Document:

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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.]

                                       8<PAGE>

                                                          [Senior Vice President
                                                                   Single Bonus]

                                                                    EXHIBIT 10.5

         EMPLOYMENT AGREEMENT dated April 8, 2002 between PALL CORPORATION, a
New York corporation (the "Company"), and Gregory Scheessele ("Executive").
         WHEREAS, the parties hereto are parties to an Employment Agreement
dated November 15, 2001 (the "Existing Agreement"), and
         The parties desire to terminate the Existing Agreement and
simultaneously replace it with this Agreement, effective April 8, 2002,
         NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the parties hereto agree as follows:

         ss.1.      Employment and Term
         The Company hereby employs Executive, and Executive hereby agrees to
serve, as an executive employee of the Company with the duties set forth in
ss.2, for a term (hereinafter called the "Term of Employment") which began April
8, 2002 (the "Term Commencement Date") and ending, unless sooner terminated
under ss.4, on the effective date specified in a notice of termination given by
either party to the other except that such effective date shall not be earlier
than the second anniversary of the date on which such notice is given.

         ss.2.      Duties
         Executive agrees that during the Term of Employment he will hold such
offices or positions with the Company, and perform such duties and assignments
relating to the business of the Company, as the chief executive officer of the
Company shall direct except that Executive shall not be required to hold any
office or position or to perform any duties or assignment inconsistent with his
experience and qualifications or not customarily performed by a corporate
officer.

         If the chief executive officer of the Company so directs, Executive
shall serve as an officer of one or more subsidiaries of the Company (provided
that the duties of such office are not inconsistent with Executive's experience
and qualifications and are duties customarily performed by a corporate officer)
and part or all of the compensation to which Executive is entitled hereunder may
be paid by such subsidiary or subsidiaries. However, such employment and/or
payment of Executive by a subsidiary or subsidiaries shall not relieve the
Company from any of its obligations under this Agreement except to the extent of
payments actually made to Executive by a subsidiary.

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         During the Term of Employment Executive shall, except during customary
vacation periods and periods of illness, devote substantially all of his
business time and attention to the performance of his duties hereunder and to
the business and affairs of the Company and its subsidiaries and to promoting
the best interests of the Company and its subsidiaries and he shall not, either
during or outside of such normal business hours, engage in any activity inimical
to such best interests.

         ss.3.      Compensation During Term of Employment

         (a) Base Salary. With respect to the period beginning on the Term
Commencement Date and ending on July 31, 2002, the Company shall pay Executive a
Base Salary (in addition to the compensation provided for elsewhere in this
Agreement) at the rate of $220,000 per annum (hereinafter called the "Original
Base Salary"). With respect to each Contract Year beginning with the Contract
Year which starts August 1, 2002, the Company shall pay Executive a Base Salary
at such rate as the Board of Directors may determine but not less than the
Original Base Salary adjusted as follows: The term "Contract Year" as used
herein means the period from August 1 of each year through July 31 of the
following year. For each Contract Year during the Term of Employment beginning
with the Contract Year which starts August 1, 2002, the minimum compensation
payable to Executive under this ss.3(a) (hereinafter called the "Minimum Base
Salary") shall be determined by increasing (or decreasing) the Original Base
Salary by the percentage increase (or decrease) of the Consumer Price Index (as
hereinafter defined) for the month of June immediately preceding the start of
the Contract Year in question over (or below) the Consumer Price Index for June
2001. The term "Consumer Price Index" as herein used means the "Consumer Price
Index for all Urban Consumers" compiled and published by the Bureau of Labor
Statistics of the United States Department of Labor for "New York - Northern N.
J. - Long Island, NY-NJ-CT-PA". To illustrate the operation of the foregoing
provisions of this ss.3(a): Executive's Base Salary for the Contract Year August
1, 2002 through July 31, 2003 shall be not less than the Original Base Salary
adjusted by the percentage increase (or decrease) of the Consumer Price Index
for June 2002 over (or below) said Index for June 2001. Further adjustment in
the Minimum Base Salary shall be made for each ensuing Contract Year, in each
case (i) using the Consumer Price Index for June 2001 as the base except as
provided in the immediately following paragraph hereof and (ii) applying the
percentage increase (or decrease) in the Consumer Price Index since said base
month to the Original Base Salary to determine the Minimum Base Salary. The Base
Salary shall be paid in such periodic installments as the Company may determine
but not less often than monthly.

                                      -2-
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         If with respect to any Contract Year (including the Contract Year
beginning August 1, 2002) the Board of Directors fixes the Base Salary at an
amount higher than the Minimum Base Salary, then (unless the resolution fixing
such higher Base Salary provides otherwise), for the purpose of determining the
Minimum Base Salary for subsequent Contract Years: (1) the amount of the higher
Base Salary so fixed shall be deemed substituted for the Original Base Salary
wherever the Original Base Salary is referred to in the immediately preceding
paragraph hereof, and (ii) the base month for determining the Consumer Price
Index adjustment shall be June of the calendar year in which the Contract Year
to which such higher Base Salary is applicable begins (e.g., if the Board of
Directors fixes a Base Salary for the Contract Year beginning August 1, 2002
which is higher than the Minimum Base Salary, then June 2002 would become the
base month for the purposes of making the CPI adjustment to determine the
Minimum Base Salary for subsequent Contract Years).

         (b) Bonus Compensation. As used herein, the term "Bonus Plan" means the
Pall Corporation Executive Incentive Bonus Plan adopted by the Compensation
Committee of the Board of Directors of the Company on July 17, 2001 and approved
by shareholders at the annual meeting of shareholders on November 14, 2001, a
copy of which is annexed hereto and incorporated herein by reference. Words and
terms used herein with initial capital letters and not defined herein are used
herein as defined in the Bonus Plan. With respect to each Fiscal Year of the
Company falling in whole or in part within the Term of Employment beginning with
the Fiscal Year ending August 3, 2002:

                  (i) if Executive is a member of the Operating  Committee of
          the Company, Executive shall be eligible to receive a Bonus pursuant
          to and in accordance with the terms of the Bonus Plan; or

                  (ii) if Executive is not a member of the Operating Committee,
          Executive shall be entitled to receive a Bonus pursuant to this
          Agreement in an amount determined in accordance with and subject to
          all of the terms of the Bonus Plan.

For purposes of determining the amount of the Bonus payable to Executive for any
Fiscal Year as provided in this ss.3(b) (the "Plan Bonus"), Executive's Target
Bonus Percentage shall be 70% of his Base Salary for such Fiscal Year.

                                      -3-
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         (c) Fringe Benefits and Perquisites. During the Term of Employment,
Executive shall enjoy the customary perquisites of office, including, but not
limited to, office space and furnishings, secretarial services, expense
reimbursements and any similar emoluments customarily afforded to senior
executive officers of the Company at the same level as Executive. Executive
shall also be entitled to receive or participate in all "fringe benefits" and
employee benefit plans provided or made available by the Company to its
executives or management personnel generally (such as, but not limited to, group
hospitalization, medical, life and disability insurance, and pension,
retirement, profit-sharing and stock option or purchase plans), at such time and
on such terms and conditions as each such plan provides.

         (d) Vacations. Executive shall be entitled each year to a vacation or
vacations in accordance with the policies of the Company as determined by the
Board or by an authorized senior officer of the Company from time to time. The
Company shall not pay Executive any additional compensation for any vacation
time not used by Executive.

         ss.4.      Termination by Reason of Disability, Death, Retirement or
Change in Control.

         (a) Disability or Death. If, during the Term of Employment, Executive,
by reason of physical or mental disability, is incapable of performing his
principal duties hereunder for an aggregate of 130 working days out of any
period of twelve consecutive months, the Company at its option may terminate the
Term of Employment effective immediately by notice to Executive given within 90
days after the end of such twelve-month period. If Executive shall die during
the Term of Employment or if the Company terminates the Term of Employment
pursuant to the immediately preceding sentence by reason of Executive's
disability, the Company shall pay to Executive, or to Executive's legal
representatives, or in accordance with a direction given by Executive to the
Company in writing, the following: (i) Executive's Base Salary to the end of the
month in which such death or termination for disability occurs and any Plan
Bonus or pro rata portion thereof that Executive is entitled to receive in
accordance with ss.3(b) hereof and (ii) for each month in the period from the
end of the month in which such death or termination for disability occurs until
the earlier of (x) the first anniversary of the date of death or termination and
(y) the date on which the Term of Employment would have ended but for such death
or termination for disability, monthly payments of an amount equal to 1/12th of
85% of the annual rate of Base Salary in effect for Executive immediately prior
to the date on which Executive's death or termination for disability occurs
(such 85% being comprised of one-half of such Base Salary and one-half of
Executive's Target Bonus Percentage set forth in ss.3 (b) hereof).

                                      -4-
<PAGE>

         (b) Retirement. (i) The Term of Employment shall end automatically,
without action by either party, on Executive's 65th birthday unless, prior to
such birthday, Executive and the Company have agreed in writing that the Term of
Employment shall continue past such 65th birthday. In the latter event, unless
the parties have agreed otherwise, the Term of Employment shall be automatically
renewed and extended each year, as of Executive's birthday, for an additional
one-year term, unless either party has given a Non-Renewal Notice. A Non-Renewal
Notice shall be effective as of Executive's ensuing birthday only if given not
less than 60 days before such birthday, and shall state that the party giving
such notice elects that this Agreement shall not automatically renew itself
further, with the result that the Term of Employment shall end on Executive's
ensuing birthday.

                  (ii) If the Term of Employment ends pursuant to this ss.4(b)
by reason of a notice given by either party as herein permitted or automatically
at age 65 or any subsequent birthday, the Company shall pay to Executive, or to
another payee specified by Executive to the Company in writing, (i) Executive's
Base Salary prorated to the date on which the Term of Employment ends and (ii)
any Plan Bonus or pro rata portion thereof that Executive is entitled to receive
in accordance with ss.3(b) hereof.

                  (iii) Anything hereinabove to the contrary notwithstanding, if
any provision of this ss.4(b) violates federal or applicable state law relating
to discrimination on account of age, such provision shall be deemed modified or
suspended to the extent necessary to eliminate such violation of law. If at a
later date, by reason of changed circumstances or otherwise, the enforcement of
such provision as set forth herein would no longer constitute a violation of
law, then it shall be enforced in accordance with its terms as set forth herein.

         (c) Change in Control. In the event of a Change in Control (as defined
in the Bonus Plan), Executive shall have the right to terminate the Term of
Employment, by notice to the Company given at any time after such Change in
Control, effective on the date specified in such notice, which date shall not be
more than (but can be less than) one year after the giving of such notice.

         ss.5.      Covenant Not to Compete.

         For a period of eighteen months after the end of the Term of Employment
if the Term of Employment is terminated by notice to the Company given by
Executive under ss.1 or ss.4 hereof, or for a period of twelve months after the
end of the Term of Employment if the Term of Employment is terminated by notice
to Executive given by the Company under ss.1 or ss.4 hereof or terminates under
ss.4 by reason of Executive's attaining the age of 65, Executive shall not
render services to any corporation, individual or other entity engaged in any
activity, or himself engage directly or indirectly in any activity, which is
competitive to any material extent with the business of the Company or any of
its subsidiaries, provided, however, that if the Company terminates under ss.1
following a Change in Control (as defined in the Bonus Plan), the foregoing
covenant not to compete shall not apply.

                                      -5-
<PAGE>

         ss.6.      Company's Right to Injunctive Relief

         Executive acknowledges that his services to the Company are of a unique
character, which gives them a peculiar value to the Company, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law,
and that therefore, in addition to any other remedy which the Company may have
at law or in equity, the Company shall be entitled to injunctive relief for a
breach of this Agreement by Executive.

         ss.7.      Inventions and Patents

        All inventions, ideas, concepts, processes, discoveries, improvements
and trademarks (hereinafter collectively referred to as intangible rights),
whether patentable or registrable or not, which are conceived, made, invented or
suggested either by Executive alone or by Executive in collaboration with others
during the Term of Employment, and whether or not during regular working hours,
shall be disclosed to the Company and shall be the sole and exclusive property
of the Company. If the Company deems that any of such intangible rights are
patentable or otherwise registrable under any federal, state or foreign law,
Executive, at the expense of the Company, shall execute all documents and do all
things necessary or proper to obtain patents and/or registrations and to vest
the Company with full title thereto.

         ss.8.      Trade Secrets and Confidential Information

         Executive shall not, either directly or indirectly, except as required
in the course of his employment by the Company, disclose or use at any time,
whether during or subsequent to the Term of Employment, any information of a
proprietary nature owned by the Company, including, but not limited to, records,
data, formulae, documents, specifications, inventions, processes, methods and
intangible rights which are acquired by him in the performance of his duties for
the Company and which are of a confidential information or trade secret nature.
All records, files, drawings, documents, equipment and the like, relating to the
Company's business, which Executive shall prepare, use, construct or observe,
shall be and remain the Company's sole property. Upon the termination of his
employment or at any time prior thereto upon request by the Company, Executive
shall return to the possession of the Company any materials or copies thereof
involving any confidential information or trade secrets and shall not take any
material or copies thereof from the possession of the Company.

                                      -6-
<PAGE>

         ss.9.      Mergers and Consolidations; Assignability

         In the event that the Company, or any entity resulting from any merger
or consolidation referred to in this ss.9 or which shall be a purchaser or
transferee so referred to, shall at any time be merged or consolidated into or
with any other entity or entities, or in the event that substantially all of the
assets of the Company or any such entity shall be sold or otherwise transferred
to another entity, the provisions of this Agreement shall be binding upon and
shall inure to the benefit of the continuing entity in or the entity resulting
from such merger or consolidation or the entity to which such assets shall be
sold or transferred. Except as provided in the immediately preceding sentence of
this ss.9, this Agreement shall not be assignable by the Company or by any
entity referred to in such immediately preceding sentence. This Agreement shall
not be assignable by Executive, but in the event of his death, it shall be
binding upon and inure to the benefit of his legal representatives to the extent
required to effectuate the terms hereof.

         ss.10.     Captions

        The captions in this Agreement are not part of the provisions hereof,
are merely for the purpose of reference and shall have no force or effect for
any purpose whatsoever, including the construction of the provisions of this
Agreement, and if any caption is inconsistent with any provisions of this
Agreement, said provisions shall govern.

         ss.11.     Choice of Law

         This Agreement is made in, and shall be governed by and construed in
accordance with the laws of, the State of New York.

         ss.12.     Entire Contract

         This instrument contains the entire agreement of the parties on the
subject matter hereof except that the rights of the Company hereunder shall be
deemed to be in addition to and not in substitution for its rights under the
Company's standard printed form of "Employee's Secrecy and Invention Agreement"
or "Employee Agreement" if heretofore or hereafter entered into between the
parties hereto so that the making of this Agreement shall not be construed as
depriving the Company of any of its rights or remedies under any such Secrecy
and Invention Agreement or Employee Agreement. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.

                                      -7-
<PAGE>

         ss.13.     Notices

         All notices given hereunder shall be in writing and shall be sent by
registered or certified mail or overnight delivery service such as Federal
Express or delivered by hand, and, if intended for the Company, shall be
addressed to it (if sent by mail or overnight delivery service) or delivered to
it (if delivered by hand) at its principal office for the attention of the
Secretary of the Company, or at such other address and for the attention of such
other person of which the Company shall have given notice to Executive in the
manner herein provided, and, if intended for Executive, shall be delivered to
him personally or shall be addressed to him (if sent by mail or overnight
delivery service) at his most recent residence address shown in the Company's
employment records or at such other address or to such designee of which
Executive shall have given notice to the Company in the manner herein provided.
Each such notice shall be deemed to be given on the date on which it is mailed
or on which it is received by the overnight delivery service or, if delivered
personally, on the date so delivered.

       ss.14.     Termination of Existing Agreement.

The Existing Agreement is hereby terminated and replaced and superseded by this
Agreement, effective April 8, 2002. All payments, of Base Salary or otherwise,
made by the Company under the Existing Agreement with respect to any period
commencing on or after August 1, 2001 shall be credited against the
corresponding payment obligations of the Company under this Agreement.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                    PALL CORPORATION

                                    By:   /s/ Jeremy Hayward-Surry
                                          ------------------------
                                            Jeremy Hayward-Surry
                                            President

                                    EXECUTIVE

                                      /s/ Gregory Scheessele
                                          ------------------
                                           Gregory Scheessele

                                      -8-
<PAGE>

                                PALL CORPORATION

                         EXECUTIVE INCENTIVE BONUS PLAN

                                      -----

1.       Purpose

         This document sets forth the Pall Corporation Executive Incentive Bonus
Plan as adopted effective July 17, 2001.

         The purpose of the Plan is to encourage greater focus on performance
among the key executives of the Corporation by relating a significant portion of
their total compensation to the achievement of annual financial objectives.

2.       Certain Definitions

         As used herein with initial capital letters, the following terms shall
have the following meanings:

         "Average Equity" shall mean, for any Fiscal Year, the average of
stockholders' equity as shown on the fiscal year-end consolidated balance sheet
of the Corporation and its subsidiaries as of the end of such Fiscal Year and as
of the end of the immediately preceding Fiscal Year except that the amounts
shown on said balance sheets as "Accumulated other comprehensive" income or
loss, as the case may be, shall be disregarded.

         "Base Salary" shall mean, with respect to any Executive and for any
Fiscal Year, the annual rate of base salary in effect for the Executive as of
the first day of such year or, if later, as of the first day of the Executive's
Term of Employment, as determined under the Executive's Employment Agreement.

         "Board of Directors" shall mean the Board of Directors of the
Corporation.

         "Bonus" shall mean the bonus payable to an Executive under this Plan
for any Fiscal Year.

         "CEO" shall mean the Chief Executive Officer of the Corporation.

         "Change in Control" means the occurrence of any of the following:

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

<PAGE>

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

         (c)      any event described in Section 13 of the Rights Agreement; or

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

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

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

         "Committee" shall mean the Compensation Committee of the Board of
Directors.

         "Corporation" shall mean Pall Corporation.

         "Covered Executive" shall mean, with respect to any Fiscal Year, each
individual who is a "Covered Employee" of the Corporation for such year for the
purpose of section 162(m) of the Code.

         "Employment Agreement" shall mean, with respect to any executive
employee of the Corporation, an employment agreement between the Corporation and
such employee which provides that the employee shall be eligible to receive
annual bonuses under this Plan.

         "Executive" shall mean an executive employee of the Corporation with
whom the Corporation has entered into an Employment Agreement.

         "Fiscal Year" shall mean the fiscal year of the Corporation ending on
August 3, 2002, and each subsequent fiscal year of the Corporation.

         "Maximum R.O.E. Target" shall mean, for any Fiscal Year, the Return on
Equity that must be achieved or exceeded in order for the Performance Percentage
for the year to equal 100%, as determined by the Committee prior to the first
day of such year or within such period of time thereafter as may be permitted
under the regulations issued under section 162(m) of the Code.

         "Minimum R.O.E. Target" shall mean, for any Fiscal Year, the Return on
Equity that must be exceeded in order for any Bonus to be paid to any Executive
for the year, as determined by the Committee prior to the first day of such year
or within such period of time thereafter as may be permitted under the
regulations issued under section 162(m) of the Code.

         "Net Earnings" shall mean, for any Fiscal Year, the after-tax
consolidated net earnings of the Corporation and its subsidiaries as certified
by the Corporation's independent accountants for inclusion in the annual report
to shareholders ("Annual Report"), adjusted so as to eliminate the effects of
any decreases in or charges to earnings for (a) the effect of foreign currency
exchange rates, (b) any acquisitions, divestitures, discontinuance of business
operations, restructuring or any other special charges, (c) the cumulative
effect of any accounting changes, and (d) any "extraordinary items" as
determined under generally accepted accounting principles, to the extent such
decreases or charges referred to in clauses (a) through (d) are separately
disclosed in the Corporation's Annual Report for the year.

                                       2
<PAGE>

         "Plan" shall mean the Pall Corporation Executive Incentive Bonus Plan,
as set forth herein and as amended from time to time.

         "Return on Equity" shall mean, for any Fiscal Year, the percentage
determined by dividing the Net Earnings for the year by the Average Equity for
the year.

         "Target Bonus Percentage" shall mean, with respect to any Executive,
the target bonus percentage specified for such Executive in his or her
Employment Agreement.

3.       Determination of Bonus Amounts

         For each Fiscal Year falling in whole or in part within an Executive's
Term of Employment, as defined in his or her Employment Agreement, the Executive
shall be entitled to receive a Bonus in an amount determined in accordance with
the provisions of this Section 3, subject, however, to the provisions of Section
4.

         (a) The amount of the Bonus payable to an Executive for each such
Fiscal Year shall be equal to (i) the Target Bonus Percentage of the Executive's
Base Salary for such year, multiplied by (ii) the Performance Percentage for
such year, as determined under (b) below.

         (b) The Performance Percentage for any Fiscal Year shall be determined
in accordance with he following provisions:

                  (i) If the Return on Equity equals or exceeds the Maximum
         R.O.E. Target for the year, the Performance Percentage for the year
         shall be 100%.

                  (ii) If the Return on Equity is less than the Maximum R.O.E.
         Target for the year but exceeds the Minimum R.O.E. Target for the year,
         the Performance Percentage for the year shall be equal to the quotient
         resulting from dividing (A) the excess of the Return on Equity for the
         year over the Minimum R.O.E. Target for the year, by (B) the excess of
         the Maximum R.O.E. Target for the year over the Minimum R.O.E. Target
         for the year.

                  (iii) If the Return on Equity equals or is less than the
         Minimum R.O.E. Target for the year, the Performance Percentage for the
         year shall be zero, and no Bonus shall be payable under the Plan for
         such year to any Executive.

                                       3
<PAGE>

         (c) If an Executive's Term of Employment commences after the start of a
Fiscal Year, or ends prior to the close of a Fiscal Year, the amount of the
Bonus payable to the Executive for the Fiscal Year in which the Executive's Term
of Employment commences, or for the Fiscal Year in which the Executive's Term of
Employment ends, as determined in accordance with the other applicable
provisions of the Plan, shall be prorated on the basis of the number of days of
such Fiscal Year that fall within the Executive's Term of Employment; provided,
however, that (i) if an Executive's Term of Employment ends within 5 days prior
to the close of a Fiscal Year, there shall be no proration and the Executive
shall be entitled to receive the entire amount of the Bonus payable to the
Executive for such year, as determined in accordance with such other provisions,
and (ii) if the Executive's Term of Employment ends within 5 days following the
start of a Fiscal Year, the Executive shall not be entitled to receive any Bonus
with respect to such Fiscal Year.

4.       Adjustment of and Limitation on Bonus Amounts

         The amount of the Bonus otherwise payable to an Executive for any
Fiscal Year in accordance with Section 3 shall be subject to the following
adjustments and limitation:

         (a) The Committee may, in its discretion, reduce the amount of the
Bonus otherwise payable to any Executive in accordance with Section 3, (i) to
reflect any decreases in or charges to earnings that were not taken into account
in determining Net Earnings for the year pursuant to clause (a), (b), (c) or (d)
contained in the definition of such term in Section 2, (ii) to reflect any
credits to earnings for extraordinary items of income or gain that were taken
into account in determining Net Earnings for the year, (iii) to reflect the
Committee's evaluation of the Executive's individual performance, or (iv) to
reflect any other events, circumstances or factors which the Committee believes
to be appropriate in determining the amount of the Bonus to be paid to the
Executive for the year.

         (b) The Committee may, in its discretion, increase the amount of the
Bonus otherwise payable to any Executive who is not a Covered Executive, as
determined under Section 3, to reflect the Committee's evaluation of the
Executive's individual performance, or to reflect such other circumstances or
factors as the Committee believes to be appropriate in determining the amount of
the Bonus to be paid to the Executive for the year. The Committee shall not have
any discretion to increase the amount of the Bonus payable to any Covered
Executive for the year, as determined under Section 3.

         (c) Notwithstanding any other provision herein to the contrary, the
amount of the Bonus otherwise payable to any Executive for any Fiscal Year shall
not exceed the lesser of (i) $1.0 million and (ii) 100% of the Executive's Base
Salary for the year.

5.       Payment of Bonuses

         The Bonus payable to an Executive for any Fiscal Year shall be paid in
accordance with the following provisions:

         (a) Except as otherwise provided in (b) or (c) below,

                  (i) if the Executive is not a Covered Executive for such year,
         50% of the estimated amount of the Executive's Bonus shall be paid to
         the Executive at such date in August next following the close of such
         year as the Committee in its discretion shall determine, and the
         remaining amount of the Executive's Bonus shall be paid to the
         Executive by no later than January 15 next following the close of such
         year;

                                       4
<PAGE>

                  (ii) if the Executive is a Covered Executive for such year,
         50% of the amount of the Executive's Bonus shall be paid to the
         Executive as soon as practicable after the Committee has certified in
         writing that all conditions for the payment of such Bonus to the
         Executive for such year have been satisfied, and the remaining amount
         of the Executive's Bonus shall be paid to the Executive by no later
         than January 15 next following the close of such year;

                  (iii) each amount payable to an Executive under (i) and (ii)
         above, reduced by the amount of all federal, state and local taxes
         required by law to be withheld therefrom, shall be paid to the
         Executive in the form of a single lump sum cash payment.

         (b) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Management Stock Purchase Plan (the "MSPP")
to have any part of the Bonus payable to the Executive for any Fiscal Year paid
in the form of Restricted Units to be credited to the Executive's account under
the MSPP, no cash payments shall be made to the Executive pursuant to (a) above
with respect to the part of the Executive Bonus that is subject to such
election; and the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged upon the
crediting of Restricted Units to the Executive's account under the MSPP in
accordance with the applicable provisions of such Plan.

         (c) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Profit-Sharing Plan (the "Profit-Sharing
Plan") to have any part of the Bonus payable to the Executive for any Fiscal
Year reduced, and to have an amount equal to such part of the Executive's Bonus
contributed to the Profit-Sharing Plan as a 401(k) Contribution on the
Executive's behalf, an amount equal to such part of the Executive's Bonus shall
be contributed to the Profit-Sharing Plan on behalf of the Executive; and
thereupon, the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged.
However, no such contribution shall be made to the extent it would cause any
limitation applicable under the 401(k) Plan to be exceeded.

6.        Change in Control

         Notwithstanding any other provision in the Plan to the contrary (but
subject to the "provided, however" clause contained in the definition of "Change
in Control" in Section 2), upon the occurrence of a Change in Control, the
following provisions shall apply.

         (a) The amount of the Bonus payable to any Executive for the Fiscal
Year in which a Change in Control occurs shall be at least equal to the Target
Bonus Percentage of the Executive's Base Salary for such year or, in the case of
any Executive whose Term of Employment commences after the start of such year or
ends prior to the close of such year, a pro rata portion thereof determined on
the basis of the number of days of such Fiscal Year that fall within the
Executive's Term of Employment.

                                       5
<PAGE>

         (b) Each Executive whose Term of Employment has not ended prior to the
occurrence of a Change in Control shall be entitled to receive a Bonus for each
Contract Year (as defined in the Executive's Employment Agreement) that falls in
whole or in part within the Executive's Term of Employment and that ends after
the Fiscal Year in which the Change in Control occurs. The amount of the Bonus
payable to the Executive for each such Contract Year shall be at least equal to
the Target Bonus Percentage of the Executive's Base Salary for such Contract
Year or, in the case of any Executive whose Term of Employment ends after the
start of such Contract Year but prior to the close of such year, a pro rata
portion thereof determined on the basis of the number of days of such Contract
Year that fall within the Executive's Term of Employment.

         (c) The entire amount of the Bonus payable to an Executive for any
Fiscal Year or Contract Year pursuant to (a) or (b) above, reduced by the amount
of all federal, state and local taxes required to be withheld therefrom, shall
be paid to the Executive in a single cash lump sum as soon as practicable after
the close of such Fiscal Year or Contract Year.

7.       Rights of Executives

         An Executive's rights and interests under the Plan shall be subject to
the following provisions:

         (a) An Executive's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Executive.

         (b) Neither the Plan nor any action taken hereunder shall be construed
as giving any Executive any right to be retained in the employment of the
Corporation or any of its subsidiaries.

8.       Administration

         The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the authority, in its discretion, to establish from time to
time guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan.

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

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

                                       6
<PAGE>

9.       Amendment or Termination

         The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that (a) no amendment, suspension or termination of the Plan
shall adversely affect the rights of any Executive with respect to any Bonus
that has become payable to the Executive under the Plan, without his or her
written consent, and (b) following a Change in Control, no amendment to Section
6, and no termination of the Plan, shall be effective if such amendment or
termination adversely affects the rights of any Executive under the Plan.

10.      Successor Corporation

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

11.      Governing Law

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

12.      Effective Date

         The Plan was adopted effective as of July 17, 2001 by the Board of
Directors, acting by the Committee, subject, however, to approval by the
shareholders of the Corporation by a majority of the votes cast in person or by
proxy at the 2001 annual meeting of the Corporation's shareholders, including
any adjournment thereof.

[The Plan was approved
by shareholders at the
annual meeting on
November 14, 2001.]

                                       7

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