Document:

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                                                                EXHIBIT 10.2 (a)

                                PALL CORPORATION

                           SUPPLEMENTARY PENSION PLAN

                    (As Amended and Restated on July 11, 2000
                               and July 17, 2001)

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                                PALL CORPORATION
                           SUPPLEMENTARY PENSION PLAN

                  Pall Corporation, a New York corporation (hereinafter called
the "Corporation"), recognizes the contributions to its growth and success which
have been made by certain key officers employed by the Corporation and desires
to retain the services of such individuals and to assure the Corporation of the
continued benefit of their experience and advice. Accordingly, the Corporation
has decided to provide such individuals with deferred compensation payable to or
for their benefit which, together with the other retirement benefits payable to
such individuals from the Corporation and under Title II of the Social Security
Act, will assure such individuals of sufficient funds during retirement.

                                    ARTICLE I
                                   DEFINITIONS

                   As used in this Pall Corporation Supplementary Pension Plan
(hereinafter called the "Plan"), the following terms shall have the meanings
described in this Article I:

                   Section 1.1 "Affiliated Corporation" means a member of a
controlled group of corporations of which the Corporation is a member. For
purposes hereof, a "controlled group of corporations" means a controlled group
of corporations as defined in section 1563(a) of the Internal Revenue Code,
determined without regard to Section 1563(b)(2)(C).

                  Section 1.2 "Board of Directors" means the board of directors
of the Corporation. Section 1.3 "Committee" means the Committee appointed and
acting for the time being pursuant to Article VI.

                  Section 1.4 "Compensation" means, for any Plan Year, the total
of all salary, incentive compensation and other bonus payments (a) received by
the Member for such Plan Year from all Affiliated Corporations plus (b) amounts
which a Member would have received for such Plan Year from Affiliated
Corporations but for the Member's election to contribute such amounts to any
employee benefit plan or program (including but not limited to the Pall
Corporation Profit-Sharing Plan, any "cafeteria plan" and the Management Stock
Purchase Plan and Employee Stock Purchase Plan adopted in 1999) pursuant to a
salary reduction or deduction agreement. The term "Compensation" does not
include any fringe benefits such as, but not limited to the provision of an
automobile or cash in lieu thereof, stock options, stock appreciation rights,
initial award or matching restricted stock units under the Management Stock
Purchase Plan, or other employer contributions by the Affiliated Corporations to
all or any employee retirement or benefit plans or programs, including but not
limited to the Pall Corporation Profit-Sharing Plan and Supplementary
Profit-Sharing Plan.

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                  Section 1.5 "Consumer Price Index" means the "Consumer Price
Index for all Urban Consumers for New York - Northern New Jersey - Long Island,
NY-NJ-CT" compiled and published by the Bureau of Labor Statistics of the United
States Department of Labor or any successor index thereto.

                  Section 1.6 "Early Retirement Date" means the last day of the
month coinciding with or immediately following the later of (a) the date on
which the Member attains age 60 and (b) the date on which the Member's pension
under the Plan vests in accordance with Section 2.1.

                  Section 1.7 "Effective Date" means August 1, 1978.

                  Section 1.8 Except as otherwise provided for specified Members
in Appendix A hereto, "Final Average Compensation" means one-third of the
aggregate of the Member's Compensation for the three (3) Plan Years in which his
Compensation was highest out of the last five (5) or fewer Plan Years in which
he was a Member. If a person has been a Member for less than three full Plan
Years, Final Average Compensation means the greater of (a) if he was a Member
for only one full Plan Year, then his Compensation for that Plan Year or if he
was a Member for two full Plan Years, then the average of his Compensation for
those two Plan Years and (b) the average of his Compensation for all Plan Years
in which he was a Member. In determining Compensation for a Plan Year for the
purpose of the two preceding sentences, the Member's Compensation for the entire
Plan Year shall be taken into account even if he was not a Member for the entire
Plan Year.

                  Section 1.9 "Former Member" means a person who at the time he
ceased to be a Member was entitled to benefits under Article II or Article III.

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                  Section 1.10 "Member" means:

                  (a) each person who on the Effective Date (i) had a written
         contract in effect with the Corporation concerning his performance of
         services for the Corporation, (ii) was an officer of the Corporation
         and (iii) was a member of the Qualified Pension Plan;

                  (b) each person who on February 10, 1982 or on any subsequent
         date prior to January 1, 1997 meets all of the following three
         conditions: (i) has a written contract in effect with the Corporation
         concerning his performance of services for the Corporation which
         contract does not provide that membership in the Plan is waived, (ii)
         is an officer of the Corporation (either a corporate officer elected by
         the Board of Directors or a divisional or non-corporate officer
         appointed by the President or the chief executive officer of the
         Corporation pursuant to the by-laws), and (iii) is a member of the
         Qualified Pension Plan;

                  (c) Each person who on January 1, 1997 or on any date
         thereafter meets all of the following three conditions: (i) is an
         officer of the Corporation residing in the United States (either a
         corporate officer elected by the Board of Directors or a divisional or
         non-corporate officer appointed by the chief executive officer pursuant
         to the by-laws), (ii) is a member of the Qualified Pension Plan; and
         (iii) has been approved in writing by the chief executive officer for
         membership in the Plan; and

                  (d) Each other person specified in Appendix B hereto.

                  A person who is ineligible to retire under Article III shall
cease to be a Member on the day his employment with the Corporation and all
other Affiliated Corporations terminates. A person shall also cease to be a
Member on the date he retires under Article III or dies.

             Section 1.11 "Normal Retirement Date" means the last day of the
month coinciding with or immediately following the date a Member attains age 65.

             Section 1.12 "Other Retirement Program" means the Qualified Pension
Plan, the Pall (U.K.) Ltd. Pension Fund, and in the case of a person who becomes
a Member after July 11, 2000 and who is subsequently transferred to an
Affiliated Corporation outside the United States, any pension or retirement
benefit, plan or program (including government sponsored pension programs)
covering employees of such Affiliated Corporation in which such Member accrues a
vested benefit.

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             Section 1.13 "Plan Year" means the twelve consecutive month period
beginning on August 1 and ending on July 31 of the following year.

             Section 1.14  "Primary Social Security Benefit" means the
following:

                  (a) in the case of a Member entitled to a pension under
         Section 3.1 or Section 3.4, the annual old-age insurance benefit
         payable to the Member on his Normal Retirement Date, as computed under
         the provisions of Title II of the Social Security Act in effect on his
         Normal Retirement Date;

                  (b) in the case of a Member entitled to a pension under
         Section 2.2 or Section 3.2, the annual old-age insurance benefit
         payable to the Member on his Normal Retirement Date, as computed under
         the provisions of Title II of the Social Security Act in effect on the
         date his pension commences under Section 2.2 or Section 3.2; in making
         such computation in the case of a Member entitled to a pension under
         Section 2.2, it will be assumed that the Member will continue to
         receive "wages" as defined in Title II of the Social Security Act in
         each Plan Year until his Normal Retirement Date in the same amount as
         the Compensation he received in the last Plan Year during which he was
         a Member for the entire Plan Year; and

                  (c) in the case of a Member entitled to a pension under
         Section 3.3, the annual disability benefit payable to the Member under
         the provisions of Title II of the Social Security Act in effect on the
         date his pension commences under Section 3.3.

                  The Committee may adopt rules governing the computation of the
Primary Social Security Benefit which shall be uniformly applicable to all
persons similarly situated. The non-receipt by a Former Member of his Primary
Social Security Benefit because of failure to apply for the same, continued
employment, or for any other reason, shall be disregarded.

                  Section 1.15 "Qualified Domestic Trust" means a trust
described in section 2056A of the Internal Revenue Code of 1986, as amended.

                  Section 1.16 "Qualified Pension Plan" means the plan qualified
under Section 401(a) of the Internal Revenue Code which was originally known as
the Pall Corporation Retirement Plan, subsequently known as the Pall Corporation
Pension Plan and, effective November 1, 1999, became known as the Pall
Corporation Cash Balance Pension Plan.

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                  Section 1.17 "Total and Permanent Disability" means such
disability as entitles the Member to a Social Security certificate of disability
award under the Federal Social Security Act, as from time to time amended, and
the possession of such a certificate by a Member shall, unless and until it is
revoked, be conclusive evidence of such disability. The Committee may require a
disabled Former Member, from time to time, but not more than once each Plan
Year, to furnish the Committee with evidence satisfactory to the Committee that
such certificate has not been Revoked.

                                   ARTICLE II
                                     VESTING

                  Section 2.1 (a) Normal Vesting. Each Member whose services for
the Corporation and all other Affiliated Corporations terminate for any reason
(other than his death) under circumstances in which he is not entitled to
retirement benefits under any of the provisions of Article III, shall, subject
to the provisions of Section 4.3, be entitled to a vested pension in the amount,
and payable at such time, as provided in this Article, provided, however, that,
notwithstanding the foregoing, except as provided in Section 2.1(b) a person who
becomes a Member on or after February 10, 1982 shall not be entitled to a vested
pension under this Article II unless (a) he is an employee of an Affiliated
Corporation on the earlier of (i) his 60th birthday and (ii) the date on which
he has been employed by an Affiliated Corporation or Corporations for a period
of 25 years or (b) he has held the position of Executive Vice President of the
Corporation at any time after February 10, 1982, provided further, however, that
any person who becomes a Member after July 11, 2000 shall not be entitled to a
vested pension until he has been a Member for five years.

                  (b) Upon Change in Control. In addition to the vesting
provided for in Section 2.1(a), upon the occurrence of a Change in Control (as
hereinafter in this paragraph defined) each Member (A) whose services for the
Corporation and all other Affiliated Corporations terminate for any reason
(other than his death) under circumstances in which he is not entitled to
retirement benefits under any of the provisions of Article III and (B) who was a
member of the Operating Committee of the Corporation at any time during the
30-day period immediately preceding the occurrence of such Change in Control
shall, subject to the provisions of Section 4.3, be entitled to a vested pension
in the amount, and payable at such time, as provided in this Article. A "Change
in Control" for purposes of this Section 2.1(b) shall mean the occurrence of any
of the following:

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

                  (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 Corporation who were not
                           either elected by the Corporation'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 Corporation as fixed
                           by its by-laws.

                  Section 2.2 Amount and Payment of Vested Pension. The vested
pension shall be a monthly pension commencing on the first day of the month
after such Former Member has attained his Early Retirement Date. The monthly
pension under this Section shall be equal to the amount computed under Section
3.1, without any reduction if the pension of such Former Member commences prior
to his Normal Retirement Date.

                  Section 2.3 Death Benefit to Spouse. If a Member dies after
becoming entitled to a vested pension but prior to becoming entitled to
retirement benefits under any of the provisions of Article III, and prior to the
commencement of the payment of his pension under this Article, and if such
Member is survived by a spouse to whom he has been lawfully married for at least
one year prior to his death, then such spouse shall be entitled to receive a
monthly pension for life, commencing on the first day of the month following the
date of the Member's death or, if later, the date that would have been the
Member's Early Retirement Date if he had not died. The monthly pension under
this Section shall be equal to fifty percent (50%) of the pension, computed in
accordance with Section 3.1, the Member would have been entitled to receive if
he had retired on the later of his Early Retirement Date or the date of his
death.

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                  Notwithstanding the foregoing, if a federal estate tax marital
deduction is available for amounts passing to a Member's spouse only if such
amounts pass in a Qualified Domestic Trust, then the amounts otherwise payable
to such spouse pursuant to this Section 2.3 upon the Member's death shall not be
paid to such spouse but shall be paid, instead, to a Qualified Domestic Trust,
if the Member has so directed either (x) in a written instrument executed by the
Member and filed with the Committee (and not revoked by him prior to his death)
or (y) in the Member's last will and testament. Any payments to be made to a
Qualified Domestic Trust pursuant to the preceding sentence shall be made in the
same amounts, and at the same times, as such payments would have been made if
payable directly to the Member's spouse in the absence of such direction.

                                   ARTICLE III
                                    BENEFITS

                  Section 3.1 Normal Retirement Pension. Each Member who retires
on his Normal Retirement Date shall be entitled to receive a monthly pension
commencing on the first day of the month following his Normal Retirement Date.
The monthly pension payable under this Section shall be equal to one-twelfth
(1/12) of the amount determined as follows:

                  (a) fifty percent (50%) of the Member's Final Average
         Compensation (seventy percent (70%) as to a Member who on March 16,
         1987 held the office of Executive Vice President of the Corporation),
         reduced by

                  (b)  the sum of

                           (i) the total annual pension payable to the Member
         under all Other Retirement Programs (excluding any portion thereof
         attributable to contributions to such Other Retirement Programs by such
         Member), and

                           (ii) the Member's Primary Social Security Benefit.

For purposes of this Section, the amount of the pension payable to the Member
under any Other Retirement Program shall be deemed to be the amount payable
thereunder to the Member in the form of a single life annuity for the Member's
life, whether or not the Member receives payment of such pension in such form;
provided, however, that the amount of such pension shall be taken into account
under (b)(i) above only on and after the date on which payment of the Member's
pension under such Other Retirement Program commences or is paid. For purposes
of the preceding sentence, if a Member elects a lump sum distribution under the
Qualified Pension Plan as amended effective November 1, 1999, the Member's
pension under the Qualified Pension Plan shall be deemed to have commenced on
the date on which such lump sum distribution is due to be paid by the terms of
the Qualified Pension Plan.

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                  Section 3.2 Early Retirement Pension. A Member who has
attained his Early Retirement Date may retire on the last day of any month which
is not less than thirty (30) days after he has filed a written request for
retirement on such day with the Committee. In such event, a Member shall be
entitled to receive a monthly pension commencing on the first day of the month
after his retirement. The monthly pension under this Section shall be equal to
the amount computed under Section 3.1, without any reduction because payment
commences prior to his Normal Retirement Date.

                  Section 3.3 Disability Retirement Pension. A Member who
suffers Total and Permanent Disability shall retire and shall be entitled to
receive a monthly pension commencing on the first day of the month after such
disability has continued for six months and continuing only during such period
during which such Member suffers Total and Permanent Disability. Notwithstanding
the foregoing, the pension of any Member who ceases to suffer Total and
Permanent Disability after he has attained his Normal Retirement Date shall
continue during his lifetime. The monthly pension under this Section shall be
equal to the amount computed under Section 3.1 without any reduction because
payment commences prior to his Normal Retirement Date.

                  Section 3.4 Deferred Retirement Pension. Each Member who
retires after his Normal Retirement Date shall be entitled to receive a monthly
pension commencing on the later of (i) the first day of the month in which his
pension under any Other Retirement Program commences or (ii) the first day of
the month after his retirement. The monthly pension under this Section shall be
equal to the greater of (a) the amount computed under Section 3.1 or (b) the
amount computed under Section 3.1 after first determining "Final Average
Compensation" on the basis of the Plan Year in which the Member's Normal
Retirement Date occurred and the immediately preceding four Plan Years (the
immediately preceding nine Plan Years in the case of the persons who were
Chairman of the Board, Vice Chairman of the Board and President of the
Corporation on March 16, 1987) and then multiplying the pension amount thus
computed by the percentage increase, if any, of the Consumer Price Index for the
month immediately preceding the month in which the Member's pension under this
Section is to commence over the Consumer Price Index for the month in which the
Member's Normal Retirement Date occurred.

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                  Section 3.5 Death Benefit to Spouse. If a Member who is
eligible to retire and thereupon receive a pension under this Article dies prior
to the commencement of payment of his pension and the Member is survived by a
spouse to whom he has been lawfully married for at least one year prior to his
death, such spouse shall be entitled to receive a monthly pension for life,
commencing on the first day of the month following the date of the Member's
death. The monthly pension under this Section shall be equal to fifty percent
(50%) of the pension the Member would have been entitled to receive under this
Article had he retired on the date of his death under the Plan and all Other
Retirement Programs in which he was a participant.

                  Notwithstanding the foregoing, if a federal estate tax marital
deduction is available for amounts passing to a Member's spouse only if such
amounts pass in a Qualified Domestic Trust, then the amounts otherwise payable
to such spouse pursuant to this Section 3.5 upon the Member's death shall not be
paid to such spouse but shall be paid, instead, to a Qualified Domestic Trust,
if the Member has so directed either (x) in a written instrument executed by the
Member and filed with the Committee (and not revoked by him prior to his death)
or (y) in the Member's last will and testament. Any payments to be made to a
qualified Domestic Trust pursuant to the preceding sentence shall be made in the
same amounts, and at the same times, as such payments would have been made if
payable directly to the Member's spouse in the absence of such direction.

                  Section 3.6 Restoration of Former Members to Employment. If
any Former Member who is entitled to a pension under Article II or this Article
again becomes an employee of any Affiliated Corporation, his pension (if any was
being paid) shall cease. Upon his subsequent retirement or other termination of
employment his pension shall (i) recommence (if it was being paid) and (ii) be
recomputed under Article II or Article III taking into consideration his Final
Average Compensation and the total annual pension payable to the Member under
all Other Retirement Programs as the date of such subsequent retirement or other
termination of employment.

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                                   ARTICLE IV
                          PAYMENT AND FORM OF PENSIONS

                  Section 4.1 Payment of Pensions. All pensions payable pursuant
to Article II or Article III shall, upon application therefor by a Member,
Former Member, spouse or beneficiary and approval thereof by the Committee, be
paid by the Corporation, acting on the direction of the Committee, provided,
however, that the Corporation shall be obligated to pay a pension to which a
Member, Former Member, spouse or beneficiary is entitled by the terms of this
Plan notwithstanding the failure or refusal of the Committee to approve or
direct payment of such pension unless the Committee has a valid basis for such
failure or refusal by the terms of this Plan. Payment of pensions shall begin on
the first day of the month as provided in Article II or Article III and shall
cease after the first day of the month coinciding with or immediately preceding
the death of the Former Member, spouse or beneficiary.

                  Section 4.2 Form of Pensions. The pension payable to a Member
or Former Member under Article II or Article III shall be paid in such form as
the Member or Former Member has elected, other than a single lump sum
distribution form, and provided that, on the day on which the Member or Former
Member makes such election, his elected form of payment is an authorized form of
payment under any Other Retirement Program in which the Member or Former Member
is a participant. If the pension the Member or Former Member receives under this
Plan is to be paid in a form other than a monthly pension payable only during
the lifetime of the Member or Former Member, such pension shall be adjusted so
that it is the actuarial equivalent of such lifetime only pension. The actuarial
factors used in determining such actuarial equivalent shall be the same
actuarial factors which are in use, on the day on which the pension hereunder
commences, by the Other Retirement Program to determine actuarial equivalence
for the same form of payment in which the Member's or Former Member's pension
hereunder is to be paid.

                  An election as to the form of payment for the pension payable
to a Member or Former Member under Article II or Article III shall be made in
writing, shall specify the form of payment selected, and shall be filed with the
Committee no later than 30 days after such individual has become a Member
pursuant to Section 1.10 or, in the case of any individual who was a Member or
Former Member on May 1, 1989, by no later than June 30, 1989.

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                  At the time such election is made, the Member or Former Member
may also elect an alternative form of payment for his pension hereunder, and
have payment of his pension made automatically in such alternative form in the
event that (a) in the case of a Member or Former Member who is single at the
time of his election, the Member or Former Member is married at the time payment
of his pension is to commence or (b) in the case of a Member or Former Member
who is married at the time of his election, such Member or Former Member is not
married or is legally separated at the time payment of his pension is to
commence, or, if at such time, the Member or Former Member's spouse has a
terminal illness. The spouse of a Member or Former Member shall be treated as
having a "terminal illness" if the spouse has incurred any illness or injury
that, in the judgment of the Committee, has been determined by competent medical
evidence to be likely to result in the death of such spouse within a period of
three years from the date on which the terminal nature of such illness or injury
was first determined.

                  A Member or Former Member may elect, as an alternative form of
payment, any form, other than a single lump sum distribution form, that, on the
day on which such election is made, is an authorized form of payment under any
Other Retirement Program in which the Member or Former Member is a participant.
Any individual who was a Member or Former Member on June 30, 1989, may elect an
alternative form of payment pursuant to the preceding paragraph by specifying in
writing the alternative form selected and filing same with the Committee no
later than 30 days after December 19, 1989.

                  Any election made by a Member or Former Member as to the form
of payment, or alternative form of payment, of his pension hereunder shall be
irrevocable.

                  Notwithstanding any other provision herein to the contrary, if
under the form of payment that a Member or Former Member has elected under this
Section 4.2 any amounts are otherwise payable to the Member's or Former Member's
spouse upon the death of the Member or Former Member, and if at the time of the
Member's or Former Member's death a federal estate tax marital deduction is
available for amounts passing to such Member's or Former Member's spouse only if
such amounts pass in a Qualified Domestic Trust, then the amounts so payable
shall not be paid to such spouse but shall be paid, instead, to a Qualified
Domestic Trust, if the Member or Former Member has so directed, either (x) in a
written instrument executed by the Member or Former Member and filed with the
Committee (and not revoked by him prior to his death) or (y) in the Member or
Former Member's last will and testament. Any payments to be made to a Qualified
Domestic Trust pursuant to the preceding sentence shall be made in the same
amounts, and at the same times, as such payments would have been made if payable
directly to the Member's or Former Member's spouse in the absence of such
direction.

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                  Section 4.3 Conditions of Payment of Pensions. The payment of
any pension under this Plan to a Former Member, spouse or beneficiary is
contingent on the following:

                  (a) that at no time either prior to or subsequent to
         retirement or other termination of employment shall such Member or
         Former Member engage in any business or other activity which, in the
         reasonable judgment of the Committee, is competitive with any activity
         of an Affiliated Corporation, except that it shall not be deemed a
         violation of this Section 4.3(a) or of Section 4.3(b) for a Member or
         Former Member to engage in any such competitive activity after the
         Corporation has terminated an employment agreement in effect with such
         Member or Former Member if by the terms of such employment agreement
         the Member or Former Member is not prohibited from engaging in such
         competitive activity immediately following such termination by the
         Corporation;

                  (b) that at no time either prior to or subsequent to his
         retirement or other termination of employment shall such Member or
         Former Member violate the provisions of his secrecy or invention
         agreements with the Corporation (if the Member or Former Member is or
         was a party to the "Pall Corporation Employee Agreement" substantially
         in the form annexed as Exhibit A to the Plan as amended in October
         1987, then said Employee Agreement shall be deemed a "secrecy or
         invention agreement" referred to in this Section 4.3(B)), and

                  (c) that such Member or Former Member shall not have been
         discharged by the Corporation or another Affiliated Corporation as a
         result of gross negligence or willful misconduct, and he shall not,
         while a Member, have engaged in conduct which, had it been known at the
         time, would have resulted, on the grounds of gross negligence or
         willful misconduct, in his discharge by the Corporation or another
         Affiliated Corporation.

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                  If the Committee determines that such Member or Former Member
has violated any of the conditions of this Section it shall notify such Member
or Former Member and the obligation of the Corporation to make any payments to
such Member or Former Member or his spouse or beneficiary shall forthwith
terminate, provided that no amount paid prior to the date of such determination
by the Committee shall be required to be repaid. Any action by the Committee
under this Section must be taken within one year from the date by which the
facts which constitute a violation of any of the conditions of this Section have
been brought to the attention of the Committee.

                                    ARTICLE V
                         CERTAIN RIGHTS AND LIMITATIONS

                  Section 5.1 Prohibition Against Alienation of Benefits. No
benefit under the Plan shall be subject in any manner to anticipation, sale,
transfer, assignment, pledge, encumbrance or charge, and any attempt so to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the
same shall be void; nor shall any such benefit be in any manner liable for or
subject to garnishment, attachment, execution or levy, or liable for or subject
to the debts, contracts, liabilities, engagements or torts of the person
entitled to such benefits; and in the event that the Committee shall find that
any Member, Former Member or his spouse or beneficiary has become bankrupt or
has attempted to anticipate, alienate, sell, transfer, assign, pledge, encumber
or charge any benefits under the Plan, then payment of such benefit shall, in
the discretion of the Committee, cease and terminate, and in that event the
Committee shall hold or apply the same to or for the benefit of such Member,
Former Member or spouse or the children or other dependents of the same, or
beneficiary in such manner and in such proportions as the Committee may deem
proper, and any such application shall be a complete discharge of all
liabilities of the Corporation therefor.

                  Section 5.2 Incompetency. In the event that the Committee
shall find that a Member, Former Member or other person entitled to a benefit
under the Plan is unable to care for his affairs because of illness or accident
or because he is a minor, the Committee may direct that any benefit payment due
him, unless claim shall have been made therefor by a duly appointed guardian,
committee or other legal representative, be paid to a spouse, child, parent or
other blood relative of such person or to anyone found by the Committee to have
incurred expense for the support and maintenance of such person, and any such
payment so made shall be a complete discharge of all liabilities of the
Corporation therefor.

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                  Section 5.3 No Right to Continued Employment. The
establishment and continuation of the Plan by the Corporation shall not confer
any legal rights upon any Member or any person to continued employment, nor
shall such establishment or continuation interfere with the rights of the
Corporation to discharge any Member and to otherwise treat him without regard to
the effect which such discharge might have upon him as a Member.

                  Section 5.4 Payment of Taxes. The Corporation shall have the
right to deduct and withhold from any amount which it is otherwise obligated to
pay under the Plan any amount which it may be required to deduct or withhold
pursuant to any applicable statute, law, regulation or order of any jurisdiction
whatsoever. The Corporation shall not be required to pay any amount to the
spouse or beneficiary of any deceased Member pursuant to Article III until such
spouse, beneficiary or the legal representatives of the deceased Member shall
have furnished the Committee with evidence satisfactory to the Corporation of
the payment or the provision for the payment of any estate, transfer,
inheritance or death taxes which may be payable with respect thereto.

                                   ARTICLE VI
                           ADMINISTRATION OF THE PLAN

                  Section 6.1 Appointment of Committee. The Board of Directors
shall appoint a Committee of not less than three nor more than five persons who
shall serve at the pleasure of said Board. Any vacancy in the Committee arising
by death, resignation or otherwise shall be filled by the Board of Directors.

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                  Section 6.2 Duties and Powers of the Committee. The Committee
shall be responsible for the control and management of the operation and
administration of the Plan and the proper execution of its provisions. It shall
also be responsible for the construction of the Plan and the determination of
all questions arising hereunder. It shall maintain all necessary books of
accounts and records. In furtherance of the foregoing, the Committee shall have
the sole power and responsibility (i) to establish, interpret, enforce, amend
and revoke from time to time such rules and regulations for the administration
of the Plan and the conduct of its business as it deems appropriate, provided
such rules and regulations are uniformly applicable to all persons similarly
situated, (ii) to receive and approve or disapprove (where approval is required)
elections of Members and Former Members to receive benefits, to otherwise
determine the entitlement of Members, Former Members and their spouses and
beneficiaries to benefits under the Plan and to decide any disputes which may
arise relative to the rights of the Members, Former Members and their spouses
and beneficiaries with respect to such benefits, and (iii) to keep all
appropriate records and data pertaining to the interests of the Members, Former
Members and their spouses and beneficiaries in the Plan. Any action which the
Committee is required or authorized to take shall, to the extent permitted by
applicable law, be final and binding upon each and every person who is or may
become interested in the Plan, provided, however, that nothing in this Section
6.2 is intended to or shall be deemed or construed to empower the Committee to
deny to any person a pension to which such person is entitled by the terms of
this Plan other than this Section 6.2 or to deprive any person of the right to a
determination by a court of competent jurisdiction of whether such person is
entitled to a pension pursuant to this Plan and of the amount and other terms of
such pension.

                  Section 6.3 Conduct of Affairs of Committee. The Committee
shall hold such meetings upon such notice at such place or places and at such
times as it may from time to time deem appropriate. The Committee may act by a
majority of its members in office from time to time. The action of such majority
may be taken at a meeting of the Committee or pursuant to written consent of
such majority without a meeting. It shall elect from time to time one of its own
members to act as Chairman and a different person, who may but need not be a
member of the Committee, to act as Secretary. It may authorize any one or more
of its members to execute and deliver any documents on behalf of the Committee.

                  Section 6.4 Expenses and Liability. The expenses of
administering the Plan shall be paid by the Corporation. The members of the
Committee shall serve without compensation for their services as such, but shall
be reimbursed by the Corporation for any expenses they may individually or
collectively incur in the performance of their duties hereunder. No member of
the Committee shall be personally liable for anything done or omitted to be done
by him unless it shall have been judicially determined that the member failed to
perform his duties under the Plan in good faith and in a prudent manner.

                                       15
<PAGE>

                  Section 6.5 Indemnification of Committee Members. The
Corporation shall, to the maximum extent permitted under applicable law,
indemnify each member of the Committee from and against any and all claims,
actions, demands, losses, damages, expenses and liabilities arising from any act
or omission of the member in connection with the performance of his duties
hereunder and for which the member is not reimbursed or otherwise made whole
under any contract or contracts of insurance maintained by the Corporation for
the purpose of indemnifying the member from and against any and all such claims,
actions, demands, losses, damages, expenses and liabilities which may arise
therefrom. Such indemnification shall include attorneys' fees and all other
costs and expenses reasonably incurred by the member in defense of any claim or
action brought or asserted against him arising from such act or omission.
Notwithstanding the foregoing, the Corporation shall not indemnify any member of
the Committee with respect to any claims, actions, demands, losses, damages,
expenses and liabilities arising from any act or omission of the member with
respect to the performance of his duties hereunder if such act or omission is
deemed by the Corporation to constitute gross negligence, willful misconduct,
criminal conduct or dealing with the Plan for his own benefit or for his own
account.

                  Section 6.6 Claims Procedure. A Member, Former Member, spouse
or beneficiary may claim any benefits under the Plan which such person believes
is properly payable pursuant to the provisions of the Plan by filing an
application therefor. Such claim shall be filed with the Committee on a form
approved by it. The claim shall be approved or denied by the Committee within
ninety (90) days after the claim was filed. If the Committee in its sole
discretion determines that special circumstances exist which require an
extension of time to process the claim, the Committee shall (i) give the
claimant written notice, within ninety (90) days after the claim was filed,
specifying the special circumstances and the expected date of a decision on the
claim and (ii) approve or deny the claim within 180 days after the claim was
filed.

                                       16
<PAGE>

                  If the claim is denied in full or in part, the claimant shall
be given written notice setting forth, in a manner calculated to be understood
by the claimant, (i) the specific reason or reasons for such denial, (ii)
specific reference to the pertinent provision or provisions of the Plan upon
which such denial was based, (iii) a description of any additional information,
documentation or other material necessary for the claimant to perfect his claim
and an explanation of why such information, documentation or other material is
necessary, and (iv) an explanation of the procedure for obtaining a review of
the denial of the claim. The claimant or his duly authorized representative may
request a review of the denial of the claim by filing with the secretary of the
Committee a written request for review within, and only within, the period of
sixty (60) days commencing with the date the denial of the claim was posted by
registered or certified mail to the claimant. The claimant and his duly
authorized representative shall be given a reasonable opportunity to review the
documents of the Plan and to submit their written issues and comments to the
Committee at any time prior to the expiration of the aforesaid 60-day period.

                  Within the period of sixty (60) days of the date a request for
review of a denial of claim is received by the Committee, the Committee shall
consider the request and post its final decision to the claimant by registered
or certified mail. In the event that the Committee in its sole discretion
determines that a hearing is warranted, and a hearing is held before the
Committee (at which hearing the claimant and his duly authorized representative
shall be given a reasonable opportunity to present their views), or in the event
that the Committee determines that the case otherwise presents special
circumstances requiring an extension of time for processing the request for
review, the Committee shall (i) give the claimant written notice of the
extension within sixty (60) days after receiving the request for review and (ii)
post its final decision to the claimant by registered or certified mail not
later than 120 days after the date the request for review was received by the
Committee. Such decision shall be written in a manner calculated to be
understood by the claimant, and shall fully set forth the reason or reasons for
the decision, with specific references to the pertinent provision or provisions
of the Plan upon which the decision was based.

                                       17
<PAGE>

                                   ARTICLE VII
                             CONTRACTUAL OBLIGATION

                  The obligation of the Corporation under this Plan to make
payments of pensions when due is merely contractual, and all such pensions shall
be paid from the general revenues of the Corporation. Nothing contained in this
Plan shall require the Corporation to segregate or earmark any cash or other
property for any Member, Former Member, spouse or beneficiary.

                                  ARTICLE VIII
                            AMENDMENT AND TERMINATION

                  Section 8.1 Amendment and Termination. The Plan may not be
amended or terminated, in whole or in part, without the written consent of (a)
each Member, (b) each Former Member and (c) any spouse or beneficiary of a
Member or Former Member who at the time of the proposed amendment or termination
is receiving benefits under the Plan subsequent to the death of the Member or
Former Member. Notwithstanding the foregoing, no such consent shall be required
from a Member, Former Member, spouse or beneficiary as to whom the proposed
amendment to, or termination of, the Plan would not under any circumstances or
at any time reduce the benefits payable under the Plan to such Member, Former
Member, spouse or beneficiary.

                  Section 8.2 Successors and Assigns. The Plan shall be binding
upon and inure to the benefit of the Corporation and its successors and assigns,
but no assignment shall relieve the Corporation of any of its obligations or
liabilities hereunder to a Member, Former Member, spouse or beneficiary without
the written consent of such person.

                                   ARTICLE IX
                                  CONSTRUCTION

                  9.1 Governing Law. This Plan shall be governed by and
construed in accordance with the laws of the State of New York.

                  9.2 Words and Headings. As used herein, the masculine gender
shall be deemed to refer to the feminine, and the singular person shall be
deemed to refer to the plural, wherever appropriate. The headings of Articles
and Sections are inserted for convenience and reference only, and in the event
of any conflict between the text of any provision of the Plan and the heading
thereof, the text shall control.

                                       18
<PAGE>

                           SUPPLEMENTARY PENSION PLAN
                                   APPENDIX A

         Anything in Section 1.8 to the contrary notwithstanding: (a) in the
case of each Member who on March 16, 1987 held the office of Chairman of the
Board (David B. Pall), Vice Chairman of the Board (Abraham Krasnoff) or
President (Maurice G. Hardy) of the Corporation, the term "Final Average
Compensation" means one-half of the aggregate of such Member's Compensation for
the two (2) Plan Years in which his Compensation was highest out of the last ten
(10) Plan Years in which he was a Member; (b) in the case of Henry Petronis, who
on March 16, 1987 held the office of Executive Vice President of the
Corporation, the term "Final Average Compensation" means one-half of the
aggregate of such Member's Compensation for the two (2) Plan Years in which his
Compensation was highest out of the last five (5) Plan Years in which he was a
Member; (c) in the case of Stanley Wernick, who on April 28, 1992 held the
office of Senior Vice President and Treasurer and Chief Financial Officer of the
Corporation, the term "Final Average Compensation" means one-half of the
aggregate of such Member's Compensation for the two (2) Plan Years in which his
Compensation was highest out of the last five (5) Plan Years in which he was a
Member; and (d) in the case of Arnold Weiner, who on October 6, 1997 was a Group
Vice President of the Corporation, the term "Final Average Compensation" means
one-third of the aggregate of his Compensation for the three (3) Plan Years in
which his Compensation was highest out of the last seven (7) Plan Years in which
he was a Member.

<PAGE>

                           SUPPLEMENTARY PENSION PLAN
                                   APPENDIX B

         Supplementing Section 1.10, "Member" means, in addition to the persons
identified therein, the following :

                  (e) each person who on October 20, 1980 held the office of
         President of either of the following Affiliated Corporations:

                           Mectron Industries Inc.

                           Pallflex, Inc.;

                  (f) the person who, on July 6, 1986, held the office of
         President of Pall Pneumatic Products Corporation (an Affiliated
         Corporation); and

                  (g) Roy Sheaff, who on May 1, 1990 was an appointed vice
         president of the Corporation.<PAGE>

                                                                EXHIBIT 10.3 (a)

                                PALL CORPORATION
                2001 Stock Option Plan for Non-Employee Directors

ss. 1.   Purpose

         The purpose of this Pall Corporation 2001 Stock Option Plan for
Non-Employee Directors (the "Plan") is to secure for Pall Corporation (the
"Company") and its stockholders the benefits of the incentive inherent in
increased common stock ownership by the members of the Board of Directors of the
Company (the "Board") who are not employees of the Company or any of its
subsidiaries.

ss. 2.   Administration

         The Plan shall be administered by the Compensation Committee of the
Board (the "Committee"). The Committee shall have all the powers vested in it by
the terms of the Plan. However, the Board, not the Committee, shall have the
sole power and authority (within the limitations described herein) to prescribe
the form of the document embodying and evidencing stock options granted under
the Plan ("Options"). The Committee shall, subject to the provisions of the
Plan, have the power to construe the Plan, to determine all questions arising
thereunder and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable. 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 the Secretary or any other officer of the Company to execute and
deliver documents in connection with the Plan, including Options granted under
the Plan. No member of the Committee shall be liable for anything done or
omitted to be done by such member 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.

ss. 3.   Amount of Stock

         The stock which may be issued and sold under the Plan shall be the
Common Stock of the Company ("Common Stock") of a total number not exceeding
400,000 shares, subject to adjustment as provided in ss. 6 hereof. The stock to
be issued may be either authorized and unissued shares or reacquired shares. In
the event that Options granted under the Plan shall terminate or expire without
having been exercised in full, new Options may be granted covering the shares
not purchased under such lapsed Options.

ss. 4.   Eligibility and Grant of Options

         As used herein, the term "Granting Date" means the fifth day of January
in each year during which the Plan is in effect beginning with the year 2002
except that if said date is not a day on which trading takes place on the New
York Stock Exchange, the Granting Date shall be the first day after January 5th
on which trading does take place on said Exchange. Each member of the Board who
is not an employee of the Company or any of its subsidiaries at the time when
Options are to be granted under the ensuing provisions of this ss. 4 (a
"Non-Employee Director") shall automatically, by virtue of the Plan and without
any action by the Committee or the Board, be granted an Option as follows:

<PAGE>

         (a) On each Granting Date, each Non-Employee Director who was elected a
director of the Company by shareholders at the annual meeting of shareholders
next preceding such Granting Date for the first time (i.e., disregarding any
previous election of such person by the Board) shall be granted an Option on
12,000 shares (an "Initial Grant").

         (b) On the Granting Date in 2002 and in every second year thereafter
(e.g., 2004, 2006, etc.), each person who is a Non-Employee Director on such
Granting Date and who is not entitled to an Initial Grant under ss. 4(a) on such
Granting Date shall be granted an Option on 7,500 shares.

ss. 5.   Terms and Conditions of Options

         Each Option granted under the Plan shall be evidenced by an instrument
in such form as the Board shall prescribe from time to time in accordance with
the Plan and all applicable laws and regulations and shall be subject to the
following terms and conditions and those set forth elsewhere in the Plan, which
terms and conditions shall be deemed incorporated in each Option by reference to
the provisions of the Plan:

         (a) The Option exercise price shall be the Fair Market Value (as
defined in ss. 7(a) hereof) of the shares of Common Stock subject to such Option
on the date the Option is granted (the "date of grant") but in no event less
than the par value of the shares.

         (b) No part of an Option may be exercised (i) before the first
anniversary of the date of grant or (ii) after the tenth anniversary of the date
of grant. The minimum number of shares with respect to which an Option may be
exercised in part at one time shall be the lesser of (i) 100 or (ii) the number
of shares remaining available under the Option. Subject to the foregoing and to
the ensuing provisions of this ss. 5, an Option may be exercised as follows:

                  (i) at any time or times from the first anniversary of the
         date of grant to the date preceding the second anniversary, both such
         dates inclusive, for any number of shares up to 25 percent of the
         number of shares covered thereby;

                  (ii) at any time or times from the second anniversary of the
         date of grant to the date preceding the third anniversary, both such
         dates inclusive, as to any number of shares which, when added to the
         shares as to which such Option has theretofore been exercised, will not
         exceed 50 percent of the number of shares covered thereby;

                                       2
<PAGE>

                  (iii) at any time or times from the third anniversary of the
         date of grant to the date preceding the fourth anniversary, both such
         dates inclusive, as to any number of shares which, when added to the
         shares as to which such Option has theretofore been exercised, will not
         exceed 75 percent of the shares covered thereby; and

                  (iv) at any time or times from the fourth anniversary of the
         date of grant to the tenth anniversary, both such dates inclusive, as
         to any number of shares which, when added to the shares as to which the
         Option has theretofore been exercised, will not exceed the total number
         of shares covered thereby.

         (c) 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
the optionee's lifetime only by the optionee, or if a legal guardian or other
legal representative is appointed for an optionee, by such guardian or
representative, except that an Option in its entirety (or the entire portion
thereof remaining after any partial exercise thereof) is transferable to any
"family member" of the optionee, as the term "family member" is defined, at the
time of any such proposed transfer, in the General Instructions to Form S-8
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933 as amended (the "Securities Act"). It is a condition
to any such transfer to a family member that (i) not less than 20 days before
any such transfer, or such shorter period as the Committee may authorize in a
particular case, the optionee has notified the Secretary of the Company of his
or her intention to make such transfer and (ii) such transfer complies with the
requirements of said General Instructions to Form S-8 which are conditions to
the registration under the Securities Act on said Form S-8 of the issuance and
sale to the transferee of the shares issuable upon exercise of the Option,
including but not limited to the provision of said General Instructions that
Form S-8 is not available for the exercise of Options transferred "for value" as
defined therein. (For the information of optionees, at the time of adoption of
this Plan said General Instructions to Form S-8 define "family member" as
follows: "For purposes of this form, 'family member' includes any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employees [sic] household (other than a
tenant or employee), a trust in which these persons have more than fifty percent
of the beneficial interest, a foundation in which these persons (or the
employee) control the management of assets, and any other entity in which these
persons (or the employee) own more than fifty percent of the voting interests."
In the event that the Commission should change that definition prior to any
proposed transfer, the definition as so changed shall apply and govern.)

                                       3
<PAGE>

         (d) No Option or any part of an Option shall be exercisable:

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

                  (ii) 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 any such obligation.

         (e) At the time notice of exercise of an Option is given pursuant to
ss. 5(d)(i) hereof, the person exercising the Option shall either (I) make full
payment in United States dollars by cash or check of the Option exercise price
of the shares being acquired (sometimes hereinafter called the "purchase price")
or (II) if the person exercising the Option is the individual to whom the Option
was granted and at the time of exercise such individual is a member of the
Board, such optionee may elect to pay the purchase price on an installment
payment basis on the following terms and conditions:

                  (A) The installments payable shall be the minimum amounts
          required to be paid by Regulation U of the Board of Governors of the
          Federal Reserve System as in effect as of the date of exercise of the
          Option or any successor regulation (hereinafter "Regulation U") or
          such greater installment payments as the Board may prescribe.

                  (B) The optionee shall not be required to pay interest to the
          Company on the unpaid balance of the purchase price.

                  (C) The unpaid balance of the purchase price shall be
          immediately payable in full upon demand made by the Company to the
          optionee (or, if the optionee has died, to the legal representatives
          of his or her estate or the successor owner of the stock, hereinafter
          collectively "Optionee's Successors").

                                       4
<PAGE>

                  (D) The shares for which the Option is exercised shall be
          issued to and registered in the name of the optionee but shall be
          endorsed by the optionee 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. Neither the optionee nor
          the Optionee's Successors shall 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 optionee (and the Optionee's Successors) 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 balance of the purchase price. Upon
          default by the optionee (or the Optionee's Successors) in the making
          of any payment due under the foregoing provisions of this ss. 5(e),
          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. In addition, upon a default in the
          making of any payment due under these installment-payment provisions,
          the Company shall have the right, but not the obligation, to give
          written notice to the optionee (or the Optionee's Successors) to the
          effect that if such payment is not received by the Company by the
          payment date specified in such notice, which date shall be not less
          than 21 days after the date of giving of such notice, (i) the Company
          shall have the right to retain and cancel the shares held as
          collateral, crediting against the payment due the Fair Market Value
          (as defined in ss. 7(a) hereof) of such shares on the payment date
          specified in such notice and (ii) the optionee (and the Optionee's
          Successors) shall be and remain liable for any balance due after such
          crediting.

                  (E) The optionee (and the Optionee's Successors) 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
          (subject to the rights of the Company pursuant to subparagraph (D)
          next above in the event of a payment default) to receive and retain
          all dividends paid thereon.

         (f) Except as limited by ss. 7(c) hereof, the Board 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.

         (g) In addition to the methods of payment of the Option exercise price
authorized by ss. 5(e) hereof, 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 (as defined in ss. 7(a) hereof) 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.
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
<PAGE>

         (h) If at the time of the death of an optionee an Option granted under
the Plan has not been fully exercised and is outstanding, the optionee's estate
or any person who has acquired the right to exercise the Option by bequest or
inheritance or by reason of the optionee's death or by transfer during the
optionee's lifetime to a "family member" in accordance with ss. 5(c) hereof may,
until the date one year after the date of the optionee's death and not
thereafter (but in no event after the tenth anniversary of the date of grant),
exercise the Option with respect to the number of shares as to which the
optionee could have exercised it at the time of his or her death.

         (i) If an optionee ceases to be a member of the Board for any reason
other than death or removal from the Board for cause in accordance with law,
then, except as provided in the next sentence hereof, the Option shall
thereafter be exercisable until the date one year after the date on which the
optionee ceases to be a member of the Board and not thereafter (but in no event
after the tenth anniversary of the date of grant) and only with respect to the
number of shares as to which the optionee could have exercised the Option at the
time that he or she ceased to be a member of the Board. Notwithstanding the
immediately preceding sentence, if at the time that an optionee ceases to be a
member of the Board he or she has been a member of the Board for at least two
full three-year terms (six years, more or less, depending on the dates of annual
meetings, which vary somewhat from year to year), the Option shall continue to
vest in accordance with the vesting schedule set forth in ss. 5(b) and shall
remain outstanding and exercisable until the tenth anniversary of the date of
grant (subject to the provisions of ss. 5(h) if the optionee shall die prior to
such tenth anniversary).

ss. 6.   Adjustment in the Event of Change in Stock

         If the Company effects any stock split, stock dividend, combination,
exchange of shares or similar capital adjustment, the aggregate number and kind
of shares available under the Plan, the number, kind and price of shares subject
to outstanding Options and the number of shares constituting an Option grant
under ss. 4 hereof, shall be appropriately and equitably adjusted so as to
reflect such change, all as determined by the Board.

ss. 7.   Miscellaneous Provisions

         (a) As used in the Plan, "Fair Market Value" means the arithmetic mean
of the highest and lowest sales prices of the Common Stock on the date of grant
or other date as of which the Common Stock is to be valued hereunder, as
reported in New York Stock Exchange Composite Transactions. If no sale shall be
reported in New York Stock Exchange Composite Transactions for the valuation
date in question, Fair Market Value shall be determined by the Committee in
accordance with Treasury Regulations applicable to incentive stock options.

                                       6
<PAGE>

         (b) Nothing in the Plan or in any Option granted under the Plan shall
confer any rights on any director to continue as a director of the Company or
shall interfere in any way with the right of the Company or its shareholders to
remove such person as a director in accordance with applicable law. If a
director shall be removed for cause in accordance with law, any Option held by
such person shall automatically terminate as of the date of such removal.

         (c) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended and that any ambiguities or
inconsistencies in the Plan be interpreted to give effect to such intention. The
Committee may adopt rules and regulations under, and amend, the Plan in
furtherance of such intent. Anything elsewhere in the Plan to the contrary
notwithstanding, neither the Board nor the Committee shall have the power to
amend the Plan in any way or take any other action which would cause the Plan to
fail to qualify as or be disqualified as a "formula plan" under and for purposes
of Rule 16b-3 and the instructions thereto.

         (d) Any director has the right to waive the granting of Options to him
or her on the next Granting Date on which an Option would be granted to such
director, by notice to the Secretary of the Company given prior to such Granting
Date.

ss. 8.   Change in Control

         (a) In the event of a "Change in Control" of the Company (as defined in
ss. 8(b) hereof), Options outstanding under the Plan on the date on which the
Change in Control occurs shall become exercisable in full on said date (i.e., to
the extent that any such Option or portion thereof is not yet exercisable on the
date on which the Change in Control occurs, the right to exercise such Option as
to all or any part of the shares covered thereby shall be accelerated).

         (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 ss. 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 amended by
         Amendment No. 1 thereto dated April 20, 1999, and as the same may have
         been further amended or extended to the time in question or in any
         successor agreement (the "Rights Agreement"); or

                                       7
<PAGE>

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

                  (iii) any event described in ss. 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
         Board or nominated by the Board 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 ss. 8(a) shall exist,
to the extent that the Board 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.

ss. 9.   Amendment

         Except as provided in ss. 7(c) hereof, the Plan may be amended at any
time and from time to time by the Board as the Board shall deem advisable,
including, but not limited to, amendments necessary to qualify for any exemption
or to comply with applicable law or regulations; provided, however, that the
Plan may not, without further approval by the shareholders of the Company, be
amended to increase the total number of shares of Common Stock which may be
issued upon the exercise of Options granted under the Plan above the number set
forth in ss. 3 hereof as said number may have been adjusted pursuant to ss. 6
hereof. No amendment of the Plan shall alter or impair any of the rights or
obligations of any optionee, without his or her consent, with respect to any
Option theretofore granted under the Plan.

ss. 10.  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 terminating the
Plan; or

         (b) on a Granting Date if on said date the number of shares remaining
available for grant of Options under the Plan is not sufficient for the making
of the grants required by ss. 4 hereof to be made on such Granting Date.

         No termination of the Plan shall alter or impair any of the rights or
obligations of any optionee, without his or her consent, with respect to any
Option theretofore granted under the Plan.

                                       8
<PAGE>

ss. 11.    Shareholder Approval

         The Plan shall be submitted to the shareholders of the Company for
their approval at the 2001 annual meeting of shareholders. The shareholders
shall be deemed to have approved the Plan if it is approved at said meeting,
including any adjournment thereof, in accordance with the Business Corporation
Law of the State of New York. If the shareholders do not approve the Plan at
said meeting, including any adjournment thereof, the Plan shall thereupon
terminate and shall be of no further force or effect.

[Note: This Plan was adopted by the
Board of Directors on July 17, 2001,
subject to approval by shareholders, and
was approved by shareholders at the
annual meeting on November 14, 2001.]

                                       9

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