase Common Stock from a Participant and, if so, the terms and conditions on which such Common Stock is to be purchased;

(p) to determine the restrictions or limitations on the transfer of Common Stock;

(q) to determine whether an Award is to be adjusted, modified or purchased, or is to become fully exercisable, under this Plan or the terms of an Agreement;

(r) to determine the permissible methods of Award exercise and payment, including cashless exercise arrangements;

(s) to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of this Plan; and

(t) to appoint and compensate agents, counsel, auditors or other specialists to aid it in the discharge of its duties.

The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing this Plan as it shall, from time to time, deem advisable to interpret the terms and provisions of this Plan and any Award issued under this Plan (and any Agreement) and to otherwise supervise the administration of this Plan. The Committee’s policies and procedures may differ with respect to Awards granted at different times or to different Participants.

Any determination made by the Committee pursuant to the provisions of this Plan shall be made in its sole discretion, and in the case of any determination relating to an Award, may be made at the time of the grant of the Award or, unless in contravention of any express terms of this Plan or Agreement, at any time thereafter. All decisions made by the Committee pursuant to the provisions of this Plan shall be final and binding on all persons, including the Company and Participants. Any determination shall not be subject to de novo review if challenged in court.

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ARTICLE IV

STOCK SUBJECT TO PLAN

4.1 Number of Shares. Subject to the adjustment under Section 4.6, the total number of shares of Common Stock reserved and available for distribution pursuant to Awards under this Plan shall be 1,700,000 shares of Common Stock authorized for issuance on the Effective Date, plus any unused shares under, or shares allocated by the Committee from, the Company’s Non-Employee Directors’ Stock Option Plan. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares.

4.2 Release of Shares. The Committee shall have full authority to determine the number of shares of Common Stock available for Award, and in its discretion may include (without limitation) as available for distribution any shares of Common Stock that have ceased to be subject to an Award, any shares of Common Stock subject to any Award that are forfeited, any Award that otherwise terminates without issuance of shares of Common Stock being made to the Participant, or any shares (whether or not restricted) of Common Stock that are received by the Company in connection with the exercise of an Award including the satisfaction of any tax liability or the satisfaction of a tax withholding obligation. If any shares could not again be available for Awards to a particular Participant under any applicable law, such shares shall be available exclusively for Awards to Participants who are not subject to such limitations.

4.3 Restrictions on Shares. Shares of Common Stock issued upon exercise of an Award shall be subject to the terms and conditions specified herein and to such other terms, conditions and restrictions as the Committee in its discretion may determine or provide in the Award Agreement. The Company shall not be required to issue or deliver any certificates for shares of Common Stock, cash or other property prior to (i) the listing of such shares on any stock exchange (or other public market) on which the Common Stock may then be listed (or regularly traded), (ii) the completion of any registration or qualification of such shares under federal or state law, or any ruling or regulation of any government body which the Committee determines to be necessary or advisable, and (iii) the satisfaction of any applicable withholding obligation in order for the Company or an Affiliate to obtain a deduction with respect to the exercise of an Award. The Company may cause any certificate for any share of Common Stock to be delivered to be properly marked with a legend or other notation reflecting the limitations on transfer of such Common Stock as provided in this Plan or as the Committee may otherwise require. The Committee may require any person exercising an Award to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares of Common Stock in compliance with applicable law or otherwise. Fractional shares shall not be delivered, but shall be rounded to the next lower whole number of shares.

4.4 Stockholder Rights. No person shall have any rights of a stockholder as to shares of Common Stock subject to an Award until, after proper exercise of the Award or

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other action required, such shares shall have been recorded on the Company’s official stockholder records as having been issued and transferred. Upon exercise of the Award or any portion thereof, the Company will have a reasonable time in which to issue the shares, and the Participant will not be treated as a stockholder for any purpose whatsoever prior to such issuance. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such shares are recorded as issued and transferred in the Company’s official stockholder records, except as provided herein or in an Agreement.

4.5 Best Efforts to Register. If there has been a Public Offering, the Company will register under the Securities Act the Common Stock delivered or deliverable pursuant to Awards on Commission Form S-8 if available to the Company for this purpose (or any successor or alternate form that is substantially similar to that form to the extent available to effect such registration), in accordance with the rules and regulations governing such forms, as soon as such forms are available for registration to the Company for this purpose. The Company will use its best efforts to cause the registration statement to become effective as soon as possible and will file such supplements and amendments to the registration statement as may be necessary to keep the registration statement in effect until the earliest of (a) one year following the expiration of the last relevant period of the last Award outstanding, (b) the date the Company is no longer a reporting company under the Exchange Act and (c) the date all Participants have disposed of all shares of Common Stock delivered pursuant to any Award. The Company may delay the foregoing obligation if the Committee reasonably determines that any such registration would materially and adversely affect the Company’s interests or if there is no material benefit to Participants.

4.6 Anti-Dilution. In the event of any Company stock dividend, stock split, combination or exchange of shares, recapitalization or other change in the capital structure of the Company, corporate separation or division of the Company (including, but not limited to, a split-up, spin-off, split-off or distribution to Company stockholders other than a normal cash dividend), sale by the Company of all or a substantial portion of its assets (measured on either a stand-alone or consolidated basis), reorganization, rights offering, a partial or complete liquidation, or any other corporate transaction, Company share offering or event involving the Company and having an effect similar to any of the foregoing, then the Committee may adjust or substitute, as the case may be, the number of shares of Common Stock available for Awards under this Plan, the number of shares of Common Stock covered by outstanding Awards, the exercise price per share of outstanding Awards, and any other characteristics or terms of the Awards as the Committee shall deem necessary or appropriate to reflect equitably the effects of such changes to the Participants; provided, however, that the Committee may limit any such adjustment so as to maintain the deductibility of the Awards under Section 162(m) of the Code, and that any fractional shares resulting from such adjustment shall be eliminated by rounding to the next lower whole number of shares with appropriate payment for such fractional share as shall reasonably be determined by the Committee.

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ARTICLE V

ELIGIBILITY

5.1 Eligibility. Except as herein provided, the persons who shall be eligible to participate in this Plan and be granted Awards shall be those persons who are officers, employees or consultants of the Company or any subsidiary, who shall be in a position, in the opinion of the Committee, to make contributions to the growth, management, protection and success of the Company and its subsidiaries. Of those persons described in the preceding sentence, the Committee may, from time to time, select persons to be granted Awards and shall determine the terms and conditions with respect thereto. In making any such selection and in determining the form of the Award, the Committee may give consideration to the functions and responsibilities of the person’s contributions to the Company and its subsidiaries, the value of the individual’s service to the Company and its subsidiaries and such other factors deemed relevant by the Committee. The Committee may designate any person who is not eligible to participate in this Plan if such person would otherwise be eligible to participate in this Plan (and members of the Committee are expressly excluded from participation to the extent necessary for purposes of Rule 16b-3, Section 162(m) of the Code or any other legal reason).

ARTICLE VI

STOCK OPTIONS

6.1 General. The Committee shall have authority to grant Options under this Plan at any time or from time to time. Stock Options may be granted alone or in addition to other Awards and may be either Incentive Stock Options or Non-Qualified Stock Options. An Option shall entitle the Participant to receive shares of Common Stock upon exercise of such Option, subject to the Participant’s satisfaction in full of any conditions, restrictions or limitations imposed in accordance with this Plan or an Agreement (the terms and provisions of which may differ from other Agreements) including without limitation, payment of the Option Price. During any three-calendar-year period, Options for no more than one-half of all shares of Common Stock available for grant under the Plan shall be granted to any Participant.

6.2 Grant and Exercise. The grant of a Stock Option shall occur as of the date the Committee determines. Each Option granted under this Plan shall be evidenced by an Agreement, in the form approved by the Committee, which shall embody the terms and conditions of such Option and which shall be subject to the express terms and conditions set forth in this Plan. Such Agreement shall become effective upon execution by the Participant. Only a person who is a common-law employee of the Company, any parent corporation of the Company or a subsidiary (as such terms are defined in Section 424 of the Code) on the Grant date shall be eligible to be granted an Option which is intended to be and is an Incentive Stock Option. To the extent that any Stock Option is not

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designated as an Incentive Stock Option or even if so designated does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.

6.3 Terms and Conditions. Stock Options shall be subject to such terms and conditions as shall be determined by the Committee, including the following:

(a) Option Period. The Option Period of each Stock Option shall be fixed by the Committee; provided that no Non-Qualified Stock Option shall be exercisable more than fifteen (15) years after the date the Stock Option is granted. In the case of an Incentive Stock Option, the Option Period shall not exceed ten (10) years from the date of grant or five (5) years in the case of an individual who owns more than ten percent (10%) of the combined voting power of all classes of stock of the Company, a corporation which is a parent corporation of the Company or any subsidiary of the Company (each as defined in Section 424 of the Code). No Option which is intended to be an Incentive Stock Option shall be granted more than ten (10) years from the date of this Plan is adopted by the Company or the date this Plan is approved by the stockholders of the Company, whichever is earlier.

(b) Option Price. The Option Price per share of the Common Stock purchasable under an Option shall be determined by the Committee. If such Option is intended to qualify as an Incentive Stock Option, the Option Price per share shall not be less than the Fair Market Value per share on the date the Option is granted, or where granted to an individual who owns or who is deemed to own stock possessing more than ten percent (10%) of the combined voting power of all classes of stock of the Company, a corporation which is a parent corporation of the Company or any subsidiary of the Company (each as defined in Section 424 of the Code), not less than one hundred ten percent (110%) of such Fair Market Value per share.

(c) Exercisability. Subject to Section 13.1, Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee. If the Committee provides that any Stock Option is exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part. In addition, the Committee may at any time accelerate the exercisability of any Stock Option. If the Committee intends that an Option be an Incentive Stock Option, the Committee shall, in its discretion, provide that the aggregate Fair Market Value (determined at the Grant Date) of Incentive Stock Option which is exercisable for the first time during the calendar year shall not exceed $100,000.

(d) Method of Exercise. Subject to the provisions of this Article VI, a Participant may exercise Stock Options, in whole or in part, at any time during the Option Period by the Participant’s giving written notice of exercise on a form provided by the Committee (if available) to the Company specifying the number of shares of Common Stock subject to the Stock Option to be purchased. Such

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notice shall be accompanied by payment in full of the purchase price by cash or check or such other form of payment as the Company may accept. If approved by the Committee (including approval at the time of exercise), payment in full or in part may also be made (i) by delivering Common Stock already owned by the Participant having a total Fair Market Value on the date of such delivery equal to the Option Price; (ii) by the execution and delivery of a note or other evidence of indebtedness (and any security agreement thereunder) satisfactory to the Committee and permitted in accordance with Section 6.3(e); (iii) by authorizing the Company to retain shares of Common Stock which would otherwise be issuable upon exercise of the Option having a total Fair Market Value on the date of delivery equal to the Option Price; (iv) by the delivery of cash or the extension of credit by a broker-dealer to whom the Participant has submitted a notice of exercise or otherwise indicated an intent to exercise an Option (in accordance with Part 220, Chapter II, Title 12 of the Code of Federal Regulations, so-called “cashless” exercise); (v) by certifying ownership of shares of Common Stock owned by the Participant to the satisfaction of the Committee for later delivery to the Company as specified by the Company; or (vi) by any combination of the foregoing. If payment of the Option Price of a Non-Qualified Stock Option is made in whole or in part in the form of Restricted Stock or Deferred Stock, the number of shares of Common Stock to be received upon such exercise equal to the number of shares of Restricted Stock or Deferred Stock used for payment of the Option Price shall be subject to the same forfeiture restrictions or deferral limitations to which such Restricted Stock or Deferred Stock was subject, unless otherwise determined by the Committee. In the case of an Incentive Stock Option, the right to make a payment in the form of already owned shares of Common Stock of the same class as the Common Stock subject to the Stock Option may be authorized only at the time the Stock Option is granted. No shares of Common Stock shall be issued until full payment therefor, as determined by the Committee, has been made. Subject to any forfeiture restrictions or deferral limitations that may apply if a Stock Option is exercised using Restricted Stock or Deferred Stock, a Participant shall have all of the rights of a stockholder of the Company holding the class of Common Stock that is subject to such Stock Option (including, if applicable, the right to vote the shares and the right to receive dividends), when the Participant has given written notice of exercise, has paid in full for such shares and such shares have been recorded on the Company’s official stockholder records as having been issued and transferred.

(e) Company Loan or Guarantee. Upon the exercise of any Option and subject to pertinent Agreement and the discretion of the Committee, the Company may at the request of the Participant:

(i)

lend to the Participant, an amount equal to such portion of the Option Price as the Committee may determine; or

(ii)

guarantee a loan obtained by the Participant from a third party for the purpose of tendering the Option Price.

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The terms and conditions of any loan or guarantee, including the term, interest rate, whether the loan is with recourse against the Participant and any security interest thereunder, shall be determined by the Committee, except that no extension of credit or guarantee shall obligate the Company for an amount to exceed the lesser of the aggregate Fair Market Value per share of the Common Stock on the date of exercise, less the par value of the shares of Common Stock to be purchased upon the exercise of the Award, or the amount permitted under applicable laws or the regulations and rules of the Federal Reserve Board and any other governmental agency having jurisdiction.

(f) Non-transferability of Options. Except as provided herein or in an Agreement and then only consistent with the intent that the Option be an Incentive Stock Option, no Stock Option or interest therein shall be transferable by the Participant other than by will or by the laws of descent and distribution or by a designation of beneficiary effective upon the death of the Participant, and all Stock Options shall be exercisable during the Participant’s lifetime only by the Participant. If and to the extent transferability is permitted by Rule 16b-3 and except as otherwise provided herein or by an Agreement, every Option granted hereunder shall be freely transferable, but only if such transfer does not result in liability under Section 16 of the Exchange Act to the Participant or other Participants and is consistent with registration of the Option and sale of Common Stock on Form S-8 (or a successor form) or the Committee’s waiver of such condition.

6.4 Termination by Reason of Death. Unless otherwise provided in an Agreement or determined by the Committee, if a Participant incurs a Termination of Employment due to death, any unexpired and unexercised Stock Option held by such Participant shall thereafter be fully exercisable for a period of one (1) year (or such other period or no period as the Committee may specify) immediately following the date of such death or until the expiration of the Option Period, whichever period is the shorter.

6.5 Termination by Reason of Disability. Unless otherwise provided in an Agreement or determined by the Committee, if a Participant incurs a Termination of Employment due to a Disability, any unexpired and unexercised Stock Option held by such Participant shall thereafter be fully exercisable by the Participant for the period of one (1) year (or such other period or no period as the Committee may specify) immediately following the date of such Termination of Employment or until the expiration of the Option Period, whichever period is shorter, and the Participant’s death at any time following such Termination of Employment due to Disability shall not affect the foregoing. In the event of Termination of Employment by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option.

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6.6 Other Termination. Unless otherwise provided in an Agreement or determined by the Committee, if a Participant incurs a Termination of Employment due to Retirement, or the Termination of Employment is involuntary on the part of the Participant (but is not due to death, Disability or with Cause), any Stock Option held by such Participant shall thereupon terminate, except that such Stock Option, to the extent then exercisable, may be exercised for the lesser of the three-month period commencing with the date of such Termination of Employment or until the expiration of the Option Period. Unless otherwise provided in an Agreement or determined by the Committee, if the Participant incurs a Termination of Employment which is either (a) voluntary on the part of the Participant (and is not due to Retirement) or (b) with Cause, the Option shall terminate immediately. Unless otherwise provided in an Agreement or determined by the Committee, the death or Disability of a Participant after a Termination of Employment otherwise provided herein shall not extend the exercisability of the time permitted to exercise an Option.

6.7 Cashing Out of Option. On receipt of written notice of exercise, the Committee may elect to cash out all or part of the portion of any Stock Option by paying the Participant an amount, in cash or Common Stock, equal to the excess of the Fair Market Value of the Common Stock that is subject to the Option over the Option Price times the number of shares of Common Stock subject to the Option on the effective date of such cash out.

ARTICLE VII

STOCK APPRECIATION RIGHTS

7.1 General. The Committee shall have authority to grant Stock Appreciation Rights under this Plan at any time or from time to time. Subject to the Participant’s satisfaction in full of any conditions, restrictions or limitations imposed in accordance with this Plan or an Agreement, a Stock Appreciation Right shall entitle the Participant to surrender to the Company the Stock Appreciation Right and to be paid therefor in shares of the Common Stock, cash or a combination thereof as herein provided, the amount described in Section 7.3(b).

7.2 Grant. Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option granted under this Plan in which case the exercise of the Stock Appreciation Right shall require the cancellation of a corresponding portion of the Stock Option, and the exercise of the Stock Option will result in cancellation of a corresponding portion of the Stock Appreciation Right. In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of grant of such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such Stock Option. A Stock Appreciation Right may also be granted on a stand-alone basis. The grant of a Stock Appreciation Right shall occur as of the date the Committee determines. Each Stock Appreciation Right granted under this Plan shall be evidenced by an Agreement, which shall embody the terms and conditions of such Stock Appreciation Right and which shall be subject to the terms and conditions set forth

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in this Plan. During any three-calendar-year period, no more Stock Appreciation Rights shall be granted to any Participant than the number of Options that may be granted to any Participant under Section 6.1.

7.3 Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Committee, including the following:

(a) Period and Exercise. The term of a Stock Appreciation Right shall be established by the Committee. If granted in conjunction with a Stock Option, the Stock Appreciation Right shall have a term which is the same as the Option Period and shall be exercisable only at such time or times and to the extent the related Stock Options would be exercisable in accordance with the provisions of Article VI. A Stock Appreciation Right which is granted on a stand alone basis shall be for such period and shall be exercisable at such times and to the extent provided in an Agreement. Stock Appreciation Rights shall be exercised by the Participant’s giving written notice of exercise on a form provided by the Committee (if available) to the Company specifying the portion of the Stock Appreciation Right to be exercised.

(b) Amount. Upon the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in cash, shares of Common Stock or both as determined by the Committee or as otherwise permitted in an Agreement equal in value to the excess of the Fair Market Value per share of Common Stock over the Option Price per share of Common Stock specified in the related Agreement multiplied by the number of shares in respect of which the Stock Appreciation Right is exercised. In the case of a Stock Appreciation Right granted on a stand-alone basis, the Agreement shall specify the value to be used in lieu of the Option Price per share of Common Stock. The aggregate Fair Market Value per share of the Common Stock shall be determined as of the date of the exercise of such Stock Appreciation Right.

(c) Special Rules. In the case of Stock Appreciation Rights relating to Stock Options held by Participants who are actually or potentially subject to Section 16(b) of the Exchange Act to the extent required by Rule 16b-3:

(i)

The Committee may require that such Stock Appreciation Rights be exercised only in accordance with the provisions of Rule 16b-3; and

(ii)

The Committee may provide that the amount to be paid upon exercise of such Stock Appreciation Rights (other than those relating to Incentive Stock Options) shall be based on the highest mean sales price of the Common Stock on the principal exchange on which the Common Stock is traded, NASDAQ or other relevant market for determining value; and

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(d) Non-transferability of Stock Appreciation Rights. Stock Appreciation Rights shall be transferable only when and to the extent that a Stock Option would be transferable under this Plan unless otherwise provided in an Agreement.

(e) Termination. A Stock Appreciation Right shall terminate at such time as a Stock Option would terminate under this Plan, unless otherwise provided in an Agreement.

(f) Effect on Shares Under this Plan. To the extent required by Rule 16b-3, upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Section 4.2 on the number of shares of Common Stock to be issued under this Plan, but only to the extent of the number of shares of Common Stock covered by the Stock Appreciation Right at the time of exercise based on the value of the Stock Appreciation Right at such time.

(g) Incentive Stock Option. A Stock Appreciation Right granted in tandem with an Incentive Stock Option shall not be exercisable unless the Fair Market Value of the Common Stock on the date of exercise exceeds the Option Price. In no event shall any amount paid pursuant to the Stock Appreciation Right exceed the difference between the Fair Market Value on the date of exercise and the Option Price.

ARTICLE VIII

RESTRICTED STOCK

8.1 General. The Committee shall have authority to grant Restricted Stock under this Plan at any time or from time to time. Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under this Plan. The Committee shall determine the persons to whom and the time or times at which grants of Restricted Stock will be awarded, the number of shares of Restricted Shares to be awarded to any Participant, the time or times within which such Awards may be subject to forfeiture and any other terms and conditions of the Awards. Each Award shall be confirmed by, and be subject to the terms of, an Agreement. The Committee may condition the grant of Restricted Stock upon the attainment of specified performance goals by the Participant or by the Company or an Affiliate (including a division or department of the Company or an Affiliate) for or within which the Participant is primarily employed or upon such other factors or criteria as the Committee shall determine. The provisions of Restricted Stock Awards need not be the same with respect to any Participant.

8.2 Awards and Certificates. Notwithstanding the limitations on issuance of shares of Common Stock otherwise provided in this Plan, each Participant receiving an Award of Restricted Stock shall be issued a certificate in respect of such shares of

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Restricted Stock. Such certificate shall be registered in the name of such Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award as determined by the Committee. The Committee may require that the certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of Restricted Stock, the Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award.

8.3 Terms and Conditions. Shares of Restricted Stock shall be subject to the following terms and conditions:

(a) Limitations on Transferability. The purchase price for shares of Restricted Stock shall be set by the Committee and may be zero. Subject to the provisions of this Plan and the Agreement, during a period set by the Committee, commencing with the date of such Award (the “Restriction Period”), the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber any interest in shares of Restricted Stock. Unless otherwise determined by the Committee, awards of Restricted Stock must be accepted by a Participant within a period of 60 days (or such shorter periods as the Committee may specify at grant) after the Grant Date, by executing a Restricted Stock Agreement and paying whatever price, if any, is required. The Participant shall not have any rights with respect to such Award, unless and until such Participant has executed an agreement evidencing the Award and has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of such award.

(b) Rights. Except as provided in Section 8.3(a), the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a stockholder of the Company holding the class of Common Stock that is the subject of the Restricted Stock, including, if applicable, the right to vote the shares and the right to receive any cash dividends. Unless otherwise determined by the Committee and subject to this Plan, cash dividends on the class of Common Stock that is the subject of the Restricted Stock shall be automatically deferred and reinvested in additional Restricted Stock, and dividends on the class of Common Stock that is the subject of the Restricted Stock payable in Common Stock shall be paid in the form of Restricted Stock of the same class as the Common Stock on which such dividend was paid.

(c) Criteria. Based on service, performance by the Participant or by the Company or the Affiliate, including any division or department for which the Participant is employed or such other factors or criteria as the Committee may determine, the Committee may provide for the lapse of restrictions in installments and may accelerate the vesting of all or any

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part of any Award and waive the restrictions for all or any part of such Award.

(d) Forfeiture. Unless otherwise provided in an Agreement or determined by the Committee, if the Participant incurs a Termination of Employment during the Restriction Period due to death or Disability, the restrictions shall lapse and the Participant shall be fully vested in the Restricted Stock. Except to the extent otherwise provided in the applicable Agreement and this Plan, upon a Participant’s Termination of Employment for any reason during the Restriction Period other than death or Disability, all shares of Restricted Stock still subject to restriction shall be forfeited by the Participant, except the Committee shall have the discretion to waive in whole or in part any or all remaining restrictions with respect to any or all of such Participant’s shares of Restricted Stock.

(e) Delivery. If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock subject to such Restriction Period, unlegended certificates for such shares shall be delivered to the Participant.

(f) Election. A Participant may elect to further defer receipt of the Restricted Stock for a specified period or until a specified event, subject in each case to the Committee’s approval and to such terms as are determined by the Committee. Subject to any exceptions adopted by the Committee, such election must be made one (1) year prior to completion of the Restriction Period.

ARTICLE IX

DEFERRED STOCK

9.1 General. The Committee shall have authority to grant Deferred Stock under this Plan at any time or from time to time. Shares of Deferred Stock may be awarded either alone or in addition to other Awards granted under this Plan. The Committee shall determine the persons to whom and the time or times at which Deferred Stock will be awarded, the number of shares of Deferred Stock to be awarded to any Participant, the duration of the period (the “Deferral Period”) prior to which the Common Stock will be delivered, and the conditions under which receipt of the Common Stock will be deferred and any other terms and conditions of the Awards. Each Award shall be confirmed by, and be subject to the terms of, an Agreement. The Committee may condition the grant of Deferred Stock upon the attainment of specified performance goals by the Participant or by the Company or an Affiliate, including a division or department of the Company or an Affiliate for or within which the Participant is primarily employed or upon such other factors or criteria as the Committee shall determine. The provisions of Deferred Stock Awards need not be the same with respect to any Participant.

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9.2 Terms and Conditions. Deferred Stock Awards shall be subject to the following terms and conditions.

(a) Limitations on Transferability. Subject to the provisions of this Plan and except as may otherwise be provided in an Agreement, neither Deferred Stock Awards, nor any interest therein, may be sold, assigned, transferred, pledged or otherwise encumbered during the Deferral Period. At the expiration of the Deferral Period (or Elective Deferral Period as defined in Section 9.2(e), where applicable), the Committee may elect to deliver Common Stock, cash equal to the Fair Market Value of such Common Stock or a combination of cash and Common Stock, to the Participant for the shares covered by the Deferred Stock Award.

(b) Rights. Unless otherwise determined by the Committee and subject to this Plan, cash dividends on the Common Stock that is the subject of the Deferred Stock Award shall be automatically deferred and reinvested in additional Deferred Stock, and dividends on the Common Stock that is the subject of the Deferred Stock Award payable in Common Stock shall be paid in the form of Deferred Stock of the same class as the Common Stock on which such dividend was paid.

(c) Criteria. Based on service, performance by the Participant or by the Company or the Affiliate, including any division or department for which the Participant is employed or such other factors or criteria as the Committee may determine, the Committee may provide for the lapse of deferral limitations in installments and may accelerate the vesting of all or any part of any Award and waive the deferral limitations for all or any part of such Award.

(d) Forfeiture. Unless otherwise provided in an Agreement or determined by the Committee, if the Participant incurs a Termination of Employment during the Deferral Period due to death or Disability, the restrictions shall lapse and the Participant shall be fully vested in the Deferred Stock. Unless otherwise provided in an Agreement or determined by the Committee, upon a Participant’s Termination of Employment for any reason during the Deferral Period other than death or Disability, the rights to the shares still covered by the Award shall be forfeited by the Participant, except the Committee shall have the discretion to waive in whole or in part any or all remaining deferral limitations with respect to any or all of such Participant’s Deferred Stock.

(e) Election. A Participant may elect to further defer receipt of the Deferred Stock payable under an Award (or an installment of an Award) for a specified period or until a specified event, subject in each case to the Committee’s approval and to such terms as are determined by the Committee. Subject to any exceptions adopted by the Committee, such election must be made at one (1) year prior to completion of the Deferral Period for the Award.

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ARTICLE X

PERFORMANCE SHARES

10.1 General. Subject to the terms and conditions described below, Performance Shares may be granted to any Participant at any time and from time to time as determined by the Committee. The Committee shall have complete discretion in determining the number of Performance Shares granted to each Participant; provided, however, that no Participant who is a Covered Employee may earn more than one half the number of shares of Common Stock reserved under the Plan as Performance Shares with respect to any Performance Period (as defined below).

10.2 Price. The purchase price for Performance Shares shall be zero unless otherwise specified by the Committee.

10.3 Performance Share Agreement. Subject to the provisions of this Plan, all the terms and conditions of an Award of Performance Shares shall be determined by the Committee in its discretion and shall be confirmed by a Performance Share Award Agreement which shall be executed by the Company and the Participant. Not later than the date required or permitted for “qualified performance-based compensation” under Code Section 162(m), the Committee shall determine the Participants who are Covered Employees who will potentially receive individual Performance Share Awards for the Performance Period and the amount or method for determining the amount of such Participant’s number of Performance Shares.

10.4 Performance Periods. Any time period (the “Performance Period”) relating to a Performance Share Award (commencing with the Grant Date) shall be at least two calendar or Company fiscal years in length unless otherwise provided by the Committee.

10.5 Performance Goals. Not later than the date required or permitted for “qualified performance-based compensation” under Section 162(m), the Committee shall establish in writing the performance goals (“Performance Goals”) for such Performance Period, which shall be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, as the Committee may determine: sales, net asset turnover, earnings per share, cash flow, cash flow from operations, operating profit or income, net income, operating margin, net income margin, return on net assets, return on total assets, return on common equity, return on total capital, and total shareholder return. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify; extraordinary, unusual or nonrecurring items; effects of accounting changes; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiates; other non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation activities and settlements.

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Any such performance criterion or combination of such criteria may apply to the Participant’s Award opportunity in its entirety or to any designated portion or portions of the Award opportunity, as the Committee may specify. Unless the Committee determines otherwise for any Performance Period, extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the Award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the correspondence performance goal has been achieved, whichever will produce the higher Award. The Committee may, in its discretion, vary the terms and conditions of any Performance Share Award, including, without limitation, the Performance Period and Performance Goals, without shareholder approval, as applied to any recipient who is not a Covered Employee with respect to the Company. In the event applicable tax or securities laws change to permit the Committee discretion to alter the governing performance measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.

10.6 Earning of Performance Shares. After the applicable Performance Period shall have ended, the Committee shall certify the extent to which the established Performance Goals have been achieved. The retention of Performance Shares shall be a direct function of the extent to which the Company’s Performance Goals have been achieved. A Participant may earn more or less than the number of Performance Shares originally awarded, or no Performance Shares at all. Performance Shares shall be paid in the form of Company Stock. Unrestricted certificates representing such number of shares of Common Stock as equals the number of Performance Shares earned under the Award shall be delivered to the Participant as soon as practicable after the end of the applicable Performance Period. Participants shall also be entitled to any dividends or other distributions that have been or would have been paid or earned in respect of such shares of Common Stock during the period from the initial award date to the final payout on the Performance Shares, and may be paid in the form of Common Stock. Unless otherwise provided, in its discretion, by the Committee, any such dividends or other distributions shall not bear interest. All determinations by the Committee as to the establishment of Performance Goals and potential Awards related to such Performance Goals and as to the achievement of Performance Goals relating to such Awards, and the number of any Performance Shares shall be made in writing in the case of any Award intended to qualify under Code Section 162(m). The Committee may not delegate any responsibility relating to such Awards.

10.7 Termination of Employment Due to Death, Disability or Retirement or at the Request of the Company Without Cause. In the event of an Extraordinary Termination of Employment or a Termination of Employment by the Company without Cause during a Performance Period, the Participant shall receive a prorated payout with respect to the Performance Shares relating to such Performance Period. The prorated payout shall be determined by the Committee, in its sole discretion, and shall be based upon the length of time that the Participant held the Performance Shares during the Performance Period and based upon the achievement of the established Performance Goals. Distribution of earned Performance Shares shall be made at the same time

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payments are made to Participants who did not incur a Termination of Employment during the applicable Performance Period.

10.8 Termination of Employment for Other Reasons. In the event that a Participant’s employment terminates for any reason other than those reasons set forth in Section 10.7, all Performance Shares shall be forfeited by the Participant to the Company.

10.9 Non-transferability. Unless otherwise provided in an Agreement, Performance Shares may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, a Participant’s rights under the Plan shall be exercisable during the Participant’s lifetime only by the Participant or a Representative.

ARTICLE XI

ANNUAL INCENTIVE AWARDS

11.1 Eligibility. Participants designated by the Committee shall be eligible for an Annual Incentive Award, the amount of which will be based on the satisfaction of specified bonus targets (“Award Targets”). Not later than the date required as permitted for “qualified performance-based compensation” under Code, Section 162(m), the Committee shall establish in writing (i) the Award Targets and (ii) the Annual Incentive Awards which may be earned by Participants, based upon the extent to which the Award Targets are achieved (“Award Opportunities”). The Award Targets and Award Opportunities shall be confirmed in Agreements between the Company and the Participants. The Award Targets shall be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, as the Committee may determine: sales, net asset turnover, earnings per share, cash flow, cash flow from operations, operating profit or income, net income, operating margin, net income margin, return on net assets, return on total assets, return on common equity, return on total capital, and total shareholder return. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items; effects of accounting changes; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiates; other non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation activities and settlements. Any such performance criterion or combination of such criteria may apply to the Participant’s Award opportunity in its entirety or to any designated portion or portions of the Award opportunity, as the Committee may specify. Unless the Committee determines otherwise for any Performance Period, extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the Award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the corresponding performance goal has been achieved, whichever will produce the higher Award. The Committee may specify the amount of the individual Award as a percentage of such business criteria, a percentage thereof in excess of a threshold amount, or another amount which need not bear a strictly

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mathematical relationship to such relationship criteria. With respect to any Performance Period, the Committee may establish an aggregate limit or individual with respect to the value of the Awards.

11.2 Earning of Annual Incentive Awards. After the applicable fiscal year shall have ended, the Committee shall certify in writing, the extent to which the established Award Targets have been achieved. The Committee may, in its discretion, determine that the amount payable to any Participant as a final Annual Incentive Award shall be increased or reduced from the amount of his or her potential Bonus Award, including a determination to make no final Award whatsoever, but the Committee may not exercise discretion to increase any such amount in the case of an individual Award with respect to a Covered Employee intended to qualify under Code Section 162(m). Unless otherwise determined by the Committee, during a Performance Period, an Award shall be payable under this Plan to the Participant who incurs an Extraordinary Termination of Employment or a Termination of Employment by the Company without cause, which shall be adjusted, pro rata, for the period of time during the year the Participant actually worked. Unless otherwise provided by the Committee, a Participant who incurs a Termination of Employment other than an Extraordinary Termination of employment or a Termination of Employment by the Company with Cause prior to the end of the Performance Period shall not be entitled to any Award under the Performance Period. Subsequently, the Committee shall calculate the Annual Incentive Award (if any) for each Participant, based upon the Award Opportunities established by the Committee prior to the beginning of the applicable year. Each Annual Incentive Award shall be solely a function of the degree to which the established Award Targets have been achieved.

11.3 Payments and Election. Participants may elect to receive Annual Incentive payouts in cash, Common Stock, Deferred Stock, Restricted Stock or a combination of the foregoing, provided that any election for payment in Common Stock is subject to the approval of the Committee. Payouts with respect to a fiscal year will be made within seventy-five (75) days of the end of such year. To elect the payout of a portion of an Annual Incentive Award in Common Stock, a Participant must inform the Committee in writing prior to the start of the fiscal year with respect to which payout would be made or at such other time as the Committee may permit. Unless modified by the Committee before the beginning of a fiscal year of the Company, terms and conditions of Deferred or Restricted Stock payouts shall include the following:

(a) Any portion of an Annual Incentive Award can be elected for payout in Deferred or Restricted Stock, either in a dollar amount or as a percentage of the total Annual Incentive Award.

(b) Deferred or Restricted Stock will be issued on the same date that cash payouts would be made, based on the closing price of the Common Stock as of the date of the award (“Closing Price”) on the principal exchange on which the Common Stock shall then be listed or quoted.

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(c) Deferred or Restricted Stock will be issued pursuant to, and shall be subject to, the terms and conditions contained in this Plan. Unless otherwise agreed, the Deferral Period or Restriction Period, respectively, will be for a period determined by the Committee of at least three (3) years in duration, after which time the Common Stock will be distributed or released to the Participant.

(d) The number of shares of Deferred Stock or Restricted Stock granted to a Participant will equal the product of (A) such number of shares of Common Stock as have an aggregate closing price equal to the dollar amount of the Annual Incentive Award elected to be received in the form of Deferred Stock or Restricted Stock, multiplied by (B) a factor greater than 1.00 but less than or equal to 1.30, as determined by the Committee prior to the beginning of the Company’s applicable fiscal year.

(e) If the Participant incurs a Termination of Employment by reason of death, Disability, or Retirement or by the Company without Cause, the Committee, at its discretion, may provide for waiver of all, or a portion of the deferrals or restrictions applicable to such Awards. If the Participant incurs a Termination of Employment for any other reason, the shares of Deferred or Restricted Stock may be forfeited.

11.4 Amendment of Awards. The Committee has discretion, subject to the Plan’s constituting a plan of performance-based compensation under Code Section 162(m), to vary the terms and conditions of any Annual Incentive Award, including, without limitation, the Award Targets, without shareholder approval, as applied to any Participant who is not a “covered employee” with respect to the Company as defined in Section 162(m) of the Code.

11.5 Performance Threshold. The Committee may establish minimum levels of Company performance which must be achieved during a fiscal year before any Annual Incentive Awards shall be paid to Participants.

11.6 Maximum Awards. The Committee may establish guidelines governing the maximum Annual Incentive Awards that may be earned by Participants (either in the aggregate, by employee class or among individual Participants), provided that no Participant may receive an Annual Incentive Award in an amount (including the value of any Common Stock constituting any portion of such Annual Incentive Awards) of greater than $1,500,000 with respect to any fiscal year of the Company.

ARTICLE XII

PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THIS PLAN

12.1 Limited Transfer During Offering. In the event there is an effective registration statement under the Securities Act pursuant to which shares of Common Stock shall be offered for sale in an underwritten offering, a Participant shall not, during

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the period requested by the underwriters managing the registered public offering, effect any public sale or distribution of shares received directly or indirectly pursuant to an exercise of an Award.

12.2 No Company Obligation. None of the Company, an Affiliate or the Committee shall have any duty or obligation to affirmatively disclose to a record or beneficial holder of Common Stock or an Award, and such holder shall have no right to be advised of any material information regarding the Company or any Affiliate at any time prior to, upon or in connection with receipt or the exercise of an Award or the Company’s purchase of Common Stock or an Award from such holder in accordance with the terms hereof.

ARTICLE XIII

CHANGE IN CONTROL PROVISIONS

13.1 Impact of Event. Notwithstanding any other provision of this Plan to the contrary, in the event of a Change in Control (as defined in Section 13.2), the Committee shall have full discretion, notwithstanding anything herein or in an Agreement to the contrary, to do any or all of the following with respect to an outstanding Award:

(a) to provide that the Stock Options and Stock Appreciation Rights outstanding as of the date of the Change in Control which are not then exercisable shall become fully exercisable to the full extent of the original grant;

(b) to provide that the restrictions and deferral limitations applicable to any Restricted Stock, Deferred Stock or other Award shall lapse, and such Restricted Stock, Deferred Stock or other Award shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant;

(c) to deem any performance goal or other condition with respect to any Performance Shares or Annual Incentive Award to have been satisfied in full, and such Award shall be fully distributable;

(d) to cause any Award to be cancelled, provided notice of at least 15 days thereof is provided before the date of cancellation;

(e) to provide that the securities of another entity be substituted hereunder for the Common Stock and to make equitable adjustment with respect thereto;

(f) to grant the Participant the right to elect by giving notice during a set period of time from and after a Change in Control to surrender all or part of a stock-based Award to the Company and to receive cash in an amount equal to the

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amount by the “Change in Control Price” (as defined in Section 13.3) per share of the Common Stock on the date of the election exceeds the amount the Participant must pay to exercise the Award per share of Common Stock under the Award (the “Spread”) multiplied by the number of shares of Common Stock granted under the Award; and

(g) to take any other action the Committee determines to take.

13.2 Definition of Change in Control. For purposes of this Plan, a “Change in Control” shall mean the happening of any of the following events:

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (iv) any acquisition by a lender to the Company pursuant to a debt restructuring of the Company, or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 13.2;

(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

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Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then-outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination, or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

13.3 Change in Control Price. For purposes of this Plan, “Change in Control Price” means the higher of (a) the highest reported sales price of a share of Common Stock in any transaction reported on the principal exchange on which such shares are listed or on NASDAQ during the 60-day period prior to and including the date of a Change in Control or (b) if the Change in Control is the result of a tender or exchange offer or a Corporate Transaction, the highest price per share of Common Stock paid in such tender or exchange offer or a Corporate Transaction, except that, in the case of Incentive Stock Options and Stock Appreciation Rights relating to Incentive Stock Options, such price shall be based only on the Fair Market Value of the Common Stock on the date such Incentive Stock Option or Stock Appreciation Right is exercised. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined in the sole discretion of the Committee.

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ARTICLE XIV

MISCELLANEOUS

14.1 Amendments and Termination. The Board may amend, alter or discontinue the Plan at any time, but no amendment, alteration or discontinuation shall be made which would impair the rights of a Participant under an Award theretofore granted without the Participant’s consent, except such an amendment (a) made to avoid an expense charge to the Company or an Affiliate, (b) made to cause the Plan to qualify for the exemption provided by Rule 16b-3, or (c) made to permit the Company or an Affiliate a deduction under the Code. In addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by law or agreement. The Committee may amend, alter or discontinue the terms of any Award theretofore granted, prospectively or retroactively, on the same conditions and limitations (and exceptions to limitations) as the Board and further subject to any approval or limitations the Board may impose.

Notwithstanding anything in the Plan to the contrary, if any right under this Plan would cause a transaction to be ineligible for pooling of interest accounting that would, but for the right hereunder, be eligible for such accounting treatment, the Committee may modify or adjust the right so that pooling of interest accounting shall be available, including the substitution of Common Stock having a Fair Market Value equal to the cash otherwise payable hereunder for the right which caused the transaction to be ineligible for pooling of interest accounting.

14.2 Unfunded Status of Plan. It is intended that this Plan be an “unfunded” plan for incentive and deferred compensation. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under this Plan to deliver Common Stock or make payments; provided, however, that, unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of this Plan.

14.3 Status of Awards Under Code Section 162(m). It is the intent of the Company that Awards granted to persons who are Covered Employees within the meaning of Code Section 162(m) shall constitute “qualified performance-based compensation” satisfying the requirements of Code Section 162(m). Accordingly, the provisions of the Plan shall be interpreted in a manner consistent with Code Section 162(m). If any provision of the Plan or any agreement relating to such an Award does not comply or is inconsistent with the requirements of Code Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements.

14.4 General Provisions.

(a) Representation. The Committee may require each person purchasing or receiving shares pursuant to an Award to represent to and agree

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with the Company in writing that such person is acquiring the shares without a view to the distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

(b) No Additional Obligation. Nothing contained in this Plan shall prevent the Company or an Affiliate from adopting other or additional compensation arrangements for its employees.

(c) Withholding. No later than the date as of which an amount first becomes includible in the gross income of the Participant for Federal income tax purposes with respect to any Award, the Participant shall pay to the Company (or other entity identified by the Committee), or make arrangements satisfactory to the Company or other entity identified by the Committee regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount required in order for the Company or an Affiliate to obtain a current deduction. To the extent permitted by the Committee, withholding obligations may be settled with Common Stock, including Common Stock that is part of the Award that gives rise to the withholding requirement provided that any applicable requirements under Section 16 of the Exchange Act are satisfied. The obligations of the Company under this Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant. If the Participant disposes of shares of Common Stock acquired pursuant to an Incentive Stock Option in any transaction considered to be a disqualifying transaction under the Code, the Participant must give written notice of such transfer and the Company shall have the right to deduct any taxes required by law to be withheld from any amounts otherwise payable to the Participant.

(d) Reinvestment. The reinvestment of dividends in additional Deferred or Restricted Stock at the time of any dividend payment shall only be permissible if sufficient shares of Common Stock are available for such reinvestment (taking into account then outstanding Options and other Awards).

(e) Representation. The Committee shall establish such procedures as it deems appropriate for a Participant to designate a Representative to whom any amounts payable in the event of the Participant’s death are to be paid.

(f) Controlling Law. This Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware (other than its law respecting choice of law). This Plan shall be construed to comply with all applicable law, and to avoid liability to the Company, an Affiliate or a Participant, including, without limitation, liability under Section 16(b) of the Exchange Act.

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(g) Offset. Any amounts owed to the Company or an Affiliate by the Participant of whatever nature may be offset by the Company from the value of any shares of Common Stock, cash or other thing of value under this Plan or an Agreement to be transferred to the Participant, and no shares of Common Stock, cash or other thing of value under this Plan or an Agreement shall be transferred unless and until all disputes between the Company and the Participant have been fully and finally resolved and the Participant has waived all claims to such against the Company or an Affiliate.

(h) Fail-Safe. With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3), as applicable. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. Moreover, in the event the Plan does not include a provision required by Rule 16b-3 or Rule 16a-1(c)(3) to be stated herein, such provision (other than one relating to eligibility requirements or the price and amount of Awards) shall be deemed to be incorporated by reference into the Plan with respect to Participants subject to Section 16.

(i) Right to Capitalize. The grant of an Award shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidation, dissolve, liquidate or sell or transfer all or any part of its business or assets.

14.5 Mitigation of Excise Tax. Subject to any other agreement between the Participant and the Company or an Affiliate, if any payment or right accruing to a Participant under this Plan (without the application of this Section 14.5), either alone or together with other payments or rights accruing to the Participant from the Company or an Affiliate (“Total Payments”) would constitute a “parachute payment” (as defined in Section 280G of the Code and regulations thereunder), such payment or right shall be reduced to the largest amount or greatest right that will result in no portion of the amount payable or right accruing under this Plan being subject to an excise tax under Section 4999 of the Code or being disallowed as a deduction under Section 280G of the Code. The determination of whether any reduction in the rights or payments under this Plan is to apply shall be made by the Committee in good faith after consultation with the Participant, and such determination shall be conclusive and binding on the Participant. The Participant shall cooperate in good faith with the Committee in making such determination and providing the necessary information for this purpose. The foregoing provisions of this Section 14.5 shall apply with respect to any person only if after reduction for any applicable federal excise tax imposed by Section 4999 of the Code and federal income tax imposed by the Code, the Total Payments accruing to such person would be less than the amount of the Total Payments as reduced, if applicable, under the foregoing provisions of this Plan and after reduction for only federal income taxes.

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14.6 Rights with Respect to Continuance of Employment. Nothing contained herein shall be deemed to alter the relationship between the Company or an Affiliate and a Participant, or the contractual relationship between a Participant and the Company or an Affiliate if there is a written contract regarding such relationship. Nothing contained herein shall be construed to constitute a contract of employment between the Company or an Affiliate and a Participant. The Company or an Affiliate and each of the Participants continue to have the right to terminate the employment or service relationship at any time for any reason, except as provided in a written contract. The Company or an Affiliate shall have no obligation to retain the Participant in its employ or service as a result of this Plan. There shall be no inference as to the length of employment or service hereby, and the Company or an Affiliate reserves the same rights to terminate the Participant’s employment or service as existed prior to the individual becoming a Participant in this Plan.

14.7 Awards in Substitution for Awards Granted by Other Corporations. Awards may be granted under this Plan from time to time in substitution for awards in respect of other plans of other entities. The terms and conditions of the Awards so granted may vary from the terms and conditions set forth in this Plan at the time of such grant as the majority of the members of the Committee may deem appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which they are granted.

14.8 Procedure for Adoption. Any Affiliate of the Company may by resolution of such Affiliate’s board of directors, with the consent of the Board of Directors and subject to such conditions as may be imposed by the Board of Directors, adopt this Plan for the benefit of its employees as of the date specified in the board resolution.

14.9 Procedure for Withdrawal. Any Affiliate which has adopted this Plan may, by resolution of the board of directors of such direct or indirect subsidiary, with the consent of the Board of Directors and subject to such conditions as may be imposed by the Board of Directors, terminate its adoption of this Plan.

14.10 Delay. If at the time a Participant incurs a termination of Employment (other than due to Cause) or if at the time of a Change in Control, the Participant is subject to “short-swing” liability under Section 16 of the Exchange Act, any time period provided for under this Plan or an Agreement to the extent necessary to avoid the imposition of liability shall be suspended and delayed during the period the Participant would be subject to such liability, but not more than six (6) months and one (1) day and not to exceed the Option Period, or the period for exercise of a Stock Appreciation Right as provided in the Agreement, whichever is shorter. The Company shall have the right to suspend or delay any time period described in this Plan or an Agreement if the Committee shall determine that the action may constitute a violation of any law or result in liability under any law to the Company, an Affiliate or a stockholder of the Company until such time as the action required or permitted shall not constitute a violation of law or result in liability to the Company, an Affiliate or a stockholder of the Company. The Committee shall have the discretion to suspend the application of the provisions of this

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Plan required solely to comply with Rule 16b-3 if the Committee shall determine that Rule 16b-3 does not apply to this Plan.

14.11 Headings. The headings contained in this Plan are for reference purposes only and shall not affect the meaning or interpretation of this Plan.

14.12 Severability. If any provision of this Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereby, and this Plan shall be construed as if such invalid or unenforceable provision were omitted.

14.13 Successors and Assigns. This Plan shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon a Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

14.14 Entire Agreement. This Plan and the Agreement constitute the entire agreement with respect to the subject matter hereof and thereof, provided that in the event of any inconsistency between this Plan and the Agreement, the terms and conditions of the Agreement shall control.

Effective as of August 28, 1996.

		CUNO INCORPORATED

By:		/s/ Paul J. Powers

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EXHIBIT C

SECOND AMENDMENT TO CUNO INCORPORATED

NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

The CUNO Incorporated Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”), having an Effective Date of September 10, 1996, amended March 25, 1999, is hereby amended, subject to the approval of its stockholders and the satisfaction of the other requirements for amending the Directors’ Plan described in Section 9.1 of the Directors’ Plan, effective as of the date of completion of such required approvals, as follows:

Section 4.1 of the Plan hereby is amended to read in its entirety:

“4.1 Number of Shares. Subject to the adjustment under Section 4.6, the total number of shares of Common Stock reserved and available for issuance pursuant to Awards under the Plan shall be 400,000 shares of Common Stock authorized for issuance on the Effective Date, plus any unused shares under, or shares allocated by the Committee from, the Company’s Non-Employee Directors’ Stock Option Plan. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares. Retainer Elections, Performance Shares, and Deferred Stock issued after March 6, 2003, shall not represent more than 85,000 shares of Common Stock.”

Section 5.3(b) of the Plan hereby is amended to read in its entirety:

“5.3(b) Option Price. The Option Price per share of the Common Stock purchasable under an Option shall be the Fair Market Value as of the Grant Date. The terms of any Stock Option granted under the Plan may not be amended to reduce the Option Price; nor may the Committee, without the approval of the stockholders, cancel any Stock Option and grant a new Stock Option with a lower Option Price such that the effect would be the same as reducing the Option Price.”

III

In all other respects, the Directors’ Plan shall continue in full force and effect.

EXHIBIT D

CUNO INCORPORATED

NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

(As Amended March 25, 1999)

TABLE OF CONTENTS

ARTICLE I

ESTABLISHMENT
1.1	Purpose	D-1

ARTICLE II

DEFINITIONS
2.1	“Affiliate”	D-1
2.2	“Agreement” or “Award Agreement”	D-1
2.3	“Award”	D-1
2.4	“Beneficiary”	D-1
2.5	“Board of Directors” or “Board”	D-1
2.6	“Change of Control”	D-2
2.7	“Code” or “Internal Revenue Code”	D-3
2.8	“Commission”	D-3
2.9	“Committee”	D-3
2.10	“Common Stock”	D-3
2.11	“Company”	D-3
2.12	“Conversion Election” or “Election”	D-3
2.13	“Deferred Stock”	D-4
2.14	“Director”	D-4
2.15	“Disability”	D-4
2.16	“Effective Date”	D-4
2.17	“Exchange Act”	D-4
2.18	“Fair Market Value”	D-4
2.19	“Grant Date”	D-5
2.20	“NASDAQ”	D-5
2.21	“Notice Date”	D-5
2.22	“Option” or “Stock Option”	D-5
2.23	“Option Period”	D-5
2.24	“Option Price”	D-5
2.25	“Participant”	D-5
2.26	“Performance Shares”	D-5
2.27	“Plan”	D-5
2.28	“Representative”	D-5
2.29	“Retainer”	D-6

2.30	“Rule 16b-3” or “Rule 16a-l(c)(c)	D-6
2.31	“Securities Act”	D-6
2.32	“Valuation Date”	D-6

ARTICLE III

ADMINISTRATION
3.1	Committee Structure and Authority	D-6

ARTICLE IV

STOCK SUBJECT TO PLAN
4.1	Number of Shares	D-7
4.2	Release of Shares	D-7
4.3	Restrictions on Shares	D-7
4.4	Stockholders Rights	D-8
4.5	Reasonable Efforts to Register	D-8
4.6	Adjustments	D-8
4.7	Limited Transfer During Offering	D-9

ARTICLE V

OPTIONS
5.1	Eligibility	D-9
5.2	Grant and Exercise	D-9
5.3	Terms and Conditions	D-10
5.4	Termination	D-11

ARTICLE VI

RETAINER ELECTION
6.1	Right to Elect	D-11
6.2	Election Procedures	D-12

ARTICLE VII

PERFORMANCE SHARES
7.1	General	D-12
7.2	Price	D-12
7.3	Performance Share Agreement	D-12
7.4	Performance Periods	D-12
7.5	Performance Goals	D-13
7.6	Earning of Performance Shares	D-13
7.7	Termination or Service as a Director	D-14
7.8	Non-Transferabillty	D-14


ARTICLE VIII

DEFERRED STOCK
8.1	General	D-14
8.2	Terms and Conditions	D-15

ARTICLE IX

MISCELLANEOUS
9.1	Amendments and Termination	D-16
9.2	General Provisions	D-16
9.3	Special Provisions Regarding a Change in Control	D-17
9.4	“Change in Control Price” definition	D-18
9.5	Awards in Substitution for Awards Granted by Other Corporations	D-19
9.6	Delay	D-19
9.7	Headings	D-19
9.8	Severability	D-19
9.9	Successors and Assigns	D-19
9.10	Entire Agreement	D-19

iii

CUNO INCORPORATED

NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

ARTICLE I

ESTABLISHMENT

1.1 Purpose. The CUNO Incorporated Non-Employee Directors’ Stock Option Plan (“Plan”) is hereby established by CUNO Incorporated (“Company”). The purpose of this Plan is to promote the overall financial objectives of the Company and its stockholders by motivating directors of the Company who are not employees, to further align the interests of such directors with those of the stockholders of the Company and to achieve long-term growth and performance of the Company. The Plan is adopted effective as of August 28, 1996 (“Effective Date”).

ARTICLE II

DEFINITIONS

For purposes of this Plan, the following terms are defined as set forth below:

2.1 “Affiliate” means any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated association or other entity (other than the Company) that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company including, without limitation, any member of an affiliated group of which the Company is a common parent corporation as provided in Section 1504 of the Code.

2.2 “Agreement” or “Award Agreement” means, individually or collectively, any agreement entered into pursuant to this Plan pursuant to which an Award is granted to a Participant.

2.3 “Award” means any Stock Option, Performance Share or Deferred Stock granted pursuant to the Plan.

2.4 “Beneficiary” means the person, persons, trust or trusts which have been designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefit specified under the Plan to the extent permitted. If there is no designated beneficiary, then the term means the person or persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits.

2.5 “Board of Directors” or “Board” means the Board of Directors of the Company.

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2.6 “Change in Control” means

(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (iv) any acquisition by a lender to the Company pursuant to a debt restructuring of the Company, or (v) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2.6;

(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than twenty percent (20%) of, respectively, the then-outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership,

D-2

immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, twenty percent (20%) or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

2.7 “Code” or “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, Treasury Regulations (including proposed regulations) thereunder and any subsequent Internal Revenue Code.

2.8 “Commission” means the Securities and Exchange Commission or any successor agency.

2.9 “Committee” means the person or persons appointed by the Board of Directors to administer this Plan, as further described in the Plan.

2.10 “Common Stock” means the shares of the Common Stock, par value $.001 per share, of the Company, whether presently or hereafter issued, and any other stock or security resulting from adjustment thereof as described hereinafter or the common stock of any successor to the Company which is designated for the purpose of this Plan.

2.11 “Company” means CUNO Incorporated, a Delaware corporation, and includes any successor or assignee corporation or corporations into which the Company may be merged, changed or consolidated; any corporation for whose securities all or substantially all of the securities of the Company shall be exchanged; and any assignee of or successor to substantially all of the assets of the Company.

2.12 “Conversion Election” or “Election” means an election by a Director to (a) either receive all of his or her Retainer on a current basis or (b) to reduce his or her Retainer by an amount or percentage specified in the Election and to receive a right to Deferred Stock. The Committee may require that an Election shall be effective only with respect to a Notice Date that is at least six months prior to the transaction to which the Election relates and is irrevocable for such period as the Committee may determine.

D-3

2.13 “Deferred Stock” means an award to receive Common Stock at the end of a specified period in exchange for a Participant’s reduction of the Retainer otherwise payable to the Participant.

2.14 “Director” means each and any director who serves on the Board and who is not an officer or employee of the Company or any of its Affiliates.

2.15 “Disability” means a mental or physical illness that renders a Participant totally and permanently incapable of performing the Participant’s duties for the Company or an Affiliate. Notwithstanding the foregoing, a Disability shall not qualify under the Plan if it is the result of (i) a willfully self-inflicted injury or willfully self-induced sickness; or (ii) an injury or disease contracted, suffered, or incurred, while participating in a criminal offense. The determination of Disability shall be made by the Committee. The determination of Disability for purposes of the Plan shall not be construed to be an admission of disability for any other purpose.

2.16 “Effective Date” means August 28, 1996.

2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

2.18 “Fair Market Value” means the value determined on the basis of the good faith determination of the Committee, without regard to whether the Common Stock is restricted or represents a minority interest, pursuant to the applicable method described below:

(a) if the Common Stock is listed on a national securities exchange or quoted on NASDAQ, the closing price of the Common Stock on the relevant date (or, if such date is not a business day or a day on which quotations are reported, then on the immediately preceding date on which quotations were reported), as reported by the principal national exchange on which such shares are traded (in the case of an exchange) or by NASDAQ, as the case may be;

(b) if the Common Stock is not listed on a national securities exchange or quoted on NASDAQ, but is actively traded in the over-the-counter market, the average of the closing bid and asked prices for the Common Stock on the relevant date (or, if such date is not a business day or a day on which quotations are reported, then on the immediately preceding date on which quotations were reported), or the most recent preceding date for which such quotations are reported; and

(c) if, on the relevant date, the Common Stock is not publicly traded or reported as described in (a) or (b), the value determined in good faith by the Committee.

D-4

2.19 “Grant Date” means the date that as of which an Award is granted pursuant to this Plan.

2.20 “NASDAQ” means The NASDAQ Stock Market, including the NASDAQ National Market.

2.21 “Notice Date” means the date established by the Committee as the deadline for it to receive an Election or any other notification with respect to an administrative matter in order to be effective under this Plan.

2.22 “Option” or “Stock Option” means the right to purchase the number of shares of Common Stock specified by the Plan at a price and for a term fixed by the Plan, and subject to such other limitations and restrictions as the Plan and the Committee imposes.

2.23 “Option Period” means the period during which the Option shall be exercisable in accordance with the Agreement and Article V.

2.24 “Option Price” means the price at which the Common Stock may be purchased under an Option as provided in Section 5.3.

2.25 “Participant” means a Director to whom an Award has been granted under the Plan, and in the event a Representative is appointed for a Participant or another person becomes a Representative, then the term “Participant” shall mean such appointed Representative. The term shall also include a trust for the benefit of the Participant, the Participant’s parents, spouse or descendants, a partnership the interests of which are for the benefit of the Participant, the Participant’s parents, spouse or descendants; or a custodian under a uniform gifts to minors act or similar statute for the benefit of the Participant’s descendants, to the extent permitted by the Committee and not inconsistent with an application of Rule 16b-3. Notwithstanding the foregoing, the term “Termination of Directorship” shall mean the Termination of Directorship of the Director.

2.26 “Performance Shares” means an Award granted under Article VII.

2.27 “Plan” means CUNO Incorporated Non-Employee Directors’ Stock Incentive Plan, as herein set forth and as may be amended from time to time.

2.28 “Representative” means (a) a person or entity acting as the executor or administrator of a Participant’s estate pursuant to the last will and testament of a Participant or pursuant to the laws of the jurisdiction in which the Participant had the Participant’s primary residence at the date of the Participant’s death; (b) the person or entity acting as the guardian or temporary guardian of a Participant; (c) the person or entity which is the Beneficiary of the Participant upon or following the Participant’s death; or (d) any person to whom an Option has been permissibly transferred by the Committee or by operation of law; provided that only one of the foregoing shall be the

D-5

Representative at any point in time as determined under applicable law and recognized by the Committee.

2.29 “Retainer” means the retainer provided to the Participant for services rendered as a Director, including service on a committee or attendance at meetings, but not the reimbursement of expenses, in his or her capacity as a Director.

2.30 “Rule 16b-3” or “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule 16a-1(c)(3), as promulgated under the Exchange Act, as amended from time to time, or any successor thereto, in effect and applicable to the Plan and Participants.

2.31 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

2.32 “Valuation Date” means the date or dates designated by the Committee for converting the Retainer to Deferred Stock pursuant to an Election.

In addition, certain other terms used herein have definitions given to them in the first place in which they are used.

ARTICLE III

ADMINISTRATION

3.1 Committee Structure and Authority. This Plan shall be administered by the Committee which, except as provided herein, shall be comprised of one or more persons. The Committee shall be the Compensation Committee of the Board of Directors, unless such committee does not exist or the Board establishes another committee whose purpose is the administration of this Plan. In the absence of an appointment, the Board shall be the Committee; provided that only those members of the Compensation Committee of the Board who participate in the decision relative to Options under the Plan shall be deemed to be part of the “Committee” for purposes of the Plan. A majority of the Committee shall constitute a quorum at any meetings thereof (including telephone conference) and the acts of a majority of the members present, or acts approved in writing by a majority of the entire Committee without a meeting, shall be the acts of the Committee for purposes of this Plan. The Committee may authorize any one or more of its members or an officer of the Company to execute and deliver documents on behalf of the Committee. A member of the Committee shall not exercise any discretion respecting himself or herself under the Plan. The Board shall have the authority to remove, replace or fill any vacancy of any member of the Committee upon notice to the Committee and the affected member. Any member of the Committee may resign upon notice to the Board. The Committee may allocate among one or more of it members, or may delegate to one or more of its agents, such duties and responsibilities as it determines.

D-6

The Committee shall have the authority, subject to (i) the terms of the Plan and (ii) the limitations of Rule 16b-3(c)(2)(ii), to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any Option issued under the Plan and to otherwise supervise the administration of the Plan. The Committee’s policies and procedures may differ with respect to Awards granted at different times or to different Participants.

Any determination made by the Committee pursuant to the provisions of the Plan shall be made in its sole discretion. All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Participants. Any determination shall not be subject to de novo review if challenged in court.

ARTICLE IV

STOCK SUBJECT TO PLAN

4.1 Number of Shares. Subject to the adjustment under Section 4.6, the total number of shares of Common Stock reserved and available for issuance pursuant to Awards under the Plan shall be 300,000 shares of Common Stock authorized for issuance on the Effective Date, plus any unused shares under, or shares allocated by the Committee from, the Company’s 1996 Stock Incentive Plan. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares.

4.2 Release of Shares. The Committee shall have full authority to determine the number of shares of Common Stock available for Awards, and in its discretion may include (without limitation) as available for distribution any shares of Common Stock that have ceased to be subject to Awards, any shares of Common Stock subject to any Awards that are forfeited, any Awards that otherwise terminate without issuance of shares of Common Stock being made to the Participant, or any shares (whether or not restricted) of Common Stock that are received by the Company in connection with the exercise of an Award including the satisfaction of any tax liability or the satisfaction of a tax withholding obligation. If any shares could not again be available for Awards to a particular Participant under applicable law, such shares shall be available exclusively for Awards to Participants who are not subject to such limitations.

D-7

advisable, and (iii) the satisfaction of any applicable withholding obligation in order for the Company or an Affiliate to obtain a deduction with respect to an Award. The Company may cause any certificate for any share of Common Stock to be delivered to be properly marked with a legend or other notation reflecting the limitations on transfer of such Common Stock as provided in the Plan or as the Committee may otherwise require. The Committee may require any person receiving Common Stock to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares of Common Stock in compliance with applicable law or otherwise. Fractional shares shall not be delivered, but shall be rounded to the next lower whole number of shares.

4.4 Stockholder Rights. No person shall have any rights of a stockholder as to shares of Common Stock subject to an Award until, after proper exercise of the Award or other action required, such shares shall have been recorded on the Company’s official stockholder records as having been issued and transferred. Upon exercise of the Award or any portion thereof, the Company will have a reasonable time in which to issue the shares, and the Participant will not be treated as a stockholder for any purpose whatsoever prior to such issuance. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such shares are recorded as issued and transferred in the Company’s official stockholder records, except as provided herein or in an Agreement.

4.5 Reasonable Efforts to Register. The Company will register under the Securities Act the Common Stock delivered or deliverable pursuant to Awards on Commission Form S-8 if available to the Company for this purpose (or any successor or alternate form that is substantially similar to that form to the extent available to effect such registration), in accordance with the rules and regulations governing such forms, as soon as such forms are available for registration to the Company for this purpose. The Company will use its reasonable efforts to cause the registration statement to become effective as soon as possible and will file such supplements and amendments to the registration statement as may be necessary to keep the registration statement in effect until the earliest of (a) one year following the expiration of the relevant period of the last Award outstanding, (b) the date the Company is no longer a reporting company under the Exchange Act and (c) the date all Participants have disposed of all shares delivered pursuant to any Award. The Company may delay the foregoing obligation if the Committee reasonably determines that any such registration would materially and adversely affect the Company’s interests or if there is no material benefit to Participants.

4.6 Adjustments. In the event of a stock dividend, stock split, combination or exchange of shares, recapitalization or other change in the capital structure of the Company, corporate separation or division of the Company (including, but not limited to, a split-up, spin-off, split-off or distribution to Company stockholders other than a normal cash dividend), sale by the Company of all or a substantial portion of its assets (measured on either a stand-alone or consolidated basis), reorganization, rights offering, a partial or complete liquidation, or any other corporate transaction, Company stock offering or event involving the Company and having an effect similar to any of the foregoing, then the

D-8

Committee may adjust or substitute, as the case may be, the number of shares of Common Stock available for Awards under this Plan, the number of shares of Common Stock covered by outstanding Awards, the exercise price per share of Common Stock covered by outstanding Awards, the exercise price per share of outstanding Options, and any other characteristics or terms of the Awards as the Committee shall deem necessary or appropriate to reflect equitably the effects of such changes to the Participants; provided, however, that any fractional shares resulting from such adjustment shall be eliminated by rounding to the next lower whole number of shares with appropriate payment for such fractional share as shall reasonably be determined by the Committee.

4.7 Limited Transfer During Offering. In the event there is an effective registration statement under the Securities Act pursuant to which shares of Common Stock shall be offered for sale in an underwritten offering, a Participant shall not, during the period requested by the underwriters managing the registered public offering, effect any public sale or distribution of shares received directly or indirectly pursuant to an Award.

ARTICLE V

OPTIONS

5.1 Eligibility. Each Director shall be granted Options to purchase shares of Common Stock as provided herein.

5.2 Grant and Exercise. Each person who is a Director shall become a Participant and shall, on the date Commercial Intertech Corp. distributes the common stock of the Company to the holders of Commercial Intertech Corp. (if he or she is a Director on such date) and on each annual stockholders’ meeting (or such other annual date as selected by the Committee) thereafter (if he or she is a Director on such date) beginning in calendar year 1997 for as long as such person is a Director, without further action by the Board or the Committee, be granted an Option to purchase 1,000 shares of Common Stock. If any Director is required to retire pursuant to the policies of the Board during the 12-month period beginning on any Grant Date, or if the Director has notified the Board that he or she intends to resign for any reason during the 12-month period beginning on any Grant Date, said Director shall instead be granted on the relevant Grant Date an Option to purchase the number of shares of Common Stock equal to (i) 1,000 multiplied by (ii) a fraction, the numerator of which is the number of full calendar months the Director will serve during the period beginning on the Grant Date and ending on the Director’s last date of service and the denominator of which is 12. If after 1996, a Director is appointed to the Board effective on any date other than the date of the annual stockholders’ meeting, said Director shall automatically be granted on the Grant Date he or she joined the Board an Option to purchase the number of shares of Common Stock equal to (i) 1,000 multiplied by (ii) a fraction, the numerator of which is the number of full months such Director will serve on the Board during the period beginning on the date he or she joins the Board and ending on the date of the next following annual

D-9

stockholders’ meeting and the denominator of which is 12. If the number of shares of Common Stock available to grant under the Plan on a scheduled date of grant is insufficient to make all automatic grants required to be made pursuant to the Plan on such date, then each eligible Director shall receive an Option to purchase a pro rata number of the remaining shares of Common Stock available under the Plan; provided further, however, that if such proration results in fractional shares of Common Stock, then such Option shall be rounded down to the nearest number of whole shares of Common Stock. If there is no whole number of shares remaining to be granted, then no grants shall be made under the Plan. Each Option granted under the Plan shall be evidenced by an Agreement, in a form approved by the Committee, which shall embody the terms and conditions of such Option and which shall be subject to the express terms and conditions set forth in the Plan. Such Agreement shall become effective upon execution by the Participant.

5.3 Terms and Conditions. Options shall be subject to such terms and conditions as shall be determined by the Committee, including in each case the following:

(a) Option Period. The Option Period of each Option shall be ten (10) years unless otherwise provided by the Committee.

(b) Option Price. The Option Price per share of the Common Stock purchasable under an Option shall be the Fair Market Value as of the Grant Date unless otherwise provided by the Committee.

(c) Exercisability. Unless otherwise specified in an Agreement, and subject to the provisions of Section 9.3, Options granted thereafter shall become exercisable on the first anniversary of the Grant Date. An Option only shall be exercisable during the Option Period.

(d) Method of Exercise. Subject to the provisions of this Article V, a Participant may exercise Stock Options, in whole or in part, at any time during the Option Period by the Participant’s giving written notice of exercise on a form provided by the Committee (if available) to the Company specifying the number of shares of Common Stock subject to the Stock Option to be purchased. Except when waived by the Committee, such notice shall be accompanied by payment in full of the purchase price by cash or check or such other form of payment as the Company may accept. If approved by the Committee (including approval at the time of exercise), payment in full or in part may also be made (i) by delivering Common Stock already owned by the Participant having a total Fair Market Value on the date of such delivery equal to the Option Price; (ii) by the execution and delivery of a note or other evidence of indebtedness (and any security agreement thereunder) satisfactory to the Committee; (iii) by authorizing the Company to retain shares of Common Stock which would otherwise be issuable upon exercise of the Option having a total Fair Market Value on the date of delivery equal to the Option Price; (iv) by the delivery of cash or the extension of credit by a broker-dealer to whom the Participant has submitted a notice of exercise or otherwise

D-10

indicated an intent to exercise an Option (in accordance with Part 220, Chapter II, Title 12 of the Code of Federal Regulations, so-called “cashless” exercise); (v) by certifying ownership of shares of Common Stock owned by the Participant to the satisfaction of the Committee for later delivery to the Company as specified by the Committee; or (vi) by any combination of the foregoing or by any other method permitted by the Committee.

(e) Non-transferability of Options. Except as provided herein or in an Agreement, no Option or interest therein shall be transferable by the Participant other than by will or by the laws of descent and distribution, and all Options shall be exercisable during the Participant’s lifetime only by the Participant. If and to the extent transferability is permitted by Rule 16b-3 and except as otherwise provided herein or by an Agreement, every Option granted hereunder shall be freely transferable, but only if such transfer does not result in liability under Section 16 of the Exchange Act to the Participant or other Participants and is consistent with registration of the Option and sale of Common Stock on Form S-8 (or a successor form) or the Committee’s waiver of such condition.

5.4 Termination. Unless otherwise provided in an Agreement or determined by the Committee, if a Participant ceases to be a Director due to death, any unexpired and unexercised Stock Option held by such Participant shall thereafter be fully exercisable for a period of one (1) year following the date of the appointment of a Representative (or such other period or no period as the Committee may specify) or until the expiration of the Option Period, whichever period is the shorter. Unless otherwise provided in an Agreement or determined by the Committee, if a Participant ceases to be a Director for any reason other than death, any unexpired and unexercised Stock Option held by such Participant shall thereafter be fully exercisable by the Participant for the period of one (1) year (or such other period or no period as the Committee may specify) immediately following the date the Participant ceases to be a Director or until the expiration of the Option Period, whichever period is shorter, and the Participant’s death at any time following the date the Participant ceases to be a Director shall not affect the foregoing.

ARTICLE VI

RETAINER ELECTION

6.1 Right to Elect

(a) A Director may have all or a portion of his or her Retainer credited as Deferred Stock on his or her behalf. A Director who desires to receive all or a portion of his or her Retainer in the form of Deferred Stock shall file an Election by the relevant Notice Date pursuant to the procedures of the Committee authorizing his or her Retainer otherwise payable to be reduced and to be distributed in the form of Deferred Stock.

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(b) As of the relevant Valuation Date determined by the Committee, the number of shares of Deferred Stock shall equal (1) the value of Retainer subject to the Conversion Election multiplied by 1.20, divided by (2) the Fair Market Value per share of the Common Stock on the effective date of the Conversion Election.

6.2 Election Procedures. If properly executed and received by the Committee, an Election shall be effective only with respect to a Retainer paid in the period to which the Election applies and only with respect to a Retainer paid after the Notice Date for the Election. The Election shall be effective only if received on or prior to the Notice Date to which the Election relates and, shall only be revocable to the extent determined by the Committee. An Election may be deemed to be continuing and applicable to calendar years after the year in which the Election is filed, and may be continuing for such period of time as determined by the Committee. The Committee may establish rules and procedures governing when an Election will be effective and what Retainer will be subject to the Election.

ARTICLE VII

PERFORMANCE SHARES

7.1 General. Subject to the terms and conditions described below, Performance Shares may be granted to Participants at any time and from time to time as determined by the Committee. Each Director on the date of the Company’s initial public offering shall receive an Award for 5000 Performance Shares; and each Director shall thereafter receive an Award for 1000 Performance Shares on the date of every other (i.e., biannual) annual stockholders’ meeting (or such other annual date selected by the Committee) beginning with calendar year 1997 (or such later year as determined by the Committee).

7.2 Price. The purchase price for Performance Shares shall be zero unless otherwise specified by the Committee.

7.3 Performance Share Agreement. Prior to the beginning of the applicable Performance Period (as defined below), subject to the provisions of this Plan, all the terms and conditions of an award of Performance Shares shall be determined by the Committee in its discretion and shall be confirmed by a Performance Share Award Agreement which shall be executed by the Company and the Participant.

7.4 Performance Periods. Unless otherwise determined by the Committee, any time period (the “Performance Period”) relating to a Performance Share award shall be at least two years in length.

D-12

7.5 Performance Goals. Performance Shares shall be earned based upon the financial performance of the Company or an operating group of the Company during a Performance Period. Prior to the beginning of the applicable Performance Period, the Committee will establish in writing targets for the Company (and/or an operating group of the Company, if applicable) over the Performance Period (“Performance Goals”), which shall be based on any of the following performance criteria, either alone or in any combination, and on either a consolidated or business unit level, as the Committee may determine: sales, net asset turnover, earnings per share, cash flow, cash flow from operations, operating profit or income, net income, operating margin, net income margin, return on net assets, return on total assets, return on common equity, return on total capital, and total shareholder return. The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify; extraordinary, unusual or nonrecurring items; effects of accounting changes; effects of financing activities (e.g., effect on earnings per share of issuance of convertible debt securities); expenses for restructuring or productivity initiatives; other non-operating items; spending for acquisitions; effects of divestitures; and effects of litigation activities and settlements. Any such performance criterion or combination of such criteria may apply to the Participant” Award opportunity in its entirety or to any designated portion or portions of the Award opportunity, as the Committee may specify. Unless the Committee determines otherwise for any Performance Period, extraordinary items, such as capital gains and losses, which affect any performance criterion applicable to the Award (including but not limited to the criterion of net income) shall be excluded or included in determining the extent to which the corresponding performance goal has been achieved, whichever will produce the greater Award. The Performance Goals may vary for different Performance Periods and need not be the same for each Participant receiving an Award for a Performance Period. The Committee may, in its discretion, vary the terms and conditions of any Performance Share Award, including, without limitation, the Performance Period and Performance Goals.

7.6 Earning of Performance Shares. After the applicable Performance Period shall have ended, the Committee shall determine the extent to which the established Performance Goals have been achieved. Subsequently, each recipient of Performance Shares shall be entitled to receive or retain the number of Performance Shares under the Award, if any, earned by the Participant over the Performance Period. A Participant may earn more or less than the number of Performance Shares originally awarded, or no Performance Shares at all. Performance Shares shall be paid in the form of Company Stock. Unrestricted certificates representing such number of shares of Stock as equals the number of Performance Shares earned under the Award shall be delivered to the Participant as soon as practicable after the end of the applicable Performance Period. Participants shall also be entitled to any dividends or other distributions that have been or would have been paid or earned in respect of such shares of Common Stock had such shares been outstanding during the period from the initial Award date to the final payout on the Performance Shares, and may be paid in the form of Common Stock. Unless

D-13

otherwise provided, in its discretion, by the Committee, any such dividends or other distributions shall not bear interest.

7.7 Termination of Service as a Director. Unless otherwise determined by the Committee, in the event the status of a Participant as a Director is terminated by reason of death or Disability during a Performance Period, the Participant shall receive a prorated payout with respect to the Performance Shares relating to such Performance Period. The prorated payout shall be determined by the Committee, in its sole discretion, and shall be based upon the length of time that the Participant held the Performance Shares during the Performance Period and based upon the achievement of the established Performance Goals. Distribution of earned Performance Shares shall be made at the same time payments are made to Participants whose service as a Director does not terminate during the applicable Performance Period. In the event that a Participant ceases to be a Director for any reason other than death or Disability, all Performance Shares shall be forfeited by the Participant to the Company, unless otherwise determined by the Committee.

7.8 Non-Transferability. Except as provided in an Agreement, Performance Shares may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, a Participant’s rights under the Plan shall be exercisable during the Participant’s lifetime only by the Participant, the Participant’s legal Representative.

ARTICLE VIII

DEFERRED STOCK

8.1 General. The Committee shall have authority to grant Deferred Stock under this Plan at any time or from time to time, including in connection with a Conversion Election. Shares of Deferred Stock may be awarded either alone or in addition to other Awards granted under this Plan. The Committee shall determine the persons to whom and the time or times at which Deferred Stock will be awarded, the number of shares of Deferred Stock to be awarded to any Participant, the duration of the period (the “Deferral Period”) prior to which the Common Stock will be delivered, and the conditions under which receipt of the Common Stock will be deferred and any other terms and conditions of the Awards. Each Award shall be confirmed by, and be subject to the terms of, an Agreement. The Committee may condition the grant of Deferred Stock upon the attainment of specified performance goals by the Participant or by the Company or an Affiliate, including a division or department of the Company or an Affiliate, for or within which the Participant is primarily employed or upon such other factors or criteria as the Committee shall determine. The provisions of Deferred Stock Awards need not be the same with respect to any Participant.

D-14

8.2 Terms and Conditions. Deferred Stock Awards shall be subject to the following terms and conditions:

(a) Limitations on Transferability. Subject to the provisions of this Plan and except as may otherwise be provided in an Agreement, neither Deferred Stock Awards, nor any interest therein, may be sold, assigned, margined, transferred, pledged or otherwise encumbered during the Deferral Period. At the expiration of the Deferral Period (or Elective Deferral Period as defined in Section 8.2(e), where applicable), the Committee shall deliver Common Stock to the Participant for the shares covered by the Deferred Stock Award.

(c) Criteria. Based on service, performance by the Participant or by the Company or the Affiliate, including any division or department for which the Participant is employed or such other factors or criteria as the Committee may determine, the Committee may provide for the lapse of deferral limitations in installments and may accelerate the vesting of all or any part of any Award and waive the deferral limitations for all or any part of such Award.

(d) Forfeiture. Unless otherwise provided in an Agreement or determined by the Committee, if the Participant ceases to be a Director during the Deferral Period due to death or Disability, the restrictions shall lapse and the Participant shall be fully vested in the Deferred Stock and shares of Common Stock shall be delivered to the Participant. Unless otherwise provided in an Agreement or determined by the Committee, upon a Participant’s ceasing to be a Director for any reason during the Deferral Period other than death or Disability, the rights to the shares still covered by the Award shall be forfeited by the Participant, except the Committee shall have the discretion to waive in whole or in part any or all remaining deferral limitations with respect to any or all of such Participant’s Deferred Stock.

D-15

ARTICLE IX

MISCELLANEOUS

9.1 Amendments and Termination. The Board may amend, alter or discontinue the Plan at any time, but no amendment, alteration or discontinuation shall be made which would impair the rights of a Participant under an Award theretofore granted without the Participant’s consent, except such an amendment (a) made to avoid an expense charge to the Company or an Affiliate, (b) made to cause the Plan to qualify for the exemption provided by Rule 16b-3, or (c) made to permit the Company or an Affiliate a deduction under the Code. In addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by law or agreement. To the extent required by law and notwithstanding the foregoing, the Plan may not be amended more than once every six (6) months to change the Plan provisions listed in section (c)(2)(ii)(A) of Rule 16b-3, other than to comport with changes in the Code or Rule 16b-3.

The Committee may amend, alter or discontinue the Plan or an Award at any time on the same conditions and limitations (and exceptions to limitations) as applies to the Board’s authority to amend the Plan and further subject to any approval or limitations the Board may impose.

The Board shall have authority to amend the Plan to take into account changes in law and tax and accounting rules, as well as other developments, and to grant Awards which qualify for beneficial treatment under such rules without stockholder approval. Notwithstanding anything in the Plan or an Agreement to the contrary, if any right under this Plan or an Agreement would cause a transaction to be ineligible for pooling of interest accounting that would, but for the right hereunder, be eligible for such accounting treatment, the Board or the Committee may modify or adjust the right so that pooling of interest accounting is available.

9.2 General Provisions.

(a) Representation. The Committee may require each person purchasing or receiving shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to the distribution thereof in violation of the Securities Act. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

(b) Withholding. If determined to be required to protect the Company, no later than the date as of which an amount first becomes includable in the gross income of the Participant for Federal income tax purposes with respect to any Option, the Participant shall pay to the Company (or other entity identified by the Committee), or make arrangements satisfactory to the Company or other entity

D-16

identified by the Committee regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, withholding obligations may be settled with Common Stock, including Common Stock that is part of the Option that gives rise to the withholding requirement, provided that any applicable requirements under Section 16 of the Exchange Act are satisfied. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant.

(c) Controlling Law. The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware (other than its law respecting choice of law). The Plan shall be construed to comply with all applicable law, and to avoid liability to the Company, an Affiliate or a Participant, including, without limitation, liability under Section 16(b) of the Exchange Act.

(d) Offset. Any amounts owed to the Company or an Affiliate by the Participant of whatever nature may be offset by the Company from the value of any shares of Common Stock, cash or other thing of value under the Plan or an Agreement to be transferred to the Participant, and no shares of Common Stock, cash or other thing of value under the Plan or an Agreement shall be transferred unless and until all disputes between the Company and the Participant have been fully and finally resolved and the Participant has waived all claims to such against the Company or an Affiliate.

(e) Fail-Safe. With respect to persons subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3). To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. Moreover, in the event the Plan does not include a provision required by Rule 16b-3 or Rule 16a-1(c)(3) to be stated therein, such provision shall be deemed to be incorporated by reference into the Plan with respect to Participants subject to Section 16.

(f) Right to Capitalize. The grant of an Award shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidation, dissolve, liquidate or sell or transfer all or any part of its business or assets.

9.3 Special Provisions Regarding a Change in Control. Notwithstanding any other provision of the Plan to the contrary, unless otherwise provided in an Agreement, in the event of a Change in Control:

D-17

(a) Any Stock Options outstanding as of the date of such Change in Control and not then exercisable shall become fully exercisable to the full extent of the original grant;

(b) Any restrictions or deferrals applicable to Deferred Stock shall lapse, and such Award shall become free of all restrictions and become fully vested and transferable to the full extent of the original grant;

(c) Any Performance Goal or other condition with respect to any Performance Shares shall be deemed to have been satisfied in full, and the Award shall be fully distributable;

(d) The Committee shall have full discretion, notwithstanding anything herein or in an Agreement to the contrary, to do any or all of the following with respect to an outstanding Award:

(1)

To cause any Award to be cancelled, provided notice of at least 15 days thereof is provided before the date of cancellation;

(2)

To provide that the securities of another entity be substituted hereunder for the Common Stock and to make equitable adjustment with respect thereto;

(3)

To grant the Participant by giving notice during a pre-set period to surrender all or part of an Award to the Company and to receive cash in an amount equal to the amount by which the “Change of Control Price” (as defined in Section 9.4(c) per share of Common Stock on the date of such election shall exceed the amount which the Participant must pay to exercise the Award per share of Common Stock under the Award (the “Spread”) multiplied by the number of shares of Common Stock granted under the Award;

(4)

To require the assumption of the obligation of the Company under the Plan subject to appropriate adjustment; and

(5)

To take any other action the Committee determines to take.

9.4 For purposes of this Section, “Change in Control Price” means the higher of (i) the highest reported sales price of a share of Common Stock in any transaction reported on the principal exchange on which such shares are listed or on NASDAQ during the sixty (60) day period prior to and including the date of a Change of Control, or (ii) if the Change in Control is the result of a corporate transaction, the highest price per share of Common Stock paid in such tender or exchange offer or a corporate transaction.

D-18

To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration shall be determined in the sole discretion of the Committee.

9.5 Awards in Substitution for Awards Granted by Other Corporations. Awards may be granted under this Plan from time to time in substitution for awards held by Directors in respect of other plans of other entities. The terms and conditions of the Awards so granted may vary from the terms and conditions set forth in this Plan at the time of such grant as the majority of the members of the Committee may deem appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which they are granted.

9.6 Delay. If at the time, the Participant is subject to “short-swing” liability under Section 16 of the Exchange Act, any time period provided for under the Plan, to the extent necessary to avoid the imposition of liability, shall be suspended and delayed during the period the Participant would be subject to such liability.

9.7 Headings. The headings contained in the Plan are for reference purposes only and shall not affect the meaning or interpretation of the Plan.

9.8 Severability. If any provision of the Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not effect any other provision hereby, and the Plan shall be construed as if such invalid or unenforceable provision were omitted.

9.9 Successors and Assigns. The Plan shall inure to the benefit of and be binding upon each successor and assign of the Company. All obligations imposed upon a Participant, and all rights granted to the Company hereunder, shall be binding upon the Participant’s heirs, legal representatives and successors.

9.10 Entire Agreement. The Plan and the Agreement constitute the entire agreement with respect to the subject matter hereof and thereof, provided that in the event of any inconsistency between the Plan and the Agreement, the terms and conditions of the Plan shall control.

Executed as of August 28, 1996.

CUNO INCORPORATED

By:		/s/ Paul J. Powers

D-19

Annual Meeting of Shareholders of

CUNO INCORPORATED

March 6, 2003

Radisson Hotel and Conference Center

100 Berlin Road, Cromwell, Connecticut

beginning at 10:00 a.m.

[Map of Meeting Location]

Directions to the Radisson:

Traveling North: Interstate 91 N to exit 21. Turn left.

Traveling South: Interstate 91 S to exit 21. Turn left.

Traveling East: I-84 to Exit 27 to Route 691 E (Meriden/Middletown) to I-91 N. Take exit 21. Turn left.

Traveling West: I-84 to Hartford Interchange to I-91S to exit 21. Turn left.

[CUNCM - CUNO INCORPORATED] [FILE NAME: ZCUNC2.ELX] [VERSION - (1)] [01/21/03] [orig. 01/21/03]

DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL

ZCUNCZ

PROXY

CUNO INCORPORATED

400 Research Parkway

Meriden, Connecticut 06450

Solicited on Behalf of the Board of Directors

For the Annual Meeting of Stockholders, March 6, 2003

The undersigned hereby appoints Mark G. Kachur, Thomas J. Hamlin, and Timothy B. Carney, and each or any of them, attorneys and proxies with full power of substitution, to represent the undersigned and to vote all shares of stock of CUNO Incorporated which the undersigned is entitled to vote at the Annual Meeting of Stockholders of CUNO Incorporated to be held at the Radisson Hotel & Conference Center, 100 Berlin Road, Cromwell, Connecticut on Thursday, March 6, 2003, at 10:00 a.m., or any adjournments or postponements thereof, upon all matters as set forth in the Notice of Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged.

SEE REVERSE

SIDE

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

SEE REVERSE

SIDE

[LOGO of CUNO]

C/O EQUISERVE TRUST COMPANY N.A.

P.O. BOX 8694

EDISON, NJ 08818-8694

Admission Ticket

Voter Control Number

Your vote is important. Please vote immediately.


Vote-by-Internet [Graphic of a Computer]	OR	Vote-by-Telephone [Graphic of a Telephone]

1. Log on to the Internet and go to http://www.eproxyvote.com/cuno 2. Enter your Voter Control Number listed above and follow the easy steps outlined on the secured website.		1. Call toll-free 1-877-PRX-VOTE (1-877-779-8683) 2. Enter your Voter Conrol Number listed above and follow the easy recorded instructions.

If you vote over the Internet or by telephone,

please do not mail your card.

[CUNCM – CUNO INCORPORATED] [FILE NAME: ZCUNC1.ELX] [VERSION – (4)] [01/27/03] [orig. 01/21/03]

ZCUNC1

DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL

Please mark

votes as in

this example.

THIS PROXY WILL BE VOTED AS DIRECTED BELOW, OR IF RETURNED EXECUTED WITH NO DIRECTION GIVEN, WILL BE VOTED FOR THE ELECTION OF ALL THE NOMINEES AS DIRECTORS, AND FOR RATIFICATION OF ERNST & YOUNG LLP AS AUDITORS.

The Board of Directors recommends a vote FOR the election of all

the nominees as directors and FOR Proposals 2, 3, 4 and 5.

2. APPROVE CUNO INCORPORATED 1996 STOCK

INCENTIVE PLAN – SECOND AMENDMENT.

FOR

AGAINST

ABSTAIN

1. Election of Directors.

Nominees: (01) Joel B. Alvord, (02) Dr. Charles L. Cooney

and (03) John M. Galvin.

3. APPROVE NON-EMPLOYEE DIRECTORS’

STOCK OPTION PLAN – SECOND AMENDMENT.

FOR

ALL

NOMINEES

WITHHELD FROM ALL NOMINEES

4. REAPPROVE THE PERFORMANCE GOALS IN THE

EXECUTIVE MANAGEMENT INCENTIVE PLAN.

5. RATIFY SELECTION OF ERNST & YOUNG LLP

If you wish to withhold authority to vote for any individual nominee,

write that nominee’s name in the space provided above.

6. IN THEIR DISCRETION, THE PROXIES ARE

AUTHORIZED TO VOTE UPON SUCH OTHER

BUSINESS AS MAY PROPERLY COME BEFORE

THE MEETING OR ANY ADJOURNMENTS OR

POSTPONEMENTS THEREOF.

PLEASE SIGN, DATE AND RETURN PROMPTLY IN ENCLOSED

ENVELOPE.

THIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS

HEREON. Executors, administrators, trustees, attorneys, etc. should

give full title as such. If the signer is a corporation or partnership,

please sign full corporate or partnership name by duly authorized officer.

Signature:

Date:

Signature:

Date: