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                                                                    EXHIBIT 10.4

                                PALL CORPORATION

                         1998 EMPLOYEE STOCK OPTION PLAN
                      (as amended effective April 17, 2002)


         Pall Corporation (the "Company"), in order to retain and attract
personnel for positions of responsibility with the Company and its subsidiaries
and to provide additional incentive to such personnel by offering them an
opportunity to obtain a proprietary interest in the Company, hereby authorizes
options to be granted to "executive officers" and "eligible employees" (as those
terms are hereinafter defined) of the Company and its subsidiaries to purchase
shares of Common Stock of the Company ("shares") upon the terms and conditions
described below in this Pall Corporation 1998 Employee Stock Option Plan (the
"Plan").

         1. Administration of the Plan. The Plan shall be administered, and the
options under the Plan shall be granted, by the Compensation Committee of the
Company as from time to time constituted (the "Committee"). The Committee shall
consist of not less than three members of the Board of Directors who are
appointed by the Board and are (i) "Non-Employee Directors" as defined in Rule
16b-3 of the Securities and Exchange Commission (the "Commission") under the
Securities Exchange Act of 1934 (the "Exchange Act") or any successor
regulation, and (ii) "outside directors" as defined in the regulations of the
Internal Revenue Service under Section 162(m) of the Internal Revenue Code of
1986 as amended (the "Code"). The members of the Committee shall serve, without
compensation, at the pleasure of the Board. Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan and the options
granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of the
options described in Section 4 hereof, and to make all other decisions necessary
or advisable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option in the manner and to the extent the Committee deems desirable to
carry it into effect. Any decision of the Committee in the administration of the
Plan, as described herein, shall be final and conclusive. The Committee may act
only by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or any officer of the Company to
execute and deliver documents on behalf of the Committee. No member of the
Committee shall be liable for anything done or omitted to be done by him or her
or by any other member of the Committee in connection with the Plan, except for
his or her own willful misconduct or as expressly provided by statute.

         2. Number of Shares Subject to Option. The aggregate number of shares
which may be issued under the Plan is eight million (8,000,000) shares of Common
Stock of the Company. Such shares may be either authorized but unissued or
reacquired shares. If after July 7, 1998 the Company effects one or more stock
splits, stock dividends, combinations, exchanges of shares or similar capital
adjustments, the number and kind of shares with respect to which options may be
granted under the Plan, the number of shares which may be granted to any
individual as limited by Section 3 hereof, the number and kind of shares subject
to each outstanding option and the option price per share under each such option
shall be proportionately and appropriately adjusted by the Committee. If any
option granted under the Plan, or any portion thereof, shall expire or terminate
for any reason without having been exercised in full, the shares with respect to
which it has not been exercised shall be available for further options under the
Plan.

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         With respect to incentive stock options granted under this Plan and
under all stock option plans of the Company and its parent and subsidiary
corporations, the aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which such incentive stock options are
exercisable for the first time by the optionee during any calendar year shall
not exceed $100,000.

         3. Eligible Optionees. Options may be granted only (a) to executive
officers of the Company as that term is defined in Rule 405 of the Securities
and Exchange Commission under the Securities Act of 1933 as amended (the
"Securities Act") or successor regulation ("executive officers"), and (b) to
other employees (including officers) of the Company and of such other
corporations as are subsidiary corporations of the Company at the time of grant
who, in the judgment of the Committee, are in a position to contribute
significantly to the Company's success ("eligible employees"). The Committee is
hereby given the authority to select the particular executive officers and
eligible employees to whom options under the Plan are to be granted, to
determine the number of shares to be optioned to each such executive officer and
eligible employee (except that options may not be granted under this Plan to any
individual during any period of 24 consecutive months on more than an aggregate
of 300,000 shares, subject to adjustment in accordance with the third sentence
of Section 2 hereof) and to grant one or more options under the Plan to any such
executive officer or eligible employee from time to time, irrespective of
whether one or more options have been granted to such individual under previous
stock option plans of the Company. In exercising its authority under the
foregoing provisions of this paragraph, each member of the Committee, as
authorized by ss.717(a) of the New York Business Corporation Law, shall be
entitled to rely on information, opinions, reports and statements prepared or
presented by (i) one or more officers of the Company or any subsidiary of the
Company whom the member believes to be reliable and competent in the matters
presented or (ii) counsel, public accountants or other persons as to matters
which the member believes to be within such person's professional or expert
competence. Nothing in the Plan or in any option granted under the Plan shall
confer any rights on any officer or other employee to continue in the employ of
the Company or any of its subsidiary corporations or shall interfere in any way
with the right of the Company or any of its subsidiary corporations, as the case
may be, to terminate his or her employment at any time.

         4. Terms of Options. Options granted under the Plan may be "incentive
stock options" meeting the requirements for such options prescribed by Section
422 of the Code, or may be options not so qualifying as incentive stock options
("nonqualified options"). The determination as to whether or not an option
granted under the Plan is intended to be an incentive stock option shall be made
by the Committee.

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         Each option granted under the Plan shall comply with the following
terms and conditions:

                  (a) The option price shall be the fair market value of the
         shares subject to the option at the time the option is granted. Fair
         market value shall be as determined in good faith by the Committee. In
         no event shall the option price be less than the par value of the
         shares.

                  (b) The option shall not be transferable by the optionee
         otherwise than by will or the laws of descent and distribution, and
         shall be exercisable during his or her lifetime only by him or her
         except that, at the discretion of the Committee, a nonqualified option
         may provide that the option is transferable to any "family member" of
         the optionee, as the term "family member" is defined in the General
         Instructions to Form S-8 promulgated by the Commission under the
         Securities Act.

                  (c) An option shall not be exercisable

                           (i) after the expiration of ten years from the date
                  it is granted (the "date of grant"); and

                           (ii) unless counsel for the Company shall be
                  satisfied that the issuance of shares upon exercise will be in
                  compliance with the Securities Act and applicable state laws;
                  and

                           (iii) unless written notice of exercise, in form
                  satisfactory to the Committee, is given to the Company; and

                           (iv) unless the optionee has been, at all times
                  during the period beginning with the date of grant of an
                  option and ending on the date of exercise thereof, an employee
                  of the Company or of one of its subsidiary corporations, or of
                  a corporation or a parent or subsidiary of a corporation
                  assuming the option in a transaction to which Section 424(a)
                  of the Code applies, except that

                                    (A) if the optionee shall cease to be an
                           employee by reason of his or her disability or by
                           reason of his or her retirement under an approved
                           retirement program of the Company or a subsidiary
                           thereof while holding an option which has not expired
                           and has not been fully exercised, the option shall
                           remain in full force and effect and may be exercised
                           in accordance with its terms until it expires by its
                           terms by the passage of time or is canceled or
                           terminated in accordance with its terms (it being
                           understood, however, that incentive stock option
                           federal income tax treatment will not be accorded
                           with respect to an option exercise made more than
                           three months after the optionee ceased to be an
                           employee by reason of such retirement or one year
                           after he ceased to be an employee by reason of
                           disability within the meaning of Section 22(e)(3) of
                           the Code or successor section); and

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                                    (B) if any person to whom an option has been
                           granted shall die holding an option which has not
                           been fully exercised, his or her estate or any person
                           who acquired the right to exercise the option by
                           bequest or inheritance or by reason of the death of
                           such person may, at any time within one year after
                           the date of such death (but in no event after the
                           option has expired by its terms by the passage of
                           time or has been canceled or terminated in accordance
                           with its terms) exercise the option with respect to
                           any shares as to which the decedent could have
                           exercised the option at the time of his or her death;
                           and

                                    (C) if the optionee shall cease to be an
                           employee for any reason other than disability,
                           retirement or death as provided in paragraphs (A) and
                           (B) of this Section 4(a)(iv), while holding an option
                           which has not expired and has not been fully
                           exercised, the Committee may, in its sole discretion,
                           amend the option to permit its exercise at any time
                           within six months (or such shorter period as the
                           Committee may specify) after the date on which the
                           optionee ceases to be an employee (but in no event
                           after the option has expired by its terms by the
                           passage of time or has been canceled or terminated in
                           accordance with its terms), provided that (I) any
                           optionee who exercises an option under this paragraph
                           (C) after he or she ceases to be an employee may not
                           elect to pay the "purchase price" on an installment
                           basis as provided in Section 4(d) hereof, and (II) it
                           is understood that incentive stock option federal
                           income tax treatment will not be accorded with
                           respect to an option exercise made, in accordance
                           with action by the Committee pursuant to this
                           paragraph, more than three months after the optionee
                           ceased to be an employee; and

                           (v) unless the person exercising the option makes
                  payment to the Company in full in United States dollars by
                  cash or check of such amount as is sufficient to satisfy the
                  Company's obligation, if any, to withhold federal, state and
                  local taxes by reason of such exercise or makes such other
                  arrangement satisfactory to the Committee as will enable the
                  Company to satisfy such obligation.

                  (d) Each option granted under the Plan shall be evidenced by
         an instrument in such form as the Committee shall prescribe from time
         to time in accordance with the Plan and all applicable laws and
         regulations and shall be subject to such terms and conditions relating
         to the time at which the option may first be exercised and the number
         of shares with respect to which it may thereafter be exercised from
         time to time (for example, in cumulative annual or other periodic
         installments), and to such additional terms and conditions not
         inconsistent with the Plan or applicable laws and regulations, as the
         Committee may in its discretion determine. Each nonqualified option
         granted under the Plan shall state that it is not to be treated as an
         incentive stock option. Each option granted under the Plan shall
         require that the person exercising the option shall, at the time notice
         of exercise is given pursuant to Section 4(c)(iii) hereof, make full
         payment in United States dollars by cash or check of the option
         exercise price of the shares being acquired except that, at the
         election of the Committee, an option may provide that, at the time
         notice of exercise is given pursuant to Section 4(c)(iii) hereof, the
         person exercising the option, at his or her election, shall either make
         full payment in United States dollars by cash or check of the option
         exercise price of the shares being acquired (sometimes hereafter called
         the "purchase price") or agree to pay such purchase price on an
         installment payment basis on the following terms and conditions:

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                           (i) The installments payable shall be the minimum
                  amounts required to be paid by Section 221.4(b) of Regulation
                  U of the Board of Governors of the Federal Reserve System as
                  in effect as of the date of exercise of the option
                  (hereinafter "Regulation U") or such greater installment
                  payments as the Committee may prescribe.

                           (ii) The person exercising the option shall not be
                  required to pay interest to the Company on the unpaid balance
                  of the purchase price.

                           (iii) The unpaid balance of the purchase price shall
                  be immediately payable in full upon demand made by the Company
                  to the optionee (or to the successor owner of the stock if the
                  optionee has died).

                           (iv) The shares for which the option is exercised
                  shall be issued to and registered in the name of the person
                  exercising the option but shall be endorsed by the person
                  exercising the option in blank (either on the certificate or
                  on a separate stock power) and held by the Company as
                  collateral security for the unpaid balance of the purchase
                  price. The person exercising the option shall not be permitted
                  to sell, withdraw, pledge or otherwise dispose of all or any
                  part of such collateral except at a time when such sale,
                  withdrawal, pledge or other disposition is permitted by
                  Regulation U. Subject to compliance with the immediately
                  preceding sentence, the person exercising the option shall
                  have the right at any time and from time to time to withdraw
                  part or all of the shares from the collateral so held by the
                  Company upon payment of the unpaid balance of the purchase
                  price of the shares withdrawn. For purposes of determining
                  such unpaid balance, each payment made otherwise than to
                  obtain withdrawal of shares under the immediately preceding
                  sentence shall be applied pro rata to all shares which at the
                  time of such payment are held by the Company as collateral for
                  the payment of the purchase price by the person exercising the
                  option. Upon default by the person exercising the option in
                  the making of any payment due under the foregoing provisions
                  of this subparagraph (d), the Company shall have with respect
                  to the collateral all of the rights of a secured party under
                  the Uniform Commercial Code as in effect in the State of New
                  York.

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                                    (E) The person exercising an option shall be
                           entitled, from the date of exercise of such option,
                           to all of the rights of a shareholder, including the
                           right to vote the shares and to receive and retain
                           all dividends paid thereon.

                  (e) The Committee is authorized in its discretion and with the
         consent of the optionee to make amendments, not in conflict with the
         Plan or any applicable law or regulation, in the terms of any option
         granted under the Plan.

                  (f) In addition to the methods of payment of the option
         exercise price authorized by subparagraph (d) next above, the option
         may provide that the person exercising the option, at his or her
         election, shall have the right to make payment at the time of exercise
         by delivering to the Company shares of Common Stock of the Company
         having a total fair market value equal to the option exercise price, or
         a combination of cash and such shares having a total fair market value
         equal to the option exercise price, provided, however, that all shares
         so delivered must have been beneficially owned by the person exercising
         the option for at least six months prior to the option exercise date
         and, upon request, the Company shall be given satisfactory proof of
         such beneficial ownership. For the purposes of the preceding sentence,
         the fair market value of a share of Common Stock shall be the mean
         between the high and low sale prices of the Common Stock on the trading
         day preceding the option exercise date as such prices are reported by
         and for the New York Stock Exchange, Inc. Composite Transactions.
         Certificates representing shares delivered to the Company pursuant to
         this paragraph shall be duly endorsed or accompanied by appropriate
         stock powers, in either case with signature guaranteed if so required
         by the Company.

         5. Change in Control.

                  (a) In the event of a "Change in Control" of the Company (as
         defined in paragraph (b) below), options outstanding under the Plan on
         the day preceding the date on which the Change in Control occurs (x)
         shall become exercisable in full on the date of the Change in Control
         (i.e., to the extent that any such option or portion thereof is not yet
         exercisable, the right to exercise such option in full shall be
         accelerated) and (y) shall remain fully exercisable, irrespective of
         whether the optionee ceases to be an employee of the Company or a
         subsidiary, until the date on which the option would otherwise expire
         by its terms by the passage of time.

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                  (b) A "Change in Control" for purposes of the Plan shall mean
         the occurrence of any of the following:

                           (i) the "Distribution Date" as defined in Section 3
                  of the Rights Agreement dated as of November 17, 1989 between
                  the Company and United States Trust Company of New York, as
                  Rights Agent as the same may have been amended or extended to
                  the time in question or in any successor agreement (the
                  "Rights Agreement"); or

                           (ii) any event described in Section 11(a)(ii)(B) of
                  the Rights Agreement; or

                           (iii) any event described in Section 13 of the Rights
                  Agreement, or

                           (iv) the date on which the number of duly elected and
                  qualified directors of the Company who were not either elected
                  by the Company's Board of Directors or nominated by the Board
                  of Directors or its Nominating Committee for election by the
                  shareholders shall equal or exceed one-third of the total
                  number of directors of the Company as fixed by its by-laws;

         provided, however, that no Change in Control shall be deemed to have
         occurred, and no rights arising upon a Change in Control pursuant to
         paragraph (a) of this Section 5 shall exist, to the extent that the
         Board of Directors of the Company so determines by resolution adopted
         prior to the Change in Control. Any such resolution may be rescinded or
         countermanded by the Board at any time. If the Board so determines by
         such resolution, and such resolution has not been rescinded or
         countermanded as permitted by the preceding sentence, the Board shall
         have the right to authorize (I) the cancellation and termination of all
         options then outstanding as of a date to be fixed by the Board,
         provided, however, that not less than 30 days written notice of the
         date so fixed shall be given to each optionee, and each optionee shall
         have the right during such period (irrespective of whether the optionee
         ceases to be an employee of the Company or a subsidiary during such
         period) to exercise his or her option as to all or any part of the
         shares covered thereby, including any shares as to which the option has
         not yet become exercisable, or (II) the substitution for each
         outstanding option of a new option meeting the requirements of Section
         424(a) of the Code.

         6. Interpretation. The words "employee", "own", "outstanding" and
"disposition", the term "subsidiary corporation" and any other words or terms
used in the Plan or in the options granted under the Plan which are defined or
used in Section 422 or 424 of the Code shall, unless the context clearly
requires otherwise, have the meanings assigned to them therein, irrespective of
whether or not such options are incentive stock options.

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         7. Reports and Returns. The appropriate officers of the Company shall
cause to be filed, or furnished to all employees to whom options have been
granted, any reports, returns or other information regarding the options granted
hereunder or any shares issued pursuant to the exercise thereof as may be
required by the Code, the Securities Act, the Exchange Act, the Employee
Retirement Income Security Act of 1974, Regulation U or any other applicable
statute, rule or regulation, as any such statute, rule or regulation has been
amended to the time in question.

         8. Amendment. The Plan may be amended at any time and from time to time
by the Board of Directors of the Company, but no amendment increasing the
aggregate number of shares which may be issued under options granted pursuant to
the Plan or affecting this sentence shall be effective unless the same be
approved by the shareholders of the Company not later than the date 12 months
after the Board adopts the amendment. No amendment of the Plan shall alter or
impair any of the rights or obligations of any person, without his or her
consent, under any option theretofore granted under the Plan.

         9. Termination. The Plan shall terminate upon the earlier of the
following dates or events to occur:

                  (a) upon the adoption of a resolution of the Board of
         Directors of the  Company terminating the Plan; or

                  (b) July 6, 2008.

         No termination of the Plan shall alter or impair any of the rights or
obligations of any person, without his or her consent, under any option
theretofore granted under the Plan.

10. Shareholder Approval. The Plan shall be submitted to the shareholders of the
Company for their approval before July 7, 1999. No option granted hereunder
shall be exercisable until such approval has been obtained. If the shareholders
do not approve the Plan before July 7, 1999, the Plan shall terminate and any
options theretofore granted hereunder shall thereupon be void without further
action of the Company. The shareholders shall be deemed to have approved the
Plan only if it is approved at a meeting of the shareholders duly held before
July 7, 1999, by vote taken in the manner required by the laws of the State of
New York.

[Note:  This Plan was adopted by the
Board of Directors on July 7, 1998,
approved by the shareholders at the annual
meeting on November 19, 1998, amended
by the Board of Directors on July 12, 2000,
with the approval of the shareholders at the annual
meeting on November 15, 2000, and amended
by the Board of Directors on April 17, 2002.]

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