10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended January 31, 2009

or

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                       to

Commission File Number: 001- 04311

PALL CORPORATION

(Exact name of registrant as specified in its charter)

New York (State or other jurisdiction of incorporation or organization)	11-1541330 (I.R.S. Employer Identification No.)
2200 Northern Boulevard, East Hills, NY (Address of principal executive offices)	11548 (Zip Code)

(516) 484-5400
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer o 
Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     The number of shares of the registrant’s common stock outstanding as of March 6, 2009 was 117,593,247.

Table of Contents

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited).
	Condensed Consolidated Balance Sheets as of January 31, 2009 and July 31, 2008.		3
	Condensed Consolidated Statements of Earnings for the three and six months ended January 31, 2009 and January 31, 2008.		4
	Condensed Consolidated Statements of Cash Flows for the six months ended January 31, 2009 and January 31, 2008.		5
	Notes to Condensed Consolidated Financial Statements.		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		35
Item 4.	Controls and Procedures.		35
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings.		36
Item 1A.	Risk Factors.		37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		37
Item 4.	Submission of Matters To a Vote of Security Holders.		38
Item 6.	Exhibits.		38
SIGNATURES			39
EX-10.1: AMENDMENT TO EMPLOYMENT AGREEMENT WITH ERIC KRASNOFF
EX-10.2: AMENDMENT TO EMPLOYMENT AGREEMENT WITH ROBERTO PEREZ
EX-10.3: AMENDMENT TO EMPLOYMENT AGREEMENT WITH LISA MC DERMOTT
EX-10.4: SUPPLEMENTARY PENSION PLAN
EX-10.5: LOAN AGREEMENT
EX-10.6: MORTGAGE NOTE BY ROBERTO PEREZ AND ASTRID PEREZ
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)

	Jan. 31, 2009			July 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	221,486		$	454,065
Accounts receivable		502,282			617,079
Inventories		458,742			492,977
Prepaid expenses		40,032			34,026
Other current assets		133,174			61,492
Total current assets		1,355,716			1,659,639
Property, plant and equipment, net		623,528			662,985
Goodwill		275,375			265,893
Intangible assets		66,380			46,204
Other non-current assets		224,170			322,025
Total assets	$	2,545,169		$	2,956,746
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable	$	19,199		$	26,062
Accounts payable and other current liabilities		360,952			471,266
Income taxes payable		126,442			57,882
Current portion of long-term debt		1,969			3,252
Dividends payable		17,047			15,501
Total current liabilities		525,609			573,963
Long-term debt, net of current portion		654,771			747,051
Income taxes payable — non-current		135,699			233,420
Deferred taxes and other non-current liabilities		216,766			263,077
Total liabilities		1,532,845			1,817,511
Stockholders’ equity:
Common stock, par value $.10 per share		12,796			12,796
Capital in excess of par value		190,739			178,608
Retained earnings		1,162,939			1,118,616
Treasury stock, at cost		(339,755	)		(290,508	)
Stock option loans		(450	)		(450	)
Accumulated other comprehensive (loss) income:
Foreign currency translation		46,543			179,429
Pension liability adjustment		(61,322	)		(61,322	)
Unrealized investment gains		1,396			2,343
Unrealized losses on derivatives		(562	)		(277	)
		(13,945	)		120,173
Total stockholders’ equity		1,012,324			1,139,235
Total liabilities and stockholders’ equity	$	2,545,169		$	2,956,746

See accompanying notes to condensed consolidated financial statements.

3

PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended				Six Months Ended
	Jan. 31, 2009		Jan. 31, 2008		Jan. 31, 2009		Jan. 31, 2008
Net sales	$	543,296	$	625,747	$	1,121,318	$	1,186,754
Cost of sales		286,947		337,471		585,578		637,162
Gross profit		256,349		288,276		535,740		549,592
Selling, general and administrative expenses		167,084		178,845		347,590		349,832
Research and development		17,419		18,092		36,352		34,987
Restructuring and other charges, net		8,747		13,859		16,922		22,628
Interest expense, net		6,553		8,063		15,979		15,784
Earnings before income taxes		56,546		69,417		118,897		126,361
Provision for income taxes		17,675		21,429		36,939		42,271
Net earnings	$	38,871	$	47,988	$	81,958	$	84,090
Earnings per share:
Basic	$	0.33	$	0.39	$	0.69	$	0.68
Diluted	$	0.33	$	0.39	$	0.68	$	0.68
Dividends declared per share	$	0.145	$	0.120	$	0.275	$	0.360
Average shares outstanding:
Basic		118,428		123,372		118,931		123,256
Diluted		119,213		124,572		119,921		124,449

See accompanying notes to condensed consolidated financial statements.

4

PALL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	Six Months Ended
	Jan. 31, 2009			Jan. 31, 2008
Operating activities:
Net cash provided/(used) by operating activities	$	61,893		$	(74,905	)
Investing activities:
Capital expenditures		(58,387	)		(52,681	)
Proceeds from sale of retirement benefit assets		7,591			11,666
Purchases of retirement benefit assets		(9,413	)		(13,714	)
Disposals of long lived assets		2,992			4,605
Acquisition of business, net of cash acquired		(37,214	)		—
Other		(12,475	)		(2,741	)
Net cash used by investing activities		(106,906	)		(52,865	)
Financing activities:
Notes payable		(2,244	)		21,538
Dividends paid		(30,814	)		(29,425	)
Net proceeds from stock plans		7,185			7,462
Purchase of treasury stock		(64,884	)		—
Long-term borrowings		115,939			119,424
Repayments of long-term debt		(177,331	)		(39,509	)
Excess tax benefits from stock-based compensation arrangements		689			760
Net cash (used)/provided by financing activities		(151,460	)		80,250
Cash flow for period		(196,473	)		(47,520	)
Cash and cash equivalents at beginning of year		454,065			443,036
Effect of exchange rate changes on cash and cash equivalents		(36,106	)		14,749
Cash and cash equivalents at end of period	$	221,486		$	410,265
Supplemental disclosures:
Interest paid	$	28,505		$	24,342
Income taxes paid (net of refunds)		45,835			187,232

See accompanying notes to condensed consolidated financial statements.

5

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

NOTE 1 — BASIS OF PRESENTATION

     The condensed consolidated financial information included herein is unaudited. Such information reflects all adjustments of a normal recurring nature, which are, in the opinion of Company management, necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows as of the dates and for the periods presented herein. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2008 (“2008 Form 10-K”).

NOTE 2 — ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

     Effective August 1, 2008, the Company adopted, on a prospective basis, certain required provisions of Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”). The provisions not yet adopted by the Company relate to non-financial assets and liabilities that are recognized or disclosed on a non-recurring basis, as permitted under FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP FAS No. 157-2”). Those remaining aspects of SFAS No. 157 for which the effective date was deferred by FSP FAS No. 157-2 are being evaluated by the Company and will be effective for the first quarter of fiscal 2010.

     SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements; rather, it applies to all other accounting pronouncements that require or permit fair value, except for those pronouncements specifically excluded from its scope. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

     SFAS No. 157 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

• Level 1: Use of observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Use of inputs other than quoted prices included in Level 1, which are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

• Level 3: Use of inputs that are unobservable.

     The following table presents, for each of these hierarchy levels, the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of January 31, 2009:

			Fair Value Measurements
	As of
	Jan. 31, 2009		Level 1		Level 2		Level 3
Financial assets carried at fair value
Available-for-sale debt securities	$	52,171	$	52,171	$	—	$	—
Available-for-sale equity securities		5,489		5,489		—		—
Derivative financial instruments		1,739		—		1,739		—
Financial liabilities carried at fair value
Derivative financial instruments		1,499		—		1,499		—

6

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

     The Company’s available-for-sale securities are valued using quoted market prices and, as such, are classified within Level 1 of the fair value hierarchy.

     The derivative financial instruments classified within Level 2 of the fair value hierarchy are comprised of an interest rate swap and foreign currency forward contracts. The fair value of the Company’s outstanding interest rate swap contract was determined based upon a non-binding valuation from the counterparty that is corroborated by observable market data such as Japanese Yen interest rates and yield curves. The fair values of the Company’s foreign currency forward contracts were valued using pricing models, with all significant inputs derived from or corroborated by observable market data such as yield curves, currency spot and forward rates and currency volatilities.

     Effective August 1, 2008, the Company also adopted the provisions of SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 permits entities to elect to measure specified financial instruments and certain other items at fair value with changes in fair value recognized in earnings each reporting period. The Company has opted not to apply the fair value option to any of its financial assets or liabilities as of January 31, 2009.

NOTE 3 — ACQUISITIONS

     On September 2, 2008 (the “Closing Date”), the Company acquired 100% of the share capital and voting rights, on a fully diluted basis, of GeneSystems, SA (“GeneSystems”), a privately held French biotechnology company that has developed a patented approach to rapid microbiological detection equipment and disposables. On the Closing Date, the Company paid a cash purchase price of 25,000 Euros ($36,265 U.S. dollar equivalent at the foreign exchange rate on the Closing Date), subject to a post closing working capital adjustment. In the second quarter, the Company paid the working capital adjustment of 289 Euros ($382 equivalent).

     In the event that French regulations relating to the monitoring of possible contamination of hot water systems and/or water cooling towers by legionella are amended by the second anniversary of the Closing Date, with effect within 12 months of such amendment, to either (i) make the use of Polymerase Chain Reaction technology mandatory for such monitoring in France or (ii) validate its use as the only or preferred method for such monitoring in France (the “Legionella Regulation”), a post closing payment equal to 11,500 Euros (less any indemnity related payments of up to 2,000 Euros) will also be paid. If the Legionella Regulation is published after the second anniversary of the Closing Date, but prior to the third anniversary of the Closing Date, and becomes effective within 12 months of publication, the sellers will be paid 5,000 Euros (less any indemnity related payments of up to 2,000 Euros).

     The acquisition is accounted for using the purchase method of accounting in accordance with SFAS No. 141, Business Combinations (“SFAS No.141”). SFAS No. 141 requires that the total cost of an acquisition be allocated to the tangible and intangible assets acquired and liabilities assumed based upon their respective fair values at the date of acquisition.

7

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

     The following table summarizes the final allocation of the purchase price to the assets acquired and liabilities assumed at the date of the acquisition:

Purchase price	$	36,647
Transaction costs		663
Total purchase price		37,310
Cash acquired		96
Total purchase price, net of cash acquired		37,214
Accounts receivable		909
Inventories		1,883
Other current assets		683
Property plant and equipment		491
In-process research and development		1,743
Intangible assets		16,618
Total assets and in-process research and development acquired		22,327
Accounts payable and other current liabilities		2,260
Other non-current liabilities		4,785
Total liabilities assumed		7,045
Goodwill	$	21,932

Based upon the valuation of in-process research and development, the Company recorded a charge to earnings of approximately $1,743, which has been included in Restructuring and other charges, net (see Note 8, Restructuring and Other Charges, Net) for the six months ended January 31, 2009.

     The amount of in-process research and development was determined by identifying research projects for which technological feasibility had not been established and for which no alternative future uses existed. As of the acquisition date, there was one project that met the above criteria. The project identified is targeted for the BioPharmaceuticals market. The value of the research project identified to be in-process was determined by estimating the future cash flows from the project once commercially feasible and discounting the net cash flows back to their present value. The key assumptions specifically underlying the valuation for purchased in-process research and development consist of an expected completion date for the in-process project, estimated costs to complete the project, revenue and expense projections, and discount rates based on the risks associated with the development life cycle of the in-process technology acquired. The weighted average discount rate used was approximately 40%. The project is expected to be completed by calendar year 2010.

     Based upon the markets GeneSystems serves, the goodwill was assigned to the Company’s Life Sciences segment. The goodwill is not tax deductible. Pro forma financial information has not been provided as it is not material. The results of GeneSystems have been included in the results of operations of the Company since the date of acquisition.

NOTE 4 — BALANCE SHEET DETAILS

     The following tables provide details of selected balance sheet items:

	Jan. 31, 2009			July 31, 2008
Accounts receivable:
Billed	$	457,112		$	572,262
Unbilled		56,368			55,746
Total		513,480			628,008
Less: Allowances for doubtful accounts		(11,198	)		(10,929	)
	$	502,282		$	617,079

     Unbilled receivables principally relate to long-term contracts recorded under the percentage-of-completion method of accounting.

8

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

	Jan. 31, 2009		July 31, 2008
Inventories:
Raw materials and components	$	131,606	$	138,146
Work-in-process		62,795		77,245
Finished goods		264,341		277,586
	$	458,742	$	492,977

	Jan. 31, 2009			July 31, 2008
Property, plant and equipment:
Property, plant and equipment	$	1,413,079		$	1,496,121
Less: Accumulated depreciation and amortization		(789,551	)		(833,136	)
	$	623,528		$	662,985

NOTE 5 — GOODWILL AND INTANGIBLE ASSETS

     The following table presents goodwill, net of accumulated amortization recorded prior to adopting SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”), allocated by reportable segment, in accordance with SFAS No. 142.

	Jan. 31, 2009		July 31, 2008
Life Sciences	$	86,167	$	72,629
Industrial		189,208		193,264
	$	275,375	$	265,893

     The change in the carrying amount of goodwill is primarily attributable to the acquisition of GeneSystems, SA, as discussed in Note 3, Acquisitions, partly offset by changes in foreign exchange rates used to translate the goodwill contained in the financial statements of foreign subsidiaries using the rates at each respective balance sheet date.

     Intangible assets, net, consist of the following:

	Jan. 31, 2009
			Accumulated
	Gross		Amortization		Net
Patents and unpatented technology	$	94,700	$	45,997	$	48,703
Trademarks		6,180		3,402		2,778
Other		17,111		2,212		14,899
	$	117,991	$	51,611	$	66,380

	July 31, 2008
			Accumulated
	Gross		Amortization		Net
Patents and unpatented technology	$	85,336	$	43,853	$	41,483
Trademarks		4,902		3,123		1,779
Other		5,058		2,116		2,942
	$	95,296	$	49,092	$	46,204

     The change in the carrying amount of patents and unpatented technology is primarily attributable to the acquisition of GeneSystems, SA, as discussed in Note 3, Acquisitions. The change in the carrying amount of other intangibles is primarily related to the purchase of certain distribution rights to a customer base primarily related to the BioPharmaceuticals market.

9

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

     Amortization expense for intangible assets for the three and six months ended January 31, 2009 was $2,260 and $4,522, respectively. Amortization expense for intangible assets for the three and six months ended January 31, 2008 was $1,988 and $4,093, respectively. Amortization expense is estimated to be approximately $4,941 for the remainder of fiscal year 2009, $9,723 in fiscal year 2010, $9,504 in fiscal year 2011, $9,237 in fiscal year 2012, $6,426 in fiscal year 2013 and $5,483 in fiscal year 2014.

NOTE 6 — TREASURY STOCK

     On November 15, 2006, the board of directors authorized an expenditure of $250,000 to repurchase shares of the Company’s common stock. On October 16, 2008, the board authorized an additional expenditure of $350,000 to repurchase shares. The Company’s shares may be purchased over time, as market and business conditions warrant. There is no time restriction on these authorizations. During the six months ended January 31, 2009, the Company purchased 2,139 shares in open-market transactions at an aggregate cost of $64,884 with an average price per share of $30.33. At January 31, 2009, approximately $484,498 remained available to be expended under the current stock repurchase programs. Repurchased shares are held in treasury for use in connection with the Company’s stock-based compensation plans and for general corporate purposes.

     During the six months ended January 31, 2009, 465 shares were issued under the Company’s stock-based compensation plans. At January 31, 2009, the Company held 10,391 treasury shares.

NOTE 7 — CONTINGENCIES AND COMMITMENTS

     With respect to the matters described below under the headings Federal Securities Class Actions, Shareholder Derivative Lawsuits and Other Proceedings, no liabilities or insurance recoveries have been reflected in the condensed consolidated financial statements as of January 31, 2009 as these amounts are not currently estimable.

Federal Securities Class Actions:

     Four putative class action lawsuits were filed against the Company and certain members of its management team alleging violations of the federal securities laws relating to the Company’s understatement of certain of its U.S. income tax payments and of its provision for income taxes in certain prior periods as described in Note 2, Audit Committee Inquiry and Restatement, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2007 (“2007 Form 10-K”). These lawsuits were filed between August 14, 2007 and October 11, 2007 in the United States District Court for the Eastern District of New York. By Order dated May 28, 2008, the Court consolidated the cases under the caption “In re Pall Corp,” No. 07-CV-3359 (E.D.N.Y.) (JS) (ARL), appointed a lead plaintiff and ordered that the lead plaintiff file a consolidated amended complaint. The lead plaintiff filed its consolidated amended complaint on August 4, 2008. The lead plaintiff seeks to act as representative for a class consisting of purchasers of the Company’s stock between April 20, 2007 and August 2, 2007, inclusive. The consolidated amended complaint names the Company and its current chief executive officer and chief financial officer as defendants and alleges violations of Section 10(b) and 20(a) of the Exchange Act, as amended, and Rule 10b-5 promulgated by the Securities and Exchange Commission (“SEC”). It alleges that the defendants violated these provisions of the federal securities laws by issuing materially false and misleading public statements about the Company’s financial results and financial statements, including the Company’s income tax liability, effective tax rate, internal controls and accounting practices. The plaintiffs seek unspecified compensatory damages, costs and expenses. The Company moved to dismiss the consolidated amended complaint on September 19, 2008 and filed its reply brief to the lead plaintiff’s opposition to the Company’s motion to dismiss on December 2, 2008. The motion is now fully briefed and before the court.

10

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

Shareholder Derivative Lawsuits:

     On October 5, 2007, two plaintiffs filed identical derivative lawsuits in New York Supreme Court, Nassau County relating to the tax matter described above. These actions purport to bring claims on behalf of the Company based on allegations that certain current and former directors and officers of the Company breached their fiduciary duties by failing to evaluate and otherwise inform themselves about the Company’s internal controls and financial reporting systems and procedures. In addition, plaintiffs allege that certain officers of the Company were unjustly enriched as a result of the Company’s inaccurate financial results over fiscal years 1999-2006 and the first three quarters of fiscal year 2007. The complaints seek unspecified compensatory damages on behalf of Pall Corporation, disgorgement of defendants’ salaries, bonuses, stock grants and stock options, equitable relief and costs and expenses. The Company, acting in its capacity as nominal defendant, moved to dismiss the complaints for failure to make a demand upon the Company’s board of directors, which motions were granted on April 30 and May 2, 2008. On September 19, 2008, the same two plaintiffs filed a derivative lawsuit in New York Supreme Court, Nassau County, which was served on the Company on September 26, 2008 (the “September Derivative”). This action purports to bring claims on behalf of the Company based on allegations that certain current and former directors and officers of the Company breached their fiduciary duties and were unjustly enriched in connection with the tax matter. In addition, the plaintiffs allege that the Board’s refusal of their demand to commence an action against the defendants was not made in good faith. The plaintiffs and the Company agreed to stay these proceedings pending resolution of the Company’s motion to dismiss in the federal securities class action lawsuit.

     On November 13, 2008, another shareholder filed a derivative lawsuit in New York Supreme Court, Nassau County, against certain current and former directors and officers of the Company, and against the Company, as nominal defendant, which was served on the Company on December 4, 2008. This action purports to bring similar claims as the September Derivative. The plaintiffs and the Company have agreed to an identical stay as in the September Derivative.

Other Proceedings:

     The SEC and U.S. Attorney’s Office for the Eastern District of New York are conducting investigations in connection with the tax matter described above. The Company is cooperating with these investigations.

Environmental Matters:

     The Company’s condensed consolidated balance sheet at January 31, 2009 includes liabilities for environmental matters of approximately $13,642, which relate primarily to the previously reported environmental proceedings involving a Company subsidiary, Gelman Sciences Inc., pertaining to groundwater contamination. In the opinion of management, the Company is in substantial compliance with applicable environmental laws and its current accruals for environmental remediation are adequate. However, as regulatory standards under environmental laws are becoming increasingly stringent, there can be no assurance that future developments, additional information and experience gained will not cause the Company to incur material environmental liabilities or costs beyond those accrued in its condensed consolidated financial statements.

11

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

NOTE 8 — RESTRUCTURING AND OTHER CHARGES, NET

     The following tables summarize the restructuring and other charges/(gains) (“ROTC”) recorded for the three and six months ended January 31, 2009 and January 31, 2008:

	Three Months Ended Jan. 31, 2009									Six Months Ended Jan. 31, 2009
				Other									Other
				Charges									Charges
	Restructuring			/(Gains)						Restructuring			/(Gains)
	(1)			(2)			Total			(1)			(2)		Total
Severance	$	6,074		$	—		$	6,074		$	7,721		$	—	$	7,721
Impairment and loss on disposal of assets (2a)		4			1,500			1,504			4			3,477		3,481
Other costs		1,341			—			1,341			2,291			—		2,291
In-process research and development (2b)		—			—			—			—			1,743		1,743
Costs related to inquiry (2c)		—			234			234			—			820		820
Environmental matters (2d)		—			(371	)		(371	)		—			908		908
		7,419			1,363			8,782			10,016			6,948		16,964
Reversal of excess restructuring reserves		(35	)		—			(35	)		(42	)		—		(42	)
	$	7,384		$	1,363		$	8,747		$	9,974		$	6,948	$	16,922
Cash	$	7,532		$	(137	)	$	7,395		$	10,122		$	1,728	$	11,850
Non-cash		(148	)		1,500			1,352			(148	)		5,220		5,072
	$	7,384		$	1,363		$	8,747		$	9,974		$	6,948	$	16,922

	Three Months Ended Jan. 31, 2008								Six Months Ended Jan. 31, 2008
				Other								Other
				Charges								Charges
	Restructuring			/(Gains)					Restructuring			/(Gains)
	(1)			(2)		Total			(1)			(2)			Total
Severance	$	2,801		$	—	$	2,801		$	7,657		$	—		$	7,657
Costs related to inquiry (2c)		—			9,900		9,900			—			13,666			13,666
Other costs		1,119			—		1,119			1,624			—			1,624
Gain on disposal of assets		(188	)		—		(188	)		(158	)		(484	)		(642	)
Environmental matters (2d)		—			317		317			—			600			600
Other		—			—		—			—			13			13
		3,732			10,217		13,949			9,123			13,795			22,918
Reversal of excess reserves		(90	)		—		(90	)		(290	)		—			(290	)
	$	3,642		$	10,217	$	13,859		$	8,833		$	13,795		$	22,628
Cash	$	3,642		$	10,217	$	13,859		$	8,803		$	13,795		$	22,598
Non-cash		—			—		—			30			—			30
	$	3,642		$	10,217	$	13,859		$	8,833		$	13,795		$	22,628

12

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

(1) Restructuring

     Following the completion of the integration of the Filtration and Separations Group (“FSG”), which was acquired in fiscal year 2002, Company management began a much broader initiative to examine the overall structure of the Company and the manner in which it conducts business activities with the objective of increasing revenue growth and achieving cost reduction. This resulted in a series of restructuring activities, including the realignment of the overall business structure into vertically integrated businesses, which commenced at the end of fiscal year 2004, the Company’s facilities rationalization initiative and European cost reduction initiative (“EuroPall”), which commenced in fiscal year 2006, and the Western Hemisphere cost reduction initiative (“AmeriPall”), which commenced in fiscal year 2007. In fiscal year 2009, the Company commenced the second phase of its European cost reduction initiative (“EuroPall II”). Furthermore, in the second quarter of fiscal year 2009 the Company commenced its plans to reduce its workforce globally in response to current economic conditions.

     Three and Six Months Ended January 31, 2008 and January 31, 2009:

• The Company continued its cost reduction initiatives as discussed above. As a result, the Company recorded severance liabilities for the termination of certain employees worldwide as well as other costs related to these initiatives.

     The following table summarizes the activity related to restructuring liabilities that were recorded in the six months ended January 31, 2009 and in fiscal years 2008, 2007 and 2006:

				Lease
				Termination
				Liabilities &
	Severance			Other			Total
2009
Original charge	$	7,721		$	2,291		$	10,012
Utilized		(2,575	)		(537	)		(3,112	)
Other changes (a)		(148	)		(19	)		(167	)
Balance at Jan. 31, 2009	$	4,998		$	1,735		$	6,733
2008
Original charge	$	8,814		$	3,110		$	11,924
Utilized		(8,059	)		(2,849	)		(10,908	)
Other changes (a)		220			6			226
Balance at Jul. 31, 2008		975			267			1,242
Utilized		(369	)		(201	)		(570	)
Reversal of excess reserves (b)		(3	)		(4	)		(7	)
Other changes (a)		(114	)		(23	)		(137	)
Balance at Jan. 31, 2009	$	489		$	39		$	528

13

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

				Lease
				Termination
				Liabilities &
	Severance			Other			Total
2007
Original charge	$	22,083		$	4,321		$	26,404
Utilized		(6,146	)		(3,573	)		(9,719	)
Other changes (a)		611			9			620
Balance at Jul. 31, 2007		16,548			757			17,305
Utilized		(13,994	)		(727	)		(14,721	)
Reversal of excess reserves (b)		(297	)		(65	)		(362	)
Other changes (a)		1,281			57			1,338
Balance at Jul. 31, 2008		3,538			22			3,560
Utilized		(1,277	)		—			(1,277	)
Reversal of excess reserves (b)		(35	)		—			(35	)
Other changes (a)		(203	)		(6	)		(209	)
Balance at Jan. 31, 2009	$	2,023		$	16		$	2,039
2006
Original charge	$	13,335		$	3,043		$	16,378
Utilized		(7,221	)		(2,900	)		(10,121	)
Other changes (a)		182			9			191
Balance at Jul. 31, 2006		6,296			152			6,448
Utilized		(2,712	)		(108	)		(2,820	)
Reversal of excess reserves (b)		(1,385	)		(40	)		(1,425	)
Other changes (a)		126			2			128
Balance at Jul. 31, 2007		2,325			6			2,331
Utilized		(1,414	)		(6	)		(1,420	)
Reversal of excess reserves (b)		(56	)		—			(56	)
Other changes (a)		(4	)		—			(4	)
Balance at Jul. 31, 2008		851			—			851
Utilized		(518	)		—			(518	)
Other changes (a)		—			—			—
Balance at Jan. 31, 2009	$	333		$	—		$	333

(a)	Other changes primarily reflect translation impact.
(b)	Reflects the reversal of excess restructuring reserves originally recorded in fiscal years 2008, 2007 and 2006.

(2) Other Charges/(Gains):

(a) Impairment of assets:

In the three months ended January 31, 2009, the Company recorded a charge of $1,500 for the impairment of capitalized software development costs related to discontinued projects.

In the three months ended October 31, 2008, the Company recorded a charge of $1,977 for the other-than-temporary diminution in value of certain equity and debt investment securities held by its benefits protection trust.

14

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

(b) In-process research and development:

In the three months ended October 31, 2008, the Company recorded a charge of $1,743 to write off in-process research and development acquired in the acquisition of GeneSystems, SA (refer to Note 3, Acquisitions, for further discussion of purchase accounting).

(c) Costs related to inquiry:

In the three and six months ended January 31, 2009, the Company recorded costs of $234 and $820, respectively, primarily comprised of legal and other professional fees related to matters that were under audit committee inquiry.

In the three and six months ended January 31, 2008, the Company recorded costs of $9,900 and $13,666, respectively, primarily comprised of legal and other professional fees related to matters that were under audit committee inquiry.

See Note 2, Audit Committee Inquiry and Restatement, to the consolidated financial statements included in the 2007 Form 10-K for a description of this inquiry.

(d) Environmental matters:

In the six months ended January 31, 2009, the Company increased its previously established environmental reserves by $1,279, primarily related to environmental matters in Pinellas Park, Florida and Ann Arbor, Michigan. Such costs were partly offset by an insurance settlement of $371 recorded in the three months ended January 31, 2009.

In the three and six months ended January 31, 2008, the Company increased its previously established environmental reserves by $317 and $600, respectively, related to environmental matters in Ann Arbor, Michigan and Pinellas Park, Florida.

NOTE 9 — INCOME TAXES

     The Company’s effective tax rate for the six months ended January 31, 2009 and January 31, 2008 was 31.1% and 33.5%, respectively. For the six months ended January 31, 2009, the effective tax rate varied from the U.S. federal statutory rate primarily due to the benefits of foreign operations and the retroactive extension of the federal research credit per the Emergency Economic Stabilization Act of 2008. For the six months ended January 31, 2008, the effective tax rate varied from the U.S. federal statutory rate primarily due to the net impact of foreign operations and a tax charge resulting from new tax legislation in Germany.

     At January 31, 2009 and July 31, 2008, the Company had gross unrecognized tax benefits of $233,073 and $242,287, respectively. During the six month period ended January 31, 2009, the amount of unrecognized tax benefits decreased by $18,039, primarily due to foreign currency translation adjustments, and increased by $8,825 as a result of tax positions taken during the current period, resulting in a net decrease of $9,214.

     If recognized, $147,881 and $152,000 of the net unrecognized tax benefits would have reduced the effective tax rate at January 31, 2009 and July 31, 2008, respectively. The reduction in net unrecognized tax benefits was primarily due to foreign currency translation adjustments.

     Based on recent discussions with various tax authorities, the Company believes it is reasonably possible that the gross amount of unrecognized tax benefits will decrease by approximately $96,338 within the next twelve months. As a result, in the quarter ended October 31, 2008, the Company reclassified $92,558 from non-current income tax liabilities to current tax liabilities and $65,985 of non-current prepaid income tax included as a component of other non-current assets as of July 31, 2008 to other current assets as this amount could be utilized in the resolution of the unrecognized tax benefits.

15

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

NOTE 10 — COMPONENTS OF NET PERIODIC PENSION COST

     The Company provides substantially all domestic and foreign employees with retirement benefits. Net periodic pension benefit cost for the Company’s defined benefit pension plans includes the following components:

	Three Months Ended
	U.S. Plans						Foreign Plans						Total
	Jan. 31, 2009			Jan. 31, 2008			Jan. 31, 2009			Jan. 31, 2008			Jan. 31, 2009			Jan. 31, 2008
Service cost	$	2,033		$	2,000		$	1,239		$	1,045		$	3,272		$	3,045
Interest cost		3,107			2,893			3,901			4,809			7,008			7,702
Expected return on plan assets		(2,114	)		(2,190	)		(3,193	)		(4,011	)		(5,307	)		(6,201	)
Amortization of prior service cost		385			276			63			84			448			360
Recognized actuarial loss		264			467			283			1,110			547			1,577
Loss due to curtailments and settlements		—			—			—			4			—			4
Net periodic benefit cost	$	3,675		$	3,446		$	2,293		$	3,041		$	5,968		$	6,487

	Six Months Ended
	U.S. Plans						Foreign Plans						Total
	Jan. 31, 2009			Jan. 31, 2008			Jan. 31, 2009			Jan. 31, 2008			Jan. 31, 2009			Jan. 31, 2008
Service cost	$	4,066		$	4,000		$	2,477		$	1,961		$	6,543		$	5,961
Interest cost		6,214			5,786			8,464			9,513			14,678			15,299
Expected return on plan assets		(4,228	)		(4,380	)		(7,040	)		(7,968	)		(11,268	)		(12,348	)
Amortization of prior service cost		770			552			115			164			885			716
Recognized actuarial loss		528			934			631			2,200			1,159			3,134
Loss due to curtailments and settlements		—			—			—			7			—			7
Net periodic benefit cost	$	7,350		$	6,892		$	4,647		$	5,877		$	11,997		$	12,769

NOTE 11 — STOCK-BASED PAYMENT

     The Company applies the provisions of SFAS No. 123(R), Share-Based Payment, which establishes the accounting for employee stock-based awards. The Company currently has four stock-based employee and director compensation plans (Stock Option Plans, Management Stock Purchase Plan (“MSPP”), Employee Stock Purchase Plan (“ESPP”) and Restricted Stock Unit Plans), which are more fully described in Note 14, Common Stock, to the consolidated financial statements included in the 2008 Form 10-K.

     The detailed components of stock-based compensation expense recorded in the condensed consolidated statements of earnings for the three and six months ended January 31, 2009 and January 31, 2008 are reflected in the table below.

	Three Months Ended				Six Months Ended
	Jan. 31, 2009		Jan. 31, 2008		Jan. 31, 2009		Jan. 31, 2008
Stock options	$	1,172	$	846	$	2,187	$	1,474
Restricted stock units		3,359		2,155		5,660		3,626
ESPP		1,248		1,056		2,272		1,875
MSPP		1,114		598		1,971		1,118
Total	$	6,893	$	4,655	$	12,090	$	8,093

16

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

     The following table illustrates the income tax effects related to stock-based compensation.

	Three Months Ended				Six Months Ended
	Jan. 31,		Jan. 31,		Jan. 31,		Jan. 31,
	2009		2008		2009		2008
Excess tax benefit in cash flows from financing activities	$	240	$	206	$	689	$	760
Tax benefit recognized related to total stock-based compensation expense		2,163		1,368		3,573		2,261
Actual tax benefit realized for tax deductions from option exercises of stock-based payment arrangements		389		630		1,697		1,927

Stock Options and ESPP

     A summary of option activity for all stock option plans during the six months ended January 31, 2009 is presented below:

						Weighted-
				Weighted-		Average
				Average		Remaining		Aggregate
				Exercise		Contractual Term		Intrinsic
Stock Options	Shares			Price		(in years)		Value
Outstanding at August 1, 2008		3,357		$	28.15
Granted		—			—
Exercised		(62	)		22.82
Forfeited or Expired		(3	)		37.95
Outstanding at October 31, 2008		3,292			28.24		4.5	$	8,641
Granted		545			26.15
Exercised		(11	)		18.99
Forfeited or Expired		(4	)		30.20
Outstanding at January 31, 2009		3,822		$	27.96		4.6	$	8,064
Expected to vest at January 31, 2009		1,685		$	32.89		5.9	$	25
Exercisable at January 31, 2009		2,103		$	23.83		3.3	$	8,038

     As of January 31, 2009, there was $11,127 of total unrecognized compensation cost related to nonvested stock options, which is expected to be recognized over a weighted-average period of 3.0 years. The total intrinsic value of options exercised during the three and six months ended January 31, 2009 was $72 and $1,147, respectively. The total intrinsic value of options exercised during the three and six months ended January 31, 2008 was $19 and $412, respectively.

     The ESPP enables participants to purchase shares of the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the market price at the beginning or end of each semi-annual stock purchase period. The semi-annual offering periods end in April and October. A total of 244 shares and 200 shares were issued under the ESPP during the semi-annual stock purchase periods ended October 31, 2008 and October 31, 2007, respectively. Shares for the current semi-annual stock purchase period will be purchased on April 30, 2009.

17

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

     The following weighted average assumptions were used in estimating the fair value of stock options granted during the three and six months ended January 31, 2009 and January 31, 2008:

	Three Months Ended						Six Months Ended
	Jan. 31, 2009			Jan. 31, 2008			Jan. 31, 2009			Jan. 31, 2008
Stock Options
Weighted average fair value at grant date	$	6.37		$	9.13		$	6.37		$	9.20
Valuation assumptions:
Expected dividend yield		1.8	%		1.7	%		1.8	%		1.7	%
Expected volatility		31.0	%		25.5	%		31.0	%		25.5	%
Expected life (years)		5.0			5.0			5.0			5.0
Risk-free interest rate		1.6	%		3.2	%		1.6	%		3.3	%
ESPP
Weighted average fair value at grant date	$	7.67		$	10.13		$	7.67		$	10.13
Valuation assumptions:
Expected dividend yield		1.4	%		1.2	%		1.4	%		1.2	%
Expected volatility		50.3	%		37.1	%		50.3	%		37.1	%
Expected life (years)	1/2 year			1/2 year			1/2 year			1/2 year
Risk-free interest rate		1.1	%		4.0	%		1.1	%		4.0	%

     The fair value of the options and ESPP shares granted is estimated using a Black-Scholes-Merton option-pricing formula and amortized to expense over the options’ service periods. The Company has placed exclusive reliance on historical volatility in its estimate of expected volatility. The Company used a sequential period of historical data equal to the expected term (or expected life) of the options and ESPP shares granted using a simple average calculation based upon the daily closing prices of the aforementioned period.

     The expected life (years) represents the period of time for which the options and ESPP shares granted are expected to be outstanding. This estimate was derived from historical share option exercise experience, which management believes provides the best estimate of the expected term.

MSPP

     The purpose of the MSPP is to encourage key employees of the Company to increase their ownership of shares of the Company’s common stock by providing such employees with an opportunity to elect to have portions of their total annual compensation paid in the form of restricted units, to make cash purchases of restricted units and to earn additional matching restricted units which vest over a three year period for matches prior to August 1, 2003 and vest over a four year period for matches made thereafter. Such restricted units aggregated 984 and 804 as of January 31, 2009 and January 31, 2008, respectively. As of January 31, 2009, there was $8,667 of total unrecognized compensation cost related to nonvested restricted stock units granted under the MSPP, which is expected to be recognized over a weighted-average period of 3.0 years.

     The following is a summary of MSPP activity during the three and six months ended January 31, 2009 and January 31, 2008:

	Three Months Ended				Six Months Ended
	Jan. 31,		Jan. 31,		Jan. 31,		Jan. 31,
	2009		2008		2009		2008
Deferred compensation and cash contributions	$	516	$	445	$	4,757	$	3,089
Fair value of restricted stock units vested	$	943	$	271	$	1,612	$	1,022
Vested units distributed		70		50		142		140

18

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

RSUs

     A summary of restricted stock unit activity, related to employees, for the Pall Corporation 2005 Stock Compensation Plan (“2005 Stock Plan”) during the six months ended January 31, 2009, is presented below:

				Weighted-
				Average
				Grant-Date
	Shares			Fair Value
Nonvested at August 1, 2008		1,025		$	34.80
Granted		1			34.85
Vested		(13	)		31.81
Forfeited		(6	)		33.09
Nonvested at October 31, 2008		1,007			34.85
Granted		128			26.16
Vested		(46	)		27.00
Forfeited		(4	)		34.48
Nonvested at January 31, 2009		1,085		$	34.16

     As of January 31, 2009, there was $22,226 of total unrecognized compensation cost related to nonvested restricted stock units granted under the 2005 Stock Plan, which is expected to be recognized over a weighted-average period of 2.9 years.

     Non-employee directors of the Company were granted in the aggregate 44 annual award units of restricted stock during the three and six months ended January 31, 2009, with a weighted-average fair market value of $27.98 per share.

     The Company uses treasury shares that have been repurchased through the Company’s stock repurchase program to satisfy share award exercises.

NOTE 12 — EARNINGS PER SHARE

     The condensed consolidated statements of earnings present basic and diluted earnings per share. Basic earnings per share is determined by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share considers the potential effect of dilution on basic earnings per share assuming potentially dilutive shares that meet certain criteria, such as those issuable upon exercise of stock options, were outstanding. The treasury stock method reduces the dilutive effect of potentially dilutive securities as it assumes that cash proceeds (from the issuance of potentially dilutive securities) are used to buy back shares at the average share price during the period. Employee stock options and units aggregating 732 and 662 shares were not included in the computation of diluted shares for the three months ended January 31, 2009 and January 31, 2008, respectively, because their effect would have been antidilutive. For the six months ended January 31, 2009 and January 31, 2008, 549 and 673 antidilutive shares, respectively, were excluded. The following is a reconciliation between basic shares outstanding and diluted shares outstanding:

	Three Months Ended				Six Months Ended
	Jan. 31, 2009		Jan. 31, 2008		Jan. 31, 2009		Jan. 31, 2008
Basic shares outstanding		118,428		123,372		118,931		123,256
Effect of stock plans		785		1,200		990		1,193
Diluted shares outstanding		119,213		124,572		119,921		124,449

19

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

NOTE 13 — COMPREHENSIVE INCOME (LOSS)

	Three Months Ended						Six Months Ended
	Jan. 31, 2009			Jan. 31, 2008			Jan. 31, 2009			Jan. 31, 2008
Net earnings	$	38,871		$	47,988		$	81,958		$	84,090
Unrealized translation adjustment		(25,456	)		(1,564	)		(128,271	)		21,812
Income taxes		3,080			1,464			(4,615	)		3,903
Unrealized translation adjustment, net		(22,376	)		(100	)		(132,886	)		25,715
Change in unrealized investment gains (losses)		1,235			(361	)		(1,069	)		1,680
Income taxes		—			130			122			(590	)
Change in unrealized investment gains (losses), net		1,235			(231	)		(947	)		1,090
Unrealized losses on derivatives		(9	)		(317	)		(438	)		(870	)
Income taxes		3			135			153			287
Unrealized losses on derivatives, net		(6	)		(182	)		(285	)		(583	)
Total comprehensive income (loss)	$	17,724		$	47,475		$	(52,160	)	$	110,312

     Unrealized investment gains/(losses) on available-for-sale securities, net of related taxes, consist of the following:

	Three Months Ended					Six Months Ended
	Jan. 31, 2009		Jan. 31, 2008			Jan. 31, 2009			Jan. 31, 2008
Unrealized gains (losses) arising during the period	$	1,235	$	(361	)	$	(2,909	)	$	1,680
Income taxes		—		130			122			(590	)
Net unrealized gains (losses) arising during the period		1,235		(231	)		(2,787	)		1,090
Reclassification adjustment for losses included in net earnings		—		—			1,840			—
Change in unrealized investment gains (losses), net	$	1,235	$	(231	)	$	(947	)	$	1,090

20

PALL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(In thousands, except per share data)
(Unaudited)

NOTE 14 — SEGMENT INFORMATION

     The Company’s reportable segments as identified in accordance with the provisions of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, which are also its operating segments, consist of the Company’s two vertically integrated businesses, Life Sciences and Industrial.

     The following table presents sales and operating profit by segment reconciled to earnings before income taxes, for the three and six months ended January 31, 2009 and January 31, 2008.

	Three Months Ended				Six Months Ended
	Jan. 31, 2009		Jan. 31, 2008		Jan. 31, 2009		Jan. 31, 2008
SALES:
Life Sciences	$	225,022	$	244,480	$	445,351	$	459,094
Industrial		318,274		381,267		675,967		727,660
Total	$	543,296	$	625,747	$	1,121,318	$	1,186,754
OPERATING PROFIT:
Life Sciences	$	48,602	$	48,153	$	90,470	$	87,936
Industrial		35,882		55,443		90,988		100,520
Total operating profit		84,484		103,596		181,458		188,456
General corporate expenses		12,638		12,257		29,660		23,683
Earnings before ROTC, interest expense, net and income taxes		71,846		91,339		151,798		164,773
ROTC		8,747		13,859		16,922		22,628
Interest expense, net		6,553		8,063		15,979		15,784
Earnings before income taxes	$	56,546	$	69,417	$	118,897	$	126,361

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements and Risk Factors

     The following discussion should be read together with the accompanying condensed consolidated financial statements and notes thereto and other financial information in this Form 10-Q and in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2008 (“2008 Form 10-K”). The discussion under the subheading “Review of Operating Segments” below is in local currency unless otherwise indicated. Company management considers local currency growth an important measure because by excluding the volatility of exchange rates, underlying volume change is clearer. Dollar amounts discussed below are in thousands, unless otherwise indicated, except per share dollar amounts. In addition, per share dollar amounts are discussed on a diluted basis.

     The matters discussed in this Quarterly Report on Form 10-Q contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements regarding future performance, earnings projections, earnings guidance, management’s expectations about its future cash needs and effective tax rate, and other future events or developments are forward-looking statements. Forward-looking statements are those that use terms such as “anticipate”, “should”, “believe”, “estimate”, “expect”, “intend”, “plan”, “predict”, “potential” or similar expressions about matters that are not historical facts. Forward-looking statements contained in this and other written and oral reports are based on current Company expectations and are subject to risks and uncertainties, which could cause actual results to differ materially. Such risks and uncertainties include, but are not limited to, those discussed in Part I, Item 1A, “Risk Factors” in the 2008 Form 10-K, and other reports the Company files with the Securities and Exchange Commission, including the impact of the current global recessionary environment and its likely depth and duration, the current credit market crisis, volatility in currency and energy costs and other macro economic challenges currently affecting the Company, our customers (including their cash flow and payment practices) and vendors, and the effectiveness of our initiatives to mitigate the impact of the current environment. The Company makes these statements as of the date of this disclosure and undertakes no obligation to update them.

Results of Operations

Review of Consolidated Results

     Sales in the quarter decreased 13.2% to $543,296 from $625,747 in the second quarter of fiscal year 2008. For the first six months of fiscal year 2009, sales decreased 5.5% compared to the same period of fiscal year 2008. Exchange rates reduced reported sales by $38,013 and $45,013 in the quarter and six months, respectively, primarily due to the strengthening of the U.S. dollar against the Euro, the British Pound and several Asian currencies, partly offset by the weakening of the U.S. dollar against the Japanese Yen. In local currency (i.e., had exchange rates not changed year over year), sales decreased 7.1% and 1.7% in the quarter and first six months, respectively. Increased pricing achieved in both the Life Sciences and Industrial segments contributed $7,134 and $10,607 to overall sales in the quarter and first six months, respectively. In the first quarter, the Company launched its Pricing Excellence initiative that is focused on optimizing prices and product margins by better defining the value equation to the benefit of the Company and its customers.

     Life Sciences segment sales decreased 1.5% (in local currency) in the quarter, attributable to a decline in the Medical market. Sales in the BioPharmaceuticals market were flat. Life Sciences segment sales in the first six months increased 1.1% (in local currency), attributable to growth in the BioPharmaceuticals market partly offset by a decline in the Medical market. Industrial segment sales in the quarter decreased 10.7% (in local currency) reflecting a decline in the Energy, Water & Process Technologies (“EWPT”) and Microelectronics markets. The Aerospace & Transportation market was up slightly in the quarter. Industrial segment sales in the first six months decreased 3.5% (in local currency) reflecting a decline in the Microelectronics market partly offset by growth in the Aerospace & Transportation market. Sales in the EWPT market were flat in the first six months. Overall systems sales decreased 4% in the quarter as growth in the EWPT market was more than offset by declines in the BioPharmaceuticals, Aerospace & Transportation and Microelectronics markets. For the first six months, overall systems sales were flat as growth in the EWPT market was offset by declines in the BioPharmaceuticals, Aerospace & Transportation and Microelectronics markets. Systems sales represented 12.5% of total sales in the quarter, on par with the second quarter of fiscal year 2008. Systems sales in the first six months represented 11.4% of total sales compared to 11.5% in the first six months of fiscal year 2008. For a detailed discussion of sales, refer to the section “Review of Operating Segments” below.

22

     Gross margin, as a percentage of sales, was 47.2% in the quarter compared to 46.1% in the second quarter of fiscal year 2008. For the first six months, gross margin, as a percentage of sales, was 47.8% compared to 46.3% in the first six months of fiscal year 2008. Improved pricing in both segments contributed approximately 70 and 50 basis points in margin in the quarter and first six months, respectively. The improvement in gross margin in the quarter and first six months also reflects the effects of the ongoing cost reduction and lean manufacturing initiatives. For a detailed discussion of gross margin by segment, refer to the section “Review of Operating Segments” below.

     Selling, general and administrative (“SG&A”) expenses in the quarter decreased by $11,761, or about 6.5% (flat in local currency). As a percentage of sales, SG&A expenses were 30.8% compared to 28.6% in the second quarter of fiscal year 2008. The increase in SG&A as a percentage of sales primarily reflects the impact of decreased sales quarter over quarter. For the first six months, SG&A expenses decreased by $2,242 (an increase of approximately 3% in local currency). As a percentage of sales, SG&A expenses were 31% compared to 29.5% in the first six months of fiscal year 2008. The increase in SG&A as a percentage of sales primarily reflects the impact of decreased sales period over period, increased selling and marketing personnel-related costs as well as consulting costs, mainly related to the Company’s Pricing Excellence initiative, partly offset by the impact of the Company’s cost reduction initiatives. In fiscal year 2007, the Company launched the equivalent of its European cost reduction initiative (“EuroPall”) in the Western Hemisphere (“AmeriPall”). The majority of the savings related to AmeriPall are expected to have an impact later in fiscal year 2009 and beyond. In fiscal year 2009, the Company also began implementing the second phase of EuroPall (“EuroPall II”). Furthermore, in the second quarter of fiscal year 2009, the Company commenced plans to reduce its workforce globally in response to current economic conditions. Expected savings related to these workforce reduction plans will be realized in the second half of fiscal year 2009.

     Research and development (“R&D”) expenses were $17,419 in the quarter compared to $18,092 in the second quarter of fiscal year 2008, a decrease of about 4% (an increase of approximately 1% in local currency). As a percentage of sales, R&D expenses were 3.2% compared to 2.9% in the second quarter of fiscal year 2008. For the first six months, R&D expenses were $36,352 compared to $34,987 in the first six months of fiscal year 2008, up about 4% (approximately 7% in local currency). As a percentage of sales, R&D expenses were 3.2% compared to 2.9% in the first six months of fiscal year 2008.

     In the second quarter of fiscal year 2009, the Company recorded restructuring and other charges (“ROTC”) of $8,747. ROTC in the quarter was primarily comprised of severance and other costs related to the Company’s on-going cost reduction initiatives of $7,384 and a charge of $1,500 for the impairment of capitalized software development costs related to discontinued projects. Additionally, ROTC includes legal fees of $234 related to matters that were under inquiry by the audit committee (see Note 2, Audit Committee Inquiry and Restatement, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2007 (“2007 Form 10-K”)). Such charges were partly offset by an insurance settlement of $371 related to an environmental matter. In the first six months of fiscal year 2009, the Company recorded ROTC of $16,922, which was primarily comprised of severance and other costs related to the Company’s on-going cost reduction initiatives of $9,974, a charge of $1,743 to write-off in-process R&D acquired in the acquisition of GeneSystems, SA (refer to Note 3, Acquisitions, for further discussion of purchase accounting), a charge of $1,977 for the other-than-temporary diminution in value of certain equity and debt investment securities held by its benefits protection trust, a charge of $1,500 for the impairment of capitalized software, and increases to previously established environmental reserves of $1,279. Additionally, ROTC includes legal fees of $820 related to matters that were under inquiry by the audit committee, as discussed above. Such charges were partly offset by an insurance settlement of $371 related to an environmental matter.

     In the second quarter of fiscal year 2008, the Company recorded ROTC of $13,859. ROTC in the quarter was primarily comprised of legal and other professional fees related to matters that were under inquiry by the audit committee (see Note 2, Audit Committee Inquiry and Restatement, to the consolidated financial statements included in the Company’s 2007 Form 10-K”). Additionally, ROTC includes severance liabilities and other costs related to the Company’s on-going cost reduction initiatives as well as an increase to a previously established environmental reserve. Such charges were partly offset by the reversal of excess restructuring reserves previously recorded in the consolidated statements of earnings in fiscal years 2005, 2006 and 2007. In the first six months of fiscal year 2008, the Company recorded ROTC of $22,628. ROTC in the six months was primarily comprised of legal and other professional fees related to matters under inquiry by the audit committee, as discussed above. Additionally, ROTC in the six months includes severance liabilities and other costs related to the Company’s on-going cost reduction initiatives as well as an increase to a previously established environmental reserve. Such charges were partly offset by the reversal of excess restructuring reserves previously recorded in the consolidated statements of earnings in fiscal years 2005, 2006 and 2007.

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     The details of ROTC for the three and six months ended January 31, 2009 and January 31, 2008 can be found in Note 8, Restructuring and Other Charges, Net, to the accompanying condensed consolidated financial statements.

     The following table summarizes the activity related to restructuring liabilities that were recorded in the six months ended January 31, 2009 and in fiscal years 2008, 2007 and 2006:

     The following table summarizes the activity related to restructuring liabilities that were recorded in the six months ended January 31, 2009 and in fiscal years 2008, 2007 and 2006:

				Lease
				Termination
				Liabilities &
	Severance			Other			Total
2009
Original charge	$	7,721		$	2,291		$	10,012
Utilized		(2,575	)		(537	)		(3,112	)
Other changes (a)		(148	)		(19	)		(167	)
Balance at Jan. 31, 2009	$	4,998		$	1,735		$	6,733
2008
Original charge	$	8,814		$	3,110		$	11,924
Utilized		(8,059	)		(2,849	)		(10,908	)
Other changes (a)		220			6			226
Balance at Jul. 31, 2008		975			267			1,242
Utilized		(369	)		(201	)		(570	)
Reversal of excess reserves (b)		(3	)		(4	)		(7	)
Other changes (a)		(114	)		(23	)		(137	)
Balance at Jan. 31, 2009	$	489		$	39		$	528
				Lease
				Termination
				Liabilities &
	Severance			Other			Total
2007
Original charge	$	22,083		$	4,321		$	26,404
Utilized		(6,146	)		(3,573	)		(9,719	)
Other changes (a)		611			9			620
Balance at Jul. 31, 2007		16,548			757			17,305
Utilized		(13,994	)		(727	)		(14,721	)
Reversal of excess reserves (b)		(297	)		(65	)		(362	)
Other changes (a)		1,281			57			1,338
Balance at Jul. 31, 2008		3,538			22			3,560
Utilized		(1,277	)		—			(1,277	)
Reversal of excess reserves (b)		(35	)		—			(35	)
Other changes (a)		(203	)		(6	)		(209	)
Balance at Jan. 31, 2009	$	2,023		$	16		$	2,039

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				Lease
				Termination
				Liabilities &
	Severance			Other			Total
2006
Original charge	$	13,335		$	3,043		$	16,378
Utilized		(7,221	)		(2,900	)		(10,121	)
Other changes (a)		182			9			191
Balance at Jul. 31, 2006		6,296			152			6,448
Utilized		(2,712	)		(108	)		(2,820	)
Reversal of excess reserves (b)		(1,385	)		(40	)		(1,425	)
Other changes (a)		126			2			128
Balance at Jul. 31, 2007		2,325			6			2,331
Utilized		(1,414	)		(6	)		(1,420	)
Reversal of excess reserves (b)		(56	)		—			(56	)
Other changes (a)		(4	)		—			(4	)
Balance at Jul. 31, 2008		851			—			851
Utilized		(518	)		—			(518	)
Other changes (a)		—			—			—
Balance at Jan. 31, 2009	$	333		$	—		$	333

(a)	Other changes primarily reflect translation impact.
(b)	Reflects the reversal of excess restructuring reserves originally recorded in fiscal years 2008, 2007 and 2006.

     Earnings before interest and income taxes (“EBIT”) were $63,099 in the quarter compared to $77,480 in the second quarter of fiscal year 2008, reflecting the factors discussed above. As a percentage of sales, EBIT was 11.6% compared to 12.4% in the second quarter of fiscal year 2008. EBIT were $134,876 in the first six months compared to $142,145 in the first six months of fiscal year 2008, reflecting the factors discussed above. As a percentage of sales, EBIT was 12%, on par with the first six months of fiscal year 2008.

     Net interest expense in the quarter decreased to $6,553 from $8,063 in the second quarter of fiscal year 2008. The reduction in net interest expense was primarily attributable to a decrease in interest expense, which was related to lower interest rates in the United States, and a reduced level of debt due to the repayment of higher interest bearing European debt. A decrease in interest income related to reduced cash balances and lower returns compared to the same period last year partly offset the above. For the first six months, net interest expense increased slightly to $15,979 from $15,784 in the first six months of fiscal year 2008 as a reduction in interest income was partially offset by a decrease in interest expense.

     In the second quarter of fiscal year 2009, the Company’s effective tax rate was 31.3% as compared to 30.9% in the second quarter of fiscal year 2008. For the first six months of fiscal year 2009, the Company’s effective tax rate was 31.1% as compared to 33.5% in the same period of fiscal year 2008. For the three months ended January 31, 2009 and 2008, the effective tax rate varied from the U.S. federal statutory rate primarily due to the benefits of foreign operations. For the six months ended January 31, 2009, the effective tax rate varied from the U.S. federal statutory rate primarily due to the benefits of foreign operations and the retroactive extension of the federal research credit per the Emergency Economic Stabilization Act of 2008. For the six months ended January 31, 2008, the effective tax rate varied from the U.S. federal statutory rate primarily due to the net impact of foreign operations and a tax charge resulting from new tax legislation in Germany. The Company expects its effective tax rate to be 31.3% for the full fiscal year 2009, exclusive of the impact of discrete items in future periods. The actual effective tax rate for the full fiscal year 2009 may differ materially based on several factors including the geographical mix of earnings in tax jurisdictions, enacted tax laws, the timing and amount of foreign dividends, state and local taxes, the ratio of permanent items to pretax book income, and the implementation of various global tax strategies, as well as nonrecurring factors.

25

     Net earnings in the quarter were $38,871, or 33 cents per share, compared with net earnings of $47,988, or 39 cents per share in the second quarter of fiscal year 2008. In summary, the decline in net earnings dollars in the quarter reflects the decrease in EBIT and an increase in the effective tax rate partly offset by a decline in net interest expense. The decline in earnings per share in the quarter reflects the decrease in net earnings partly offset by the impact of reduced shares outstanding due to stock buybacks. Net earnings in the first six months were $81,958, or 68 cents per share, compared with net earnings of $84,090, or 68 cents per share in the first six months of fiscal year 2008. In summary, the decline in net earnings dollars in the first six months primarily reflects the decrease in EBIT partly offset by a decrease in the effective tax rate. Earnings per share in the first six months was flat compared to last year as a decrease in net earnings was offset by the impact of reduced shares outstanding due to stock buybacks. Company management estimates that foreign currency translation reduced net earnings by 3 cents per share in both the quarter and first six months. The acquisition of GeneSystems was dilutive to earnings by 1 cent and 3 cents per share in the quarter and first six months, respectively.

Review of Operating Segments

     The following table presents sales and operating profit by segment, reconciled to earnings before income taxes, for the three and six months ended January 31, 2009 and January 31, 2008.

			%				%		%
Three Months Ended	Jan. 31, 2009		Margin		Jan. 31, 2008		Margin		Change
SALES:
Life Sciences	$	225,022			$	244,480				(8.0	)
Industrial		318,274				381,267				(16.5	)
Total	$	543,296			$	625,747				(13.2	)
OPERATING PROFIT:
Life Sciences	$	48,602		21.6	$	48,153		19.7		0.9
Industrial		35,882		11.3		55,443		14.5		(35.3	)
Total operating profit		84,484		15.6		103,596		16.6		(18.4	)
General corporate expenses		12,638				12,257				3.1
Earnings before ROTC, interest expense, net and income taxes		71,846		13.2		91,339		14.6		(21.3	)
ROTC		8,747				13,859
Interest expense, net		6,553				8,063
Earnings before income taxes	$	56,546			$	69,417
			%				%		%
Six Months Ended	Jan. 31, 2009		Margin		Jan. 31, 2008		Margin		Change
SALES:
Life Sciences	$	445,351			$	459,094				(3.0	)
Industrial		675,967				727,660				(7.1	)
Total	$	1,121,318			$	1,186,754				(5.5	)
OPERATING PROFIT:
Life Sciences	$	90,470		20.3	$	87,936		19.2		2.9
Industrial		90,988		13.5		100,520		13.8		(9.5	)
Total operating profit		181,458		16.2		188,456		15.9		(3.7	)
General corporate expenses		29,660				23,683				25.2
Earnings before ROTC, interest expense, net and income taxes		151,798		13.5		164,773		13.9		(7.9	)
ROTC		16,922				22,628
Interest expense, net		15,979				15,784
Earnings before income taxes	$	118,897			$	126,361

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 Life Sciences:

     Presented below are Summary Statements of Operating Profit for the Life Sciences segment for the three and six months ended January 31, 2009 and January 31, 2008:

Three Months Ended	Jan. 31, 2009		% of Sales		Jan. 31, 2008		% of Sales
Sales	$	225,022			$	244,480
Cost of sales		109,720		48.8		123,137		50.4
Gross margin		115,302		51.2		121,343		49.6
SG&A		57,086		25.4		62,982		25.8
Research and development		9,614		4.2		10,208		4.2
Operating profit	$	48,602		21.6	$	48,153		19.7
Six Months Ended	Jan. 31, 2009		% of Sales		Jan. 31, 2008		% of Sales
Sales	$	445,351			$	459,094
Cost of sales		215,530		48.4		226,603		49.4
Gross margin		229,821		51.6		232,491		50.6
SG&A		119,470		26.8		124,729		27.2
Research and development		19,881		4.5		19,826		4.3
Operating profit	$	90,470		20.3	$	87,936		19.2

     The tables below present sales by market and geography within the Life Sciences segment for the three and six months ended January 31, 2009 and January 31, 2008, including the effect of exchange rates for comparative purposes.

											%
								Exchange			Change in
					%			Rate			Local
Three Months Ended	Jan. 31, 2009		Jan. 31, 2008		Change			Impact			Currency
By Market
Medical (a)	$	96,887	$	106,432		(9.0	)	$	(5,948	)		(3.4	)
BioPharmaceuticals (a)		128,135		138,048		(7.2	)		(9,843	)		(0.1	)
Total Life Sciences	$	225,022	$	244,480		(8.0	)	$	(15,791	)		(1.5	)
By Geography
Western Hemisphere	$	84,867	$	95,897		(11.5	)	$	(705	)		(10.8	)
Europe		107,676		117,471		(8.3	)		(15,163	)		4.6
Asia		32,479		31,112		4.4			77			4.1
Total Life Sciences	$	225,022	$	244,480		(8.0	)	$	(15,791	)		(1.5	)

(a) The BioPharmaceuticals market includes the Laboratory market previously reported in Medical. Prior year amounts conform to the current classification.

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											%
								Exchange			Change in
					%			Rate			Local
Six Months Ended	Jan. 31, 2009		Jan. 31, 2008		Change			Impact			Currency
By Market
Medical (a)	$	189,293	$	200,674		(5.7	)	$	(6,906	)		(2.2	)
BioPharmaceuticals (a)		256,058		258,420		(0.9	)		(12,059	)		3.8
Total Life Sciences	$	445,351	$	459,094		(3.0	)	$	(18,965	)		1.1
By Geography
Western Hemisphere	$	166,183	$	182,899		(9.1	)	$	(966	)		(8.6	)
Europe		217,134		218,493		(0.6	)		(18,246	)		7.7
Asia		62,034		57,702		7.5			247			7.1
Total Life Sciences	$	445,351	$	459,094		(3.0	)	$	(18,965	)		1.1

(a) The BioPharmaceuticals market includes the Laboratory market previously reported in Medical. Prior year amounts conform to the current classification.

     Life Sciences segment sales decreased 1.5% in the quarter compared to the second quarter of fiscal year 2008 and increased 1.1% in the first six months compared to the first six months of fiscal year 2008. Increased pricing (driven by the Biopharmaceuticals market) contributed $3,057 and $4,888 to overall sales in the quarter and first six months, respectively. Life Sciences represented approximately 41% and 40% of total sales in the quarter and first six months, respectively, compared to 39% in both the second quarter and first six months of fiscal year 2008.

     Within Life Sciences, Medical market sales, which now excludes the Laboratory market and represented approximately 43% of Life Sciences sales, decreased 3.4% in the quarter. This decline was attributable to a decrease in Blood Filtration (-9.9%), the largest market served by Medical, partly tempered by sales growth in the Original Equipment Manufacturer (“OEM”) (+5.2%) market. Sales in the Hospital market were flat as increased sales in the Western Hemisphere were offset by a decrease in sales in Asia. For the first six months, Medical market sales decreased 2.2% from the comparable period in fiscal year 2008. The decline in Medical sales for the first six months was attributable to a decrease in Blood Filtration (-9.3%), partly mitigated by sales growth in the OEM (+6.3%) and Hospital (+3.2%) markets. The decline in the Blood Filtration market for the quarter and first six months primarily relates to decreased volume to several large customers in the Western Hemisphere and decreased volume in several countries in Europe. The growth in OEM sales in both periods was primarily driven by strong sales across Europe. The growth in Hospital sales in the quarter and first six months in the Western Hemisphere was primarily driven by increased Aquasafe filter sales related to a Legionella outbreak in the United States and increased breathing and IV filter sales as a result of seasonal influenza.

     Sales in the quarter in the BioPharmaceuticals market, which now includes the Laboratory market previously reported in Medical, were flat compared to the second quarter of fiscal year 2008. By geography, growth in Europe (+4%), the Company’s largest geographic BioPharmaceuticals market, and in Asia (+8.7%), was offset by a decline in the Western Hemisphere (-11.9%). Within BioPharmaceuticals, growth in the Laboratory market of 10.1% was offset by a decline in the Pharmaceuticals market (formerly named BioPharmaceuticals market) of 1.7%. The growth in Laboratory sales was driven by double-digit growth in Europe and Asia. Sales in the Western Hemisphere were up slightly, reflecting signs of a slowdown in the United States. related to the economy. In Europe, growth was driven by strong sales in Germany and France as well as expansion into Eastern European countries. Key products driving growth in Europe are life sciences research products as well as products for analytical sample preparation. In Asia, growth was strongest in China and India, reflecting the results of the Company’s investments in the region to take advantage of expanding market opportunities. The decline in Pharmaceuticals sales reflects a decrease of systems sales of 25.5% partly offset by growth in consumables sales of 2.7%. The decrease in systems sales was related to a slowdown in the Western Hemisphere combined with the impact of strong sales in the second quarter of fiscal year 2008. Growth in Europe related to ongoing investment in new manufacturing capacity for biological drugs partly mitigated the impact. The growth in consumables sales reflects increases in Europe and Asia partly offset by a decline in the Western Hemisphere. Key drivers of consumables growth are the Company’s virus removal filters for plasma derived therapeutics and vaccines. Increased adoption of the Company’s single-use processing technologies by customers is also driving growth.

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     For the first six months, sales in the BioPharmaceuticals market increased 3.8% compared to the first six months of fiscal year 2008. By geography, growth in Europe (+7.1%) and in Asia (+9.2%) was partly offset by a decline in the Western Hemisphere (-5.2%). Within BioPharmaceuticals, sales in the Laboratory market grew 18.3% while sales in the Pharmaceuticals market grew 1.5%. The growth in Laboratory sales for the first six months reflects strong growth in all geographies. The growth in Europe and Asia reflect the same factors evident in the quarter. In the Western Hemisphere, sales growth was strong in the first quarter, however, in the second quarter sales began to slow as discussed above. The growth in Pharmaceuticals sales for the first six months reflects growth in consumables sales of 3.2% partly offset by a decrease of systems sales of 9.9%. The growth in consumables sales was driven by Europe and Asia, reflecting the same factors evident in the quarter. Consumables sales in the Western Hemisphere were flat. The decrease in systems sales was related to a slowdown in the Western Hemisphere partly offset by growth in Europe as discussed above.

     Life Sciences gross margins increased 160 basis points to 51.2% from 49.6% in the second quarter of fiscal year 2008. The improvement in gross margins was principally driven by improved pricing that contributed approximately 70 basis points in margin and a shift in product mix to a lower percentage of systems sales (about 5.4% of total Life Sciences sales compared to 7.3% in the second quarter of fiscal year 2008), partly offset by the impact of inflation on manufacturing costs. For the first six months, Life Sciences gross margins increased 100 basis points to 51.6% from 50.6% in the first six months of fiscal year 2008. The improvement in gross margins was principally driven by improved pricing that contributed approximately 50 basis points in margin and a shift in product mix to a lower percentage of systems sales (about 5.6% of total Life Sciences sales compared to 6.4% in the first six months of fiscal year 2008), partly offset by the impact of inflation on manufacturing costs.

     SG&A expenses decreased by $5,896, or about 9% (about 2¹/2% in local currency), compared to the second quarter of fiscal year 2008. The decrease in SG&A reflects a reduction in selling costs and the impact of the Company’s cost reduction initiatives. SG&A as a percentage of sales decreased to 25.4% from 25.8% in the second quarter of fiscal year 2008. The improvement in SG&A as a percentage of sales reflects the impact of the Company’s cost reduction initiatives. For the first six months, SG&A expenses decreased by $5,259, or about 4% (flat in local currency), compared to the first six months of fiscal year 2008. SG&A as a percentage of sales for the first six months decreased to 26.8% from 27.2% in the same period last year also reflecting cost reduction initiatives.

     R&D expenses were $9,614 compared to $10,208 in the second quarter of fiscal year 2008, a decrease of about 6% (an increase of 2% in local currency). As a percentage of sales, R&D expenses were 4.3% compared to 4.2% in the second quarter of fiscal year 2008. For the first six months, R&D expenses were $19,881 compared to $19,826 in the first six months of fiscal year 2008 (6% increase in local currency). As a percentage of sales, R&D expenses were 4.5% compared to 4.3% in the first six months of fiscal year 2008. Increased spending in the quarter and first six months primarily reflects investments in the BioPharmaceuticals market, including spending at GeneSystems, which was acquired on September 2, 2008.

     Operating profit dollars in the quarter increased about 1% to $48,602 and operating margin improved to 21.6% from 19.7% in the second quarter of fiscal year 2008 despite the decrease in revenues, largely due to the significant improvement in gross margin as well as the other factors discussed above. For the first six months, operating profit dollars increased about 3% to $90,470 and operating margin improved to 20.3% from 19.2% in the first six months of fiscal year 2008, reflecting the factors discussed above.

     Industrial:

     Presented below are summary Statements of Operating Profit for the Industrial segment for the three and six months ended January 31, 2009 and January 31, 2008.

			% of				% of
Three Months Ended	Jan. 31, 2009		Sales		Jan. 31, 2008		Sales
Sales	$	318,274			$	381,267
Cost of sales		177,227		55.7		214,334		56.2
Gross margin		141,047		44.3		166,933		43.8
SG&A		97,360		30.6		103,606		27.2
R&D		7,805		2.4		7,884		2.1
Operating profit	$	35,882		11.3	$	55,443		14.5

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			% of				% of
Six Months Ended	Jan. 31, 2009		Sales		Jan. 31, 2008		Sales
Sales	$	675,967			$	727,660
Cost of sales		370,048		54.7		410,559		56.4
Gross margin		305,919		45.3		317,101		43.6
SG&A		198,460		29.4		201,420		27.7
R&D		16,471		2.4		15,161		2.1
Operating profit	$	90,988		13.5	$	100,520		13.8

     The tables below present sales by market and geography within the Industrial segment for the three and six months ended January 31, 2009 and January 31, 2008, including the effect of exchange rates for comparative purposes.

											%
								Exchange			Change
					%			Rate			in Local
Three Months Ended	Jan. 31, 2009		Jan. 31, 2008		Change			Impact			Currency
By Market
Energy, Water & Process Technologies (a)	$	201,332	$	232,005		(13.2	)	$	(16,141	)		(6.3	)
Aerospace & Transportation		66,388		71,013		(6.5	)		(5,536	)		1.3
Microelectronics		50,554		78,249		(35.4	)		(545	)		(34.7	)
Total Industrial	$	318,274	$	381,267		(16.5	)	$	(22,222	)		(10.7	)
By Geography
Western Hemisphere	$	100,065	$	98,976		1.1		$	(1,904	)		3.0
Europe		117,423		149,309		(21.4	)		(18,219	)		(9.2	)
Asia		100,786		132,982		(24.2	)		(2,099	)		(22.6	)
Total Industrial	$	318,274	$	381,267		(16.5	)	$	(22,222	)		(10.7	)

(a) Formerly General Industrial.

											%
								Exchange			Change
					%			Rate			in Local
Six Months Ended	Jan. 31, 2009		Jan. 31, 2008		Change			Impact			Currency
By Market
Energy, Water & Process Technologies (a)	$	418,931	$	440,694		(4.9	)	$	(19,135	)		(0.6	)
Aerospace & Transportation		139,083		137,272		1.3			(7,088	)		6.5
Microelectronics		117,953		149,694		(21.2	)		175			(21.3	)
Total Industrial	$	675,967	$	727,660		(7.1	)	$	(26,048	)		(3.5	)
By Geography
Western Hemisphere	$	201,964	$	195,909		3.1		$	(2,827	)		4.5
Europe		249,520		281,768		(11.4	)		(21,572	)		(3.8	)
Asia		224,483		249,983		(10.2	)		(1,649	)		(9.5	)
Total Industrial	$	675,967	$	727,660		(7.1	)	$	(26,048	)		(3.5	)

(a) Formerly General Industrial.

30

     Industrial segment sales in the quarter decreased 10.7% from the second quarter of fiscal year 2008, as growth in the Aerospace & Transportation market was offset by declines in the EWPT and Microelectronics markets. For the first six months, Industrial segment sales decreased 3.5% over the same period of fiscal year 2008 as growth in the Aerospace & Transportation market was offset by a decrease in the Microelectronics market. Sales in the EWPT market, the Company’s largest Industrial market, were flat for the first six months. Increased pricing (largely driven by the EWPT and Aerospace & Transportation markets) contributed $4,077 and $5,719 to overall sales in the quarter and first six months, respectively. Industrial systems sales increased 2.4% in the quarter compared to the second quarter of fiscal year 2008. The Food & Beverage, Energy and Municipal Water markets reported within EWPT were the key contributors to the growth in systems sales in the quarter. Industrial consumables sales decreased 13.4%, reflecting declines in all markets with the exception of Military within the Aerospace & Transportation market. For the first six months, Industrial systems sales increased 3.4% compared to the first six months of fiscal year 2008. The Food & Beverage and Municipal Water markets reported within EWPT were the key contributors to the growth in systems sales in the period. Industrial consumables sales decreased 5.1%, reflecting declines in all markets with the exception of Energy, within the EWPT market, and Military, within the Aerospace & Transportation market. Industrial represented approximately 59% and 60% of total sales in the quarter and first six months, respectively, compared to 61% in both the second quarter and first six months of fiscal year 2008.

     EWPT market sales, which account for about 60% of the Industrial segment, decreased 6.3%, with sales in all markets down compared to the second quarter of fiscal year 2008, with the exception of Municipal Water which was flat. The largest decline was seen in the Industrial Manufacturing market which is the most susceptible to macroeconomic pressures. For the first six months, EWPT market sales were flat as a decline in the Industrial Manufacturing market offset modest growth in all of the other markets.

     Municipal Water sales were flat compared to the second quarter of fiscal year 2008 as systems growth in the Western Hemisphere, the Company’s largest geographic Municipal Water market, was offset by decreases in Europe and Asia. For the first six months, Municipal Water sales increased 3.6%, driven by growth in the Western Hemisphere partly offset by decreases in Europe and Asia. The sales growth in the Western Hemisphere in the quarter and first six months was primarily attributable to surface water treatment projects driven by government regulations, solutions for which the Company is strategically situated to provide. The decrease in sales in Asia was attributable to timing of systems projects and tough comparables against the same periods last year (which included a large project in Australia). The decline in Europe primarily relates to a slowdown of projects in Eastern Europe due to economic conditions in the region.

     Sales in the energy-related market decreased 1.6% in the quarter, as growth in systems sales were more than offset by a decrease in consumables sales. The increase in systems sales reflects growth in Europe and Asia in the Fuels and Chemicals market partly offset by a decline in the Western Hemisphere (Power Generation and Fuels and Chemicals markets). The decline in consumables sales was mainly attributable to Europe in the Fuels and Chemicals market due to a downturn in the plastics and fine chemicals sectors partly offset by growth in the Power Generation market (all geographies contributing). For the first six months, sales in the energy-related market increased 1.2%, as growth in consumables more than offset the decrease in systems sales. The increase in consumables sales reflects growth in the Power Generation market (all geographies contributing) partly offset by a decline in the Fuels and Chemicals market in Europe primarily due to a downturn in the plastics and fine chemicals sectors as discussed above. The decrease in systems sales was attributable to the Western Hemisphere (Power Generation and Fuels and Chemicals markets) and reflects tough comparables against a strong first six months of fiscal year 2008. Systems sales in Europe and Asia increased in the first six months in both the Power Generation and Fuels and Chemicals markets, partly mitigating the decline in the Western Hemisphere. Market opportunities and growth drivers in the energy-related market continue to be alternative energy projects and investments in power generation infrastructure.

     Food and Beverage sales were flat in the quarter as growth in systems sales of 20.2% (attributable to the Western Hemisphere and Asia) was offset by a decline in consumables of 5.1% (attributable to Europe). Sales in Europe, the Company’s largest geographic Food & Beverage market, were down 11.2%. The decline in Europe reflects decreased sales in Eastern Europe due to poor economic conditions in the region, a slowdown in the fine wine sector and a general slowing in capital projects. In Asia, sales increased 15.7%, attributable to the overall growth in this region in various countries. In the Western Hemisphere, sales increased 33%, reflecting strong systems sales growth, while consumables sales were flat. Food and Beverage sales in the first six months increased 5.5%, reflecting growth in systems sales of 61.2% (all geographies contributing) partly offset by a decline in consumables of 3.4% (attributable to Europe). Sales in Europe were down 3.7% reflecting the factors discussed above. In Asia, sales increased 17.6%, attributable to the overall growth in this region. In the Western Hemisphere, sales increased 38.7%. Growth in both the Western Hemisphere and Asia was driven by strong systems sales growth accompanied by modest growth in consumables. These two regions also benefitted from expanded market share.

31

     Sales in the Industrial Manufacturing market decreased 23.2% and 12.5% in the quarter and first six months, respectively. All geographies reported decreased sales in the quarter and first six months compared to the prior periods. Sales growth was negatively impacted by the global macroeconomic environment, particularly in the steel, automotive, mining, metals and paper sectors.

     Aerospace & Transportation sales increased 1.3% in the quarter with growth in Military sales of 12.9%, partly offset by decreases in the Commercial Aerospace and Transportation markets of 4.9% and 11.1%, respectively. The growth in Military sales was primarily driven by CH-47 helicopter product shipments to the Army, increased OEM platform builds in the Western Hemisphere and sales growth in spares in Europe (primarily the United Kingdom and France) and Africa (Centrisep project). The decrease in the Commercial portion of this market primarily reflects a decrease in aftermarket sales in the Western Hemisphere and Europe partly related to airlines taking planes out of service. The decrease in the Transportation market primarily reflects decreased sales to the construction and truck industries in Europe. In the first six months, Aerospace & Transportation sales increased 6.5% driven by growth in Military sales of 24.4%. Sales in the Commercial Aerospace and Transportation markets were down 6.2% and 5.9%, respectively. The growth in Military sales in the first six months reflects the same factors evident in the quarter. The decrease in the Commercial portion of this market primarily reflects a decrease in aftermarket sales in the Western Hemisphere, while the decline in the Transportation market primarily reflects decreased sales in Europe (as discussed above).

     Microelectronics sales decreased 34.7% and 21.3% in the quarter and first six months, respectively, reflecting decreases in all geographies. Overall, the sales decreases reflect the growing weakness in the semiconductor and consumer electronics markets related to the global economic environment.

     Industrial gross margins increased 50 basis points to 44.3% from 43.8% in the second quarter of fiscal year 2008. The increase in gross margins reflects improved pricing, which contributed about 70 basis points in margin, and the effects of the ongoing cost reduction and lean manufacturing initiatives, which offset inflation of manufacturing costs. Furthermore, the increase in gross margins in the quarter reflect an improvement in systems margins compared to last year. These positive factors were partly offset by a shift in product mix to a higher percentage of systems sales (about 17.5% of total Industrial sales compared to 15.9% in the second quarter of fiscal year 2008). For the first six months, Industrial gross margins increased 170 basis points to 45.3% from 43.6% in the first six months of fiscal year 2008. The increase in gross margins reflects improved pricing, which contributed about 50 basis points in margin, and the effects of the ongoing cost reduction and lean manufacturing initiatives, which offset inflation of manufacturing costs. Furthermore, the increase in gross margins in the first six months reflects an improvement in systems margins compared to last year. These positive factors were partly offset by a shift in product mix to a higher percentage of systems sales (about 15.2% of total Industrial sales compared to 14.8% in the first six months of fiscal year 2008).

     SG&A expenses decreased by $6,246, or 6% (flat in local currency), compared to the second quarter of fiscal year 2008. SG&A expenses as a percentage of sales was 30.6% compared to 27.2% in the second quarter of fiscal year 2008, primarily attributable to the decline in sales in the quarter. For the first six months, SG&A expenses decreased by $2,960, or 1¹/2% (an increase of 2% in local currency), compared to the same period last year. The increase in SG&A reflects an increase in selling, distribution and marketing related costs. SG&A expenses as a percentage of sales was 29.4% compared to 27.7% in the first six months of fiscal year 2008 reflecting the decline in sales.

     R&D expenses decreased 1% (flat in local currency) to $7,805 from $7,884 in the second quarter of fiscal year 2008. As a percentage of sales, R&D expenses were 2.5% compared to 2.1% in the second quarter of fiscal year 2008. For the first six months, R&D expenses increased about 8¹/2% (almost 9% in local currency) to $16,471 compared to $15,161 in the first six months of fiscal year 2008. As a percentage of sales, R&D expenses were 2.4% compared to 2.1% in the first six months of fiscal year 2008. Increased spending in dollars in the first six months reflects investments in new technologies across various markets within Industrial.

     As a result of the above factors, operating profit dollars decreased 35% to $35,882 and operating margin decreased to 11.3% from 14.5% in the second quarter of fiscal year 2008. For the first six months, operating profit dollars decreased about 9¹/2% to $90,988 and operating margin decreased to 13.5% from 13.8% in the first six months of fiscal year 2008.

32

     Corporate:

     Corporate expenses in the quarter increased by $381 or approximately 3% to $12,638 from $12,257 in the second quarter of fiscal year 2008. Corporate expenses in the first six months of fiscal year 2009 increased by $5,977 or 25% to $29,660 from $23,683 in the first six months of fiscal year 2008. The increase in Corporate expenses primarily reflects increased consulting costs related to the Company’s pricing initiative, timing of costs associated with the production of the Company’s annual report and proxy statement, foreign currency transaction losses and increased payroll related to additions to Corporate staff.

Liquidity and Capital Resources

     Non-cash working capital, which is defined as working capital excluding cash and cash equivalents, notes receivable, notes payable and the current portion of long-term debt, was approximately $628,900 at January 31, 2009 as compared with $660,000 at July 31, 2008. Based on discussions with various tax authorities, the Company believes it is reasonably possible that the gross amount of unrecognized tax benefits will decrease by approximately $96,338 within the next 12 months. As a result, the Company has reclassified $92,558 from non-current income tax liabilities to current tax liabilities. In addition, the Company reclassified $65,985 of non-current prepaid income tax included in other non-current assets as of July, 31, 2008 to other current assets as of January 31, 2009 as this amount could be utilized in the resolution of the unrecognized tax benefits. These reclassifications reduced non-cash working capital by $26,573 compared to July 31, 2008.

     The Company’s balance sheet is affected by spot exchange rates used to translate local currency amounts into U.S. dollars. In comparing spot exchange rates at January 31, 2009 to those at July 31, 2008, the Euro and the British Pound have weakened against the U.S. dollar, while the Japanese Yen has strengthened against the U.S. dollar. The effect of foreign exchange decreased non-cash working capital by $77,647, including net inventory, net accounts receivable and other current assets by $47,319, $60,860 and $11,363, respectively, as compared to July 31, 2008. Additionally, foreign exchange decreased accounts payable and other current liabilities by $37,797 and current income tax payable by $4,098.

     Net cash provided by operating activities in the first six months of fiscal year 2009 was $61,893 as compared to net cash used by operating activities of $74,905 in the first six months of fiscal year 2008, an increase of $136,798. Net cash used by operating activities in the first six months of fiscal year 2008 reflected a tax payment of $135,000 to the Internal Revenue Service. Excluding this item net cash provided by operating activities increased $1,798.

     Accounts receivable days sales outstanding (“DSO”) for the quarter ended January 31, 2009 was 83 days, on par with the quarter ended January 31, 2008, including the impact of exchange rates. Excluding the impact of exchange rates, DSO was 85 days. Inventory turns were 2.6 for the four quarters ended January 31, 2009 on par with the four quarters ended January 31, 2008.

     Free cash flow, which is defined as net cash provided by operating activities less capital expenditures, was $3,506 in the first six months of fiscal year 2009, as compared with $(127,586) in the first six months of fiscal year 2008. The increase in free cash flow reflects the increase in net cash provided by operating activities as discussed above partly offset by an increase in capital expenditures. Company management believes this measure is important because it is a key element of its planning. The Company utilizes free cash flow as one way to measure its current and future financial performance. The following table reconciles free cash flow to net cash provided by operating activities.

	Jan. 31, 2009		Jan. 31, 2008
Net cash provided/(used) by operating activities	$	61,893	$	(74,905	)
Less capital expenditures		58,387		52,681
Free cash flow	$	3,506	$	(127,586	)

     Overall, net debt (debt net of cash and cash equivalents) as a percentage of total capitalization (net debt plus equity) was 31% at January 31, 2009 as compared to 22.1% at July 31, 2008. Net debt increased by approximately $132,100 compared with July 31, 2008, comprised of a decrease in cash and cash equivalents of $200,000 partly offset by a decrease in gross debt of $85,800. Significant uses of cash in the six months included the acquisition of GeneSystems ($37,214), the repurchases of stock ($64,884) and the repayment of foreign debt (approximately $150,000), bearing higher rates than U.S. borrowing rates. The impact of foreign exchange rates increased net debt by about $17,900. The Company was in compliance with all financial covenants of its various debt agreements as of January 31, 2009.

33

     The Company utilizes cash flow generated from operations and its revolving credit facility to meet its short-term liquidity needs. Company management considers its existing lines of credit, along with the cash typically generated from operations, to be sufficient to meet its short-term liquidity needs.

     Capital expenditures were $58,387 in the first six months of fiscal year 2009 ($32,100 expended in the current quarter). Depreciation expense was $19,646 and $40,311 in the quarter and six months, respectively. Amortization expense was $2,325 and $4,655 in the quarter and six months, respectively.

     On November 15, 2006, the board of directors authorized an expenditure of $250,000 to repurchase shares of the Company’s common stock. At July 31, 2008 there was $199,382 available to be expended under this authorization. On October 16, 2008, the board authorized an additional expenditure of $350,000 to repurchase shares. The Company repurchased stock of $64,884 in the first six months of fiscal year 2009 and as such there was $484,498 remaining at January 31, 2009 under the current stock repurchase programs. Net proceeds from stock plans were $7,185 in the first six months of fiscal year 2009.

     The Company increased its quarterly dividend by 8% from 12 cents to 13 cents per share, effective with the dividend declared on March 12, 2008. In the first six months of fiscal year 2009, the Company paid dividends of $30,814, an increase of about 5% compared to the first six months of fiscal year 2008. The Company increased its quarterly dividend by 11.5% from 13 cents to 14.5 cents per share, effective with the dividend declared on January 22, 2009.

Recently Issued Accounting Pronouncements

     Effective August 1, 2008, the Company adopted, on a prospective basis, certain required provisions of Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”). The provisions not yet adopted by the Company relate to non-financial assets and liabilities that are recognized or disclosed on a non-recurring basis, as permitted under FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 (“FSP FAS No. 157-2”). Those remaining aspects of SFAS No. 157 for which the effective date was deferred by FSP FAS No. 157-2 are being evaluated by the Company and will be effective for the first quarter of fiscal year 2010.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) is effective for the Company beginning with fiscal year 2010.

     In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51 (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for the Company beginning with fiscal year 2010.

     In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 (“SFAS No. 161”). SFAS No. 161 requires entities to provide enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for the Company beginning with its third quarter of fiscal year 2009.

     In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP No. 142-3”). FSP No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. FSP No. 142-3 is effective for the Company beginning with fiscal year 2010. The Company is in the process of assessing the effect FSP No. 142-3 may have on its consolidated financial statements.

34

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     There is no material change in the market risk information disclosed in Item 7A of the 2008 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES.

     There are some changes which, taken together, are expected to have a favorable impact on the Company’s controls over a multi-year period. There are a number of significant business improvement initiatives designed to improve processes and enhance customer and supplier relationships and opportunities. These include information systems upgrades and integrations that are in various phases of planning or implementation and contemplate enhancements of ongoing activities to support the growth of the Company’s financial shared service capabilities and standardization of its financial systems. The Company is employing a project management and phased implementation approach that will provide continued monitoring and assessment in order to maintain the effectiveness of internal control over financial reporting during and subsequent to implementation of these initiatives.

     In connection with the business improvement initiatives discussed above, during the second quarter of fiscal year 2009, certain subsidiaries in the Western Hemisphere commenced utilizing a modified procurement-to-payment process, which includes a new procurement-to-payment system.

     Except as noted above, there have been no changes in the Company’s internal control over financial reporting during the second quarter of fiscal year 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

     As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s chief executive officer and chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures are effective.

     It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

35

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.
(In thousands)

     As previously disclosed in the 2008 Form 10-K, the Company is subject to various regulatory proceedings and litigation relating to various environmental matters and to the tax matters described in Note 2, Audit Committee Inquiry and Restatement, to the 2007 Form 10-K. The information provided below updates and should be read in conjunction with the discussion of these proceedings in Part I — Item 3 — Legal Proceedings in the 2008 Form 10-K. Reference is also made to Note 7, Contingencies and Commitments, to the accompanying condensed consolidated financial statements.

Federal Securities Class Actions:

     Four putative class action lawsuits were filed against the Company and certain members of its management team alleging violations of the federal securities laws relating to the Company’s understatement of certain of its U.S. income tax payments and of its provision for income taxes in certain prior periods as described in Note 2, Audit Committee Inquiry and Restatement, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2007 (“2007 Form 10-K”). These lawsuits were filed between August 14, 2007 and October 11, 2007 in the United States District Court for the Eastern District of New York. By Order dated May 28, 2008, the Court consolidated the cases under the caption “In re Pall Corp,” No. 07-CV-3359 (E.D.N.Y.) (JS) (ARL), appointed a lead plaintiff and ordered that the lead plaintiff file a consolidated amended complaint. The lead plaintiff filed its consolidated amended complaint on August 4, 2008. The lead plaintiff seeks to act as representative for a class consisting of purchasers of the Company’s stock between April 20, 2007 and August 2, 2007, inclusive. The consolidated amended complaint names the Company and its current chief executive officer and chief financial officer as defendants and alleges violations of Section 10(b) and 20(a) of the Exchange Act, as amended, and Rule 10b-5 promulgated by the Securities and Exchange Commission (“SEC”). It alleges that the defendants violated these provisions of the federal securities laws by issuing materially false and misleading public statements about the Company’s financial results and financial statements, including the Company’s income tax liability, effective tax rate, internal controls and accounting practices. The plaintiffs seek unspecified compensatory damages, costs and expenses. The Company moved to dismiss the consolidated amended complaint on September 19, 2008 and filed its reply brief to the lead plaintiff’s opposition to the Company’s motion to dismiss on December 2, 2008. The motion is now fully briefed and before the court.

Shareholder Derivative Lawsuits:

     On October 5, 2007, two plaintiffs filed identical derivative lawsuits in New York Supreme Court, Nassau County relating to the tax matter described above. These actions purport to bring claims on behalf of the Company based on allegations that certain current and former directors and officers of the Company breached their fiduciary duties by failing to evaluate and otherwise inform themselves about the Company’s internal controls and financial reporting systems and procedures. In addition, plaintiffs allege that certain officers of the Company were unjustly enriched as a result of the Company’s inaccurate financial results over fiscal years 1999-2006 and the first three quarters of fiscal year 2007. The complaints seek unspecified compensatory damages on behalf of Pall Corporation, disgorgement of defendants’ salaries, bonuses, stock grants and stock options, equitable relief and costs and expenses. The Company, acting in its capacity as nominal defendant, moved to dismiss the complaints for failure to make a demand upon the Company’s board of directors, which motions were granted on April 30 and May 2, 2008. On September 19, 2008, the same two plaintiffs filed a derivative lawsuit in New York Supreme Court, Nassau County, which was served on the Company on September 26, 2008 (the “September Derivative”). This action purports to bring claims on behalf of the Company based on allegations that certain current and former directors and officers of the Company breached their fiduciary duties and were unjustly enriched in connection with the tax matter. In addition, the plaintiffs allege that the Board’s refusal of their demand to commence an action against the defendants was not made in good faith. The plaintiffs and the Company agreed to stay these proceedings pending resolution of the Company’s motion to dismiss in the federal securities class action lawsuit.

     On November 13, 2008, another shareholder filed a derivative lawsuit in New York Supreme Court, Nassau County, against certain current and former directors and officers of the Company, and against the Company, as nominal defendant, which was served on the Company on December 4, 2008. This action purports to bring similar claims as the September Derivative. The plaintiffs and the Company have agreed to an identical stay as in the September Derivative.

36

Other Proceedings:

     The SEC and U.S. Attorney’s Office for the Eastern District of New York are conducting investigations in connection with the tax matter described above. The Company is cooperating with these investigations.

Environmental Matters:

     The Company’s condensed consolidated balance sheet at January 31, 2009 includes liabilities for environmental matters of approximately $13,642, which relate primarily to the previously reported environmental proceedings involving a Company subsidiary, Gelman Sciences Inc., pertaining to groundwater contamination. In the opinion of management, the Company is in substantial compliance with applicable environmental laws and its current accruals for environmental remediation are adequate. However, as regulatory standards under environmental laws are becoming increasingly stringent, there can be no assurance that future developments, additional information and experience gained will not cause the Company to incur material environmental liabilities or costs beyond those accrued in its condensed consolidated financial statements.

ITEM 1A. RISK FACTORS.

     There is no material change in the risk factors reported in Item 1A of the 2008 Form 10-K. This report contains certain forward-looking statements which reflect management’s expectations regarding future events and operating performance and speak only as of the date hereof. These statements are subject to risks and uncertainties, which could cause actual results to differ materially. For a description of these risks see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements and Risk Factors.”

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a)	During the period covered by this report, the Company did not sell any of its equity securities that were not registered under the Securities Act of 1933, as amended.
(b)	Not applicable.
(c)	The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” of shares of the Company’s common stock.

	(In thousands, except per share data)
					Total Number of		Approximate Dollar
					Shares Purchased as		Value of Shares that
	Total Number				Part of Publicly		May Yet Be Purchased
	of Shares		Average Price		Announced Plans or		Under the Plans or
Period	Purchased		Paid Per Share		Programs (1)		Programs (1)
November 1, 2008 to November 30, 2008		—	$	—		—	$	499,488
December 1, 2008 to December 31, 2008		515	$	26.24		515	$	485,979
January 1, 2009 to January 31, 2009		56	$	26.42		56	$	484,498
Total		571	$	26.26		571

(1)

On November 15, 2006, the board authorized an expenditure of $250,000 to repurchase shares of the Company’s common stock. On October 21, 2008, the board authorized an additional expenditure of $350,000 to repurchase shares. The Company’s shares may be purchased over time, as market and business conditions warrant. There is no time restriction on these authorizations. During the six months ended January 31, 2009, the Company purchased 2,139 shares in open-market transactions at an aggregate cost of $64,884, with an average price per share of $30.33. At January 31, 2009, approximately $484,498 remained available under the current stock repurchase programs. Repurchased shares are held in treasury for use in connection with the Company’s stock-based compensation plans and for general corporate purposes.

During the six months ended January 31, 2009, one share was traded in by an employee in payment of a stock option exercise at a price of $39.84 per share and an aggregate cost of $13.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

(a)	The Annual Meeting of Shareholders of the Company was held on November 19, 2008.
(b)	Not required. Proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934, as amended. There was no solicitation in opposition to management’s director nominees as listed in the proxy statement, and all of management’s nominees were elected.
(c)	The matters voted upon and the results of the voting were as follows:
	Proposal I — Election of Directors
	Holders of 95,423,978 shares of common stock voted either in person or by proxy for the election of seven directors. The number of votes cast for each nominee were as indicated below:

			Total vote
	Total vote for		withheld for
Director	each director		each director
Cheryl W. Grisé		94,293,681		1,130,297
Ulric S. Haynes, Jr.		92,780,231		2,643,747
Ronald L. Hoffman		95,114,534		309,444
Edwin W. Martin, Jr.		92,768,875		2,655,103
Katharine L. Plourde		93,265,884		2,158,094
Heywood Shelley		92,617,128		2,806,850
Edward Travaglianti		94,811,775		612,203

Directors whose terms of office continue past the Annual Meeting of Shareholders are: Daniel J. Carroll, Jr., Eric Krasnoff, Dennis N. Longstreet and Edward L. Snyder.

Proposal II — Ratification of the Appointment of KPMG LLP as Independent Registered Public Accounting Firm for Fiscal Year 2009

The proposal was approved as follows:

Shares For	Shares Against		Abstain
93,050,378		2,178,272		195,328

Proposal III — Amendment to the Management Stock Purchase Plan

The proposal was approved as follows:

Shares For	Shares Against		Abstain		Nonvotes
75,622,413		1,700,242		251,136		17,850,187

Proposal IV — Amendment to the 2005 Stock Compensation Plan

The proposal was approved as follows:

Shares For	Shares Against		Abstain		Nonvotes
69,292,756		8,034,473		246,562		17,850,187

(d) Not applicable.

ITEM 6. EXHIBITS.

See the Exhibit Index for a list of exhibits filed herewith or incorporated by reference herein.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Pall Corporation
March 12, 2009	/s/ LISA MCDERMOTT
	Lisa McDermott
	Chief Financial Officer and Treasurer
	/s/ FRANCIS MOSCHELLA
	Francis Moschella
	Vice President — Corporate Controller Chief Accounting Officer

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EXHIBIT INDEX

Exhibit
Number	Description of Exhibit
3(i)*	Restated Certificate of Incorporation of the Registrant as amended through November 23, 1993, filed as Exhibit 3(i) to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 30, 1994.
3(ii)*	By-Laws of the Registrant as amended effective January 17, 2008, filed as Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K filed on January 18, 2008.
10.1†‡	Amendment to Employment Agreement effective December 31, 2008 between the Company and Eric Krasnoff.
10.2†‡	Amendment to Employment Agreement effective December 31, 2008 between the Company and Roberto Perez.
10.3†‡	Amendment to Employment Agreement effective December 31, 2008 between the Company and Lisa McDermott.
10.4†‡	Pall Corporation Supplementary Pension Plan, effective December 31, 2008.
10.5†‡(a)	Loan Agreement between the Company and Donald Stevens, effective on or about May 27, 2005.
10.6†‡(a)	Mortgage Note by Roberto Perez and Astrid Perez in favor of the Company, dated March 2000.
31.1†	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1†	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
32.2†	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

*	Incorporated herein by reference.
†	Exhibit filed herewith.
‡	Denotes management contract or compensatory plan or arrangement.
(a)	Portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

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EX-10.1

Exhibit 10.1

AMENDMENT DATED DECEMBER 31, 2008 TO EMPLOYMENT AGREEMENT

          The AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated JULY 20, 2005 between PALL CORPORATION, a New York Corporation (the “Company”) and ERIC KRASNOFF (“Executive”) as amended by amendments dated May 3, 2006, and July 18, 2006 (said Amended and Restated Employment Agreement as so amended being hereinafter called the “Agreement”) is hereby further amended as follows:

1.	Section 1 is amended by replacing the words “executive employee” with the words “chief executive officer.”
2.	Section 2(b) is amended by deleting the word “substantially” and adding the following phrase immediately after the phrase, “all of his business time and attention”:
	“(other than time devoted to charitable and family business and/or investment activities which do not materially interfere with his duties hereunder)”
3.	Section 3(d) is amended by adding the following phrase at the end of the first sentence thereof:
	“, which shall not be less than customarily provided to senior executive officers of the Company”
4.	Section 4(c) is amended by the addition of the following at the end of Section 4(c):
	In addition, any of Executive’s restricted stock units not yet vested under the 2005 Stock Compensation Plan, as amended (the “Stock Plan”), outstanding on the date on which a Change in Control (as defined in the Stock Plan) occurs will vest on such date.
5.	Section 5 is renamed “Payments Upon Notice and Severance” and is hereby amended to read in its entirety as follows:

(a) Payments Upon Notice. If, in connection with any notice given under Section 1 or 4(c), upon written consent of the Company, Executive no longer performs any services for the Company under Section 2 of this Agreement or otherwise and Executive experiences a “separation from service” as determined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations issued thereunder (“Section 409A”) (“separation from service”) then subject to Executive’s compliance with Section 13 below (where applicable) and with Executive’s other continuing obligations under Section 9 below, Executive will receive the following compensation and benefits under this Agreement in lieu of any compensation or benefits to which he might otherwise be entitled under Section 3 of this Agreement or any benefit plans referenced therein:

(i)	Any Plan Bonus or pro rata portion thereof (based on actual Company performance for the full fiscal year as certified by the Compensation Committee and taking into account any negative discretion the Compensation Committee has the right to exercise) that Executive may be entitled to receive under the Bonus Plan with respect to the year in which Executive’s separation from service takes place, less any amount Executive elected to defer under the Management Stock Purchase Plan, paid in accordance with the terms of the Bonus Plan..
(ii)	Each month for a period of 24 consecutive months, beginning with the month following the month in which Executive’s separation from service occurs, the Company shall make a payment in an amount equal to (X) the sum of (1) Base Salary at the annual rate at which Executive’s Base Salary was payable immediately prior to Executive’s separation from service and (2) the amount determined under clause (X)(1) multiplied by 70% of the Target Bonus Percentage, divided by (Y) 12; provided that on any August 1st occurring after Executive’s separation from service, the annual rate of Base Salary set forth in (X)(1) shall be adjusted for changes in the Consumer Price Index in the manner set forth in Section 3(a) hereof). Each installment will be paid on the first business day of the applicable month.
(iii)	During the period beginning on the date of Executive’s separation from service and ending on the two-year anniversary thereof, any of Executive’s restricted stock units not yet vested under the 2005 Stock Compensation Plan, as amended (the “Stock Plan”), outstanding on the date of Executive’s separation from service will not be cancelled, but will continue to vest and be settled in the manner and at the times set forth in their grant agreements and the Stock Plan as though Executive had not experienced a separation from service until such two-year anniversary.
(iv)	(A) During the period beginning on the date of Executive’s separation from service and ending on the two-year anniversary thereof, any of Executive’s units not yet vested under the Management Stock Purchase Plan, as amended (the “MSPP”), as of the date of Executive’s separation from service will not be cancelled, but will continue to be settled in the manner and at the times set forth under the MSPP as though Executive had not experienced a separation from service until such two-year anniversary.

(B) Any vested units Executive had previously deferred under the MSPP, to the extent payable upon a Termination of Employment (as defined in the MSPP), will be paid on the two-year anniversary of Executive’s separation from service.

(v) Any monthly pension to which Executive is entitled under the Pall Corporation Supplementary Pension Plan (the “SPP”) will be calculated at the time of the two-year anniversary of Executive’s separation from service and will commence payment on the later of the first day of the month after Executive has attained his Early Retirement Date (as defined in the SPP) and the two-year anniversary of Executive’s separation from service.

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(vi)

During the period beginning on the date of Executive’s separation from service and ending on the two-year anniversary thereof, Executive shall continue to participate in the Company’s Comprehensive Welfare Benefits Plan; provided however, all expenses are incurred, and in-kind benefits provided, prior to such two-year anniversary and all expenses are reimbursed within 12 months following such two-year anniversary.

(vii)

In the event that Executive gives notice under Section 4(c):

(A) for purposes of Section 5(a)(ii), Executive will cease to receive such monthly payments on the date specified in the notice given by Executive (and not on the two-year anniversary of separation from service) and

(B) for purposes of Section 5(a) (iv)(A), the period of such continued vesting and for purposes of Sections 5(a)(iii) and (iv)(A), the period of such continued settlement shall end on the date specified in the notice given by Executive (and not on the two-year anniversary of separation from service), provided, however, that any units the settlement date for which under Sections 5(a)(iii) and (iv)(A) would have been the two-year anniversary of separation from service shall continue to be settled on such two-year anniversary.

(b) Severance. In the event that the Term of Employment is terminated by the Company under Section 1 hereof or by Executive under Section 2 or Section 4(c) hereof, subject to Executive’s compliance with Section 13 below and with Executive’s other continuing obligations under Section 9 below, in addition to any amounts Executive may be entitled to receive pursuant to Section 5(a) above, Executive will also be entitled to receive from the Company as severance pay, each month for a period of 24 consecutive months beginning with the month following the month in which Executive’s separation from service occurs, an amount equal to (A) the sum of (1) Base Salary at the annual rate at which Executive’s Base Salary was payable immediately prior to Executive’s separation from service and (2) the amount determined under clause (A)(1) multiplied by 150% of the Target Bonus Percentage divided by (B) 12. Each installment will be paid on the first business day of the applicable month.

(c) Supplementary Pension Plan. In no event will any monthly pension to which Executive is entitled under the SPP commence payment prior to the two-year anniversary of Executive’s separation from service, except that on or after the date executive attains 65 years of age, upon a separation from service for any reason, the monthly pension shall be payable at the time and in the form set forth under the terms of the SPP.

6.

Section 6 is amended by the insertion of the following at the beginning of the Section:

Other than in the event that the Term of Employment ends pursuant to Section 4(b), the phrase “the end of the Term of Employment”, “the date of the Term of Employment ends” or “the last day of the Term of Employment” whenever it appears in this Section 6 will be replaced by the phrase “the two-year anniversary of Executive’s separation from service” and the phrase “five full fiscal years of the Term of Employment” will be

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replaced by the phrase “five full fiscal years prior to the two-year anniversary of Executive’s separation from service.” In no event shall the calculation of the Annual Contract Pension under Section 6(a) take into account any payments made to Executive under Section 5(b) hereof.”

7.	Section 6(a)(ii) is amended to delete the parenthetical that reads as follows:
	“(i.e., the effective date of termination of the Term of Employment under any of the provisions of ss. ss. 1, 2, or 4 hereof)”
8.	Section 6(b) is amended to delete the word “penultimate” from the second sentence of such Section and to delete following paragraph:
	“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.”

     and replace it with the following paragraph:

	“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 beginning on the date the monthly pension under this Plan commences (the “Commencement Date”), whether or not the Member receives payment of such pension in such form.”
9.	The first sentence of Section 6(f)(v) is amended and restated in its entirety as follows:
	At the Company’s option, the coverages and benefits to be provided hereunder may be provided through insurance, or by the Company directly paying, or reimbursing Executive or any of his Dependents for his or her payment of, expenses covered under this Section 6(f), so long as any such reimbursements are made within 12 months of the date on which the expense was incurred.
10.	Section 6(f) is amended by the insertion of the following at the beginning of Section 6(f):
	The benefits under this Section 6(f) are conditioned upon Executive’s compliance with Section 13 below and with Executive’s other continuing obligations under Section 9 below.
11.	Section 6(f) is further amended by the insertion of the following at the end of Section 6(f):

(viii) The amount of expenses eligible for reimbursement or the amount of coverage or in-kind benefits provided under this Section 6(f) during any fiscal year may not affect the

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amount of expenses eligible for reimbursement or the amount of coverage or in-kind benefits provided under this Section 6(f) for any other fiscal year.

12.	Section 7(b) is amended and restated in its entirety as follows:
	In the event that it shall be determined that any benefit provided or payment made by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of an agreement, plan, program, arrangement or otherwise (a “Payment”), would subject Executive to an obligation to pay an excise tax imposed by Section 4999 of the Code or any interest or penalties related to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. For purposes of clarification and without limiting the effect of the foregoing, it is intended that Executive should be responsible for regular federal, state and local income and employment taxes and for any taxes incurred under Section 409A of the Code with respect to any Payment to which this Section 7 applies.
	Subject to the provisions below, all determinations required to be made with respect to Executive, including whether a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions not specified herein to be used in arriving at such determinations, shall be made by a nationally recognized accounting firm proposed by the Company and reasonably acceptable to Executive (the “Firm”). In making such determination with respect to any matter that is uncertain, the Firm shall adopt the position that it believes more likely than not would be adopted by the Internal Revenue Service (“IRS”). The Firm shall provide detailed supporting calculations with respect to its determination both to the Company and Executive. All fees and expenses of the Firm shall be borne by the Company. If the Firm determines that no Excise Tax is payable by Executive it shall furnish Executive with a written opinion that failure to report the Excise Tax on Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Firm shall be final, binding and conclusive upon the Company and Executive, except as provided in the following sentences of this paragraph (b).
	As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”) or that Gross-Up Payments which have been made by the Company should not have been made (“Excess Gross-Up Payment”).
	An Underpayment or Excess Gross-Up Payment can result from a claim by the IRS or from a redetermination by the Firm. In the event that:

5

     (i) the IRS makes a claim and the Company exhausts its right to contest set out below and Executive thereafter is required to make a payment of any Excise Tax, the Firm shall promptly determine the amount of the Underpayment and such Underpayment shall be promptly paid by the Company to or for the benefit of Executive

     (ii) the Firm determines that an Underpayment has occurred, the Firm shall promptly determine the amount of the Underpayment, which shall be promptly paid by the Company to or for the benefit of Executive together with a Gross-Up Payment with respect to such Underpayment determined in accordance with the first paragraph of this Section 7(b) hereof in the same manner as if the Underpayment had originally been paid pursuant to such first paragraph of this Section 7(b).

     (iii) if the IRS makes an Excess Gross-Up Payment determination, or the Firm makes such determination and furnishes Executive with a written opinion that the basis for its determination would be accepted by the IRS, Executive shall promptly repay to the Company an amount equal to the reduction in aggregate taxes due by Executive resulting from such determination by the IRS or the Firm, provided that Executive shall only be required to repay any portion of such amount that had been paid to the IRS to the extent that and when Executive receives a refund from the IRS (or is entitled and able to utilize such amount as a credit against other taxes due).

Executive shall notify the Company in writing of any claim (including the nature and other details of such claim) by the IRS that, if successful, would require the payment by the Company of a Gross-Up Payment, within 10 days of such notice. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

(i) Give the Company any information reasonably requested by the Company relating to such claim,

(ii) Take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) Cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) Permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay all costs and expenses incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any taxes, including, without limitation, any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing

6

provisions, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any taxes, including, without limitation, any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the IRS or any other taxing authority. Any payment pursuant to this Section shall be paid on the same grossed-up basis as provided in the first paragraph of this Section 7(b) hereof, and shall reflect all taxes referred to in such paragraph of this Section 7(b)).

If, after the receipt by Executive of an amount advanced by the Company pursuant to the above paragraph, Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Company’s complying with the requirements of such paragraph) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to the above paragraph, a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

13. Section 7 is amended by adding the following at the end of such Section:

(c) Section 409A Compliance. This Agreement is intended to comply with the requirements of Section 409A or an exemption and shall in all respects be administered and interpreted in accordance with Section 409A. Notwithstanding anything in the Agreement to the contrary, distributions upon termination of employment may only be made upon a “separation from service” as determined under Section 409A and each installment of any payments and benefits provided to Executive under this Agreement that would be considered to be deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)(1)) will be treated as a separate “payment” for purposes of Section 409A. In the event the parties determine that the terms of this Agreement do

7

not comply with Section 409A, they will negotiate reasonably and in good faith to amend the terms of this Agreement such that it complies (in a manner that attempts to minimize the economic impact of such amendment on Executive and the Company) within the time period permitted by Section 409A. In no event shall the Company be required to pay Executive any gross-up or other payment with respect to any taxes or penalties imposed under Section 409A with respect to any benefit paid to Executive hereunder.

14. Section 9 is renamed “Restrictive Covenants”, the paragraph that currently comprises Section 9 is designated “(a) Covenant Not to Compete.”, and the following is added at the end of Section 9:

(b) Non-Disparagement. While employed by the Company, and for a period of 18 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 Sections 1, 2 or 4 hereof, or for a period of 12 months after the end of the Term of Employment if the Term of Employment is terminated by notice to Executive given by the Company under Section 1 or Section 4 hereof or terminated under Section 4 by reason of Executive’s attaining the age of 65 (the “Non-Disparagement Period”), Executive shall not make any disparaging or untruthful remarks concerning the Company or any of its subsidiaries, or their officers, directors, employees or agents, whether acting in their individual or representative capacities. Executive shall not be deemed to have breached Executive’s obligations under the foregoing sentence if during Executive’s employment with the Company Executive criticizes the job performance of employees who report to Executive, as part of such employees’ performance reviews and evaluations, provided such remarks are made in the ordinary course of business, not malicious or unfounded, are not publicly made or widely disseminated and are not in violation of Executive’s obligations to comply with laws, regulations and Company policies and procedures. Additionally, in the event that Executive is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose during the Non-Disparagement Period any information that may be disparaging, Executive shall comply with such requests, provided that Executive shall give the Company prompt notice of any such request so that the Company may seek an appropriate protective order, and provided that Executive shall comply with the terms of any protective order so obtained. Similarly, during the Non-Disparagement Period, the Company shall not make any disparaging or untruthful remarks concerning Executive, except that the Company shall not be deemed to have breached its obligations hereunder: (i) if during Executive’s employment with the Company, any Company director, employee, agent or representative criticizes Executive’s job performance as part of performance reviews and evaluations or in response to questions from members of management, the board of directors or Company advisors, provided such remarks are made in the ordinary course of business, not malicious or unfounded, are not publicly made or widely disseminated and are not in violation of laws, regulations and Company policies and procedures, or (ii) in the event that the Company is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose during the Non-Disparagement Period any information that may be disparaging, the Company complies with such requests, provided that the Company shall give Executive prompt notice of any such request so that Executive may seek an appropriate protective order,

8

and provided that the Company shall comply with the terms of any protective order so obtained.

(c) Non-Solicitation of Employees or Customers. While employed by the Company, and during the Non-Disparagement Period, Executive will not (i) indirectly or directly solicit, encourage, induce, or recruit any person who is then an employee of the Company or any of its subsidiaries to seek or accept employment with any other employer, or (ii) indirectly or directly solicit, encourage, or induce any customer of the Company to become the customer of any business that is competitive to any material extent with the business of the Company or any of its subsidiaries, provided, however, that if the Company terminates under Section 1 following a Change in Control (as defined in the Bonus Plan), the foregoing non-solicitation covenant shall not apply.

15. Section 10 is amended by adding the following at the end of such Section:

The parties also acknowledge and agree that, if, in any judicial proceeding, a court shall deem any of the restrictive covenants in Section 9(a) or 9(c), invalid, illegal or unenforceable because its scope is considered excessive, such restrictive covenant shall be modified so that the scope of the restrictive covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable, and if any such restrictive covenant (or portion thereof) is deemed invalid, illegal or unenforceable in any jurisdiction, as to that jurisdiction such restrictive covenant (or portion thereof) shall be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining restrictive covenants (or portion thereof) in such jurisdiction or rendering that or any other restrictive covenant (or portion thereof) invalid, illegal, or unenforceable in any other jurisdiction. The parties hereto intend that the validity and enforceability of any provision of this Agreement shall not affect or render invalid any other provision of this Agreement.

16.	Section 12 is amended by adding the following phrase immediately following the phrase “except as required in the course of his employment by the Company”:
	“or except as required to comply with requirements of applicable law or an order or subpoena of a court of competent jurisdiction (as to which Executive will notify the Company reasonably in advance of disclosure)”
17.	New Section 13 is hereby appended to the Agreement, and reads in its entirety as follows:
	Release.
	The payments and benefits under Sections 5(a)(ii), (iii), (iv), (vi) and (vii), 5(b), and 6(f) are subject to the condition that Executive has delivered to the Company an executed copy of a release substantially in the form attached hereto as Exhibit A (with such changes as may be required under applicable law) and that such release has become irrevocable within 30 days after the date of Executive’s separation from service. In that event, payment that otherwise would have been made within such 30-day period shall be paid at the expiration of such 30-day period; provided that any payments or benefits

9

payable by reason of the death of Executive shall not be subject to the condition set forth in this Section 13.

[Signature Page Follows]

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

PALL CORPORATION

By: Name:	/s/ DANIEL J. CARROLL, JR. Daniel J. Carroll, Jr.
Title:	Chairman, Compensation Committee

EXECUTIVE

/s/ ERIC KRASNOFF Eric Krasnoff

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Exhibit A

GENERAL RELEASE

          1. Release of Claims and Waiver of Rights.

          (a) In consideration of any payments and benefits being provided to me under Sections 5(a)(ii), (iii), (iv), (vi) and (vii), 5(b), and 6(f) of the employment agreement (the “Employment Agreement”) dated July 20, 2005, as it may have been amended to the date hereof, between me and Pall Corporation (the “Company”), those payments and benefits being good and valuable consideration, the adequacy and sufficiency of which are acknowledged by me (the “Payments”), I, Eric Krasnoff, hereby release, remise and acquit Company, its present and past parents, subsidiaries and affiliates, their successors, assigns, benefit plans and/or committees, and their respective present or past officers, directors, managers, supervisors, employees, shareholders, attorneys, advisors, agents and representatives in their individual and corporate capacity, and their successors and assigns (the “Releasees”), from, and hold them harmless against, any and all claims, obligations, or liabilities (including attorneys, fees and expenses), asserted or unasserted, known or unknown, that I, my heirs, successors or assigns have or might have, which have arisen by reason of any matter, cause or thing whatsoever on or prior to the date on which this General Release is signed.

          (b) The terms “claims, obligations, or liabilities” (whether denominated claims, demands, causes of action, obligations, damages or liabilities) include, but are not limited to, any and all claims under any contract with the Company, claims of age, disability, race, religion, national origin, sex, retaliation, and/or other forms of employment discrimination, breach of express or implied contract, breach of employee handbook, practices or procedures, libel, slander, intentional tort or wrongful dismissal, claims for reinstatement or reemployment, arising under any federal, state, or local common or statutory law; claims for unpaid salary, commission or fringe benefits; or any other statutory claim before any state or federal court, tribunal or administrative agency, arising out of or in any way related to my employment relationship with the Company and its affiliates and the termination of that relationship. I will not file or permit to be filed on my behalf any such claim.

          (c) This General Release constitutes, among other things, a waiver of all rights and claims I may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. 621, et seq.) (“ADEA”), the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of the United States Civil Rights Act of 1964, all as amended including the amendment set forth in 42 U.S.C. § 1981 concerning damages in cases of intentional discrimination in employment, the New York State Human Rights Law, including N.Y. Exec. Law § 296, the New York City Human Rights Law, including § 8-107 of the Administration Code and Charter of New York City, and the New York Labor Law, and any other comparable national or state laws, all as amended.

          (d) Notwithstanding the preceding paragraph (c) or any other provision of this Agreement, this General Release is not intended to interfere with my right to file a charge with the Equal Employment Opportunity Commission (the “EEOC”) in connection with any claim I believe I may have against the Company or its affiliates. However, by executing this General

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Release, I hereby waive the right to recover in any proceeding I may bring before the EEOC or any state human rights commission or in any proceeding brought by the EEOC or any state human rights commission on my behalf. In addition, this General Release is not intended to interfere with my right to challenge that my waiver of any and all ADEA claims pursuant to this General Release is a knowing and voluntary waiver, notwithstanding my specific representation that I have entered into this General Release knowingly and voluntarily.

          (e) This General Release is for any relief, no matter how denominated, including, but not limited to, injunctive relief, wages, back pay, front pay, compensatory damages, or punitive damages.

          (f) This General Release shall not apply to any rights in the nature of indemnification which I may have with respect to claims against me relating to or arising out of my employment with the Company and its affiliates or my service on their respective boards of directors, or any vested benefit to which I am entitled under any tax qualified pension plan of the Company or its affiliates, COBRA continuation coverage benefits or any other similar benefits required to be provided by statute. Notwithstanding anything to the contrary contained in this Section 1, I do not release any of the Releasees from the Company’s obligation to timely provide me with all payments and benefits to which I am entitled pursuant to the terms of the Employment Agreement, or any other obligations of the Company under the Employment Agreement.

     2. Continued Cooperation. In consideration of the Payments, I also agree to fully cooperate with the Company with respect to any reasonable assistance the Company may request from me upon reasonable notice to me, including but not limited to in connection with any legal claims, demands, or causes of action against the Company which relate to or are based on events that arose during the period of my employment with the Company. The Company shall pay me for such cooperation, at an hourly rate, calculated on the basis of my regular salary (not including bonus or any benefits) immediately prior to the termination of my employment with the Company, for each hour of assistance that I provide to the Company at its request, and shall reimburse me for all expenses I reasonably incur in connection with such cooperation, provided I deliver to the Company an invoice(s) in respect of such amounts, which invoice details with reasonable sufficiency the assistance provided and the number of hours spent providing such assistance. Notwithstanding the foregoing, in no case shall the Company require me to provide such assistance on more than 20 days in any year, nor shall the Company require me to travel outside the United States to provide such assistance. A condition for me providing any such assistance is that the Company shall agree to indemnify me for any and all liability I may incur in connection with providing such assistance to the same extent as if I was still an executive officer of the Company.

     3. Representations and Covenants. I hereby represent and agree to all of the following:

          (a) I have carefully read this General Release.

          (b) I understand it fully.

          (c) I am freely, voluntarily and knowingly releasing the Releasees in accordance with the terms contained above.

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          (d) Before executing this General Release, I had twenty-one (21) days to consider my rights and obligations under this General Release.

          (e) The period of time I had to consider my rights and obligations under this General Release was reasonable.

          (f) Before signing this General Release, I was advised to consult with an attorney and given a reasonable period of time to do so and in executing this General Release have not relied on any representation or statement not set forth herein.

          (g) Execution of this General Release and the General Release becoming enforceable (in accordance with paragraph (h) below) within 30 days from the date of my “separation from service” (as determined under Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder) is a condition to the Payments, which payments and benefits are in addition to anything of value to which I am already entitled to receive from the Company and its affiliates.

          (h) For a period of seven (7) days following the date on which I sign this General Release, I may revoke it. Any such revocation must be made in writing and received by the Corporate Secretary of the Company, by the seventh day following the date on which I sign this General Release. The Company’s obligation to pay the consideration as set forth in Section 1 above shall not become effective or enforceable until this seven (7) day revocation period has expired without my having exercised my right to revoke.

          (i) I have reported to the Company any and all work-related injuries incurred by me during my employment by the Company.

          (j) There are no pending lawsuits, charges, employee dispute resolution proceedings, administrative proceedings or other claims of any nature whatsoever, that I have brought (and which are pending) against any Releasee, in any state or federal court, before any agency or other administrative body or in any other forum.

          (k) I am not aware of any material violation of any laws or Company policies or procedures by a Company employee or officer that has not been reported to Company officials.

          (l) My obligations under the Employee Agreement (attached hereto) including my obligations under the sections entitled Covenant Not to Compete, Non-Disparagement, Non-Solicitation, Inventions and Patents, Trade Secrets and Confidential Information, are reasonable, are necessary to protect legitimate interests of the Company, and continue beyond the termination of my employment and the execution of this General Release. If I violate my obligations under the Employee Agreement and such violation causes material harm to the Company, I understand that, in addition to other relief to which the Company may be entitled, the Company shall be entitled to cease providing the Payments and benefits provided to me pursuant to Section 1 above unless such violation is cured (if capable of being cured) within 30 days of notification by the Company to me of such violation (and, following such cure, all suspended payments shall be made in a single lump sum), and this General Release will remain in full force and effect.

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          (m) If I should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Releasees with respect to any matter, cause or thing which is the subject of the release under Section 1 of this General Release, this General Release may be raised as a complete bar to any such action, claim or proceeding, and the applicable Releasee may recover from me all costs incurred in connection with such action, claim or proceeding, including attorneys’ fees.

          (n) If any provision of this General Release is declared illegal, invalid, or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such provisions will immediately become null and void, leaving the remainder of this General Release in full force and effect, provided, however, that if the general release of all claims given by me herein is declared illegal, invalid, or unenforceable, this General Release will become null and void and, to the fullest extent permitted by law, any Payments (which are being provided to me as a result of my execution of this General Release) which have not yet been made by the Company to me shall no longer be required to be made.

          (o) Except as necessary to enforce my rights under this General Release or except as required to comply with requirements of applicable law or an order or subpoena of a court of competent jurisdiction (as to which I will notify the Company reasonably in advance of disclosure) or except to the extent such information has become public knowledge, I shall keep confidential and not disclose to any person, other than my spouse or attorneys, accountants and/or tax advisors who shall be obligated to and agree to keep confidential, the existence, nature and terms of this General Release, the amount and fact of any payment to me, any and all discussions, communications, and correspondence leading to this General Release and any and all events, conduct, statements and/or communications giving rise to or relating in any way to any and all claims, obligations or liabilities, I have or may have. This General Release shall not be construed as an admission by the Company or any other Releasee of any liability whatsoever for any damages, injuries or other claims, obligations or liabilities alleged or which may be alleged by me.

          (p) This General Release shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles.

          4. Declaration. I declare under penalty of perjury under the laws of the State of New York that the foregoing is true and correct.

	Date:
Eric Krasnoff

Acknowledged before me this                                         

                                        , NOTARY PUBLIC

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EX-10.2

Exhibit 10.2

AMENDMENT DATED DECEMBER 31, 2008 TO EMPLOYMENT AGREEMENT

          The AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated September 12, 2005 between PALL CORPORATION, a New York Corporation (the “Company”) and Roberto Perez (“Executive”) as amended by amendments dated May 3, 2006, and July 18, 2006 (said Amended and Restated Employment Agreement as so amended being hereinafter called the “Agreement”) is hereby further amended as follows:

1.	Section 3(b)(i) is hereby amended to replace “45%” with “105%”.
2.	Section 3(b)(ii) is hereby deleted, and Section 3(b)(iii) is renumbered Section 3(b)(ii).
3.	Section 4(c) is amended by the addition of the following at the end of Section 4(c):
	In addition, any of Executive’s restricted stock units not yet vested under the 2005 Stock Compensation Plan, as amended (the “Stock Plan”), outstanding on the date on which a Change in Control (as defined in the Stock Plan) occurs will vest on such date.
4.	Section 4 is amended to add paragraph (d) and (e) as follows:

(d) Payments Upon Notice. If, in connection with any notice given under Section 1 or 4(c), upon written consent of the Company, the Executive no longer performs any services for the Company under Section 2 of this Agreement or otherwise and Executive experiences a “separation from service” as determined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations issued thereunder (“Section 409A”) (“separation from service”) then subject to Executive’s compliance with Section 16 below (where applicable) and with Executive’s other continuing obligations under Section 5 below, Executive will receive the following compensation and benefits under this Agreement in lieu of any compensation or benefits to which he might otherwise be entitled under Section 3 of this Agreement or any benefit plans referenced therein:

(i)

Any Plan Bonus or pro rata portion thereof (based on actual Company performance for the full fiscal year as certified by the Compensation Committee and taking into account any negative discretion the Compensation Committee has the right to exercise) that Executive may be entitled to receive under the Bonus Plan with respect to the year in which Executive’s separation from service takes place, less any amount Executive elected to defer under the Management Stock Purchase Plan, paid in accordance with the terms of the Bonus Plan..

(ii)

Each month for a period of 24 consecutive months, beginning with the month following the month in which Executive’s separation from service occurs, the Company shall make a payment in an amount equal to (X) the sum of (1) Base Salary at the annual rate at which Executive’s Base Salary was payable

	immediately prior to Executive’s separation from service and (2) the amount determined under clause (X)(1) multiplied by 70% of the Target Bonus Percentage, divided by (Y) 12; provided that on any August 1st occurring after Executive’s separation from service, the annual rate of Base Salary set forth in (X)(1) shall be adjusted for changes in the Consumer Price Index in the manner set forth in Section 3(a) hereof). Each installment will be paid on the first business day of the applicable month.
(iii)	During the period beginning on the date of Executive’s separation from service and ending on the two-year anniversary thereof, any of Executive’s restricted stock units not yet vested under the Stock Plan, outstanding on the date of Executive’s separation from service will not be cancelled, but will continue to vest and be settled in the manner and at the times set forth in their grant agreements and the Stock Plan as though Executive had not experienced a separation from service until such two-year anniversary.
(iv)	(A) During the period beginning on the date of Executive’s separation from service and ending on the two-year anniversary thereof, any of Executive’s units not yet vested under the Management Stock Purchase Plan, as amended (the “MSPP”), as of the date of Executive’s separation from service will not be cancelled, but will continue to be settled in the manner and at the times set forth under the MSPP as though Executive had not experienced a separation from service until such two-year anniversary.

(B) Any vested units Executive had previously deferred under the MSPP, to the extent payable upon a Termination of Employment (as defined in the MSPP), will be paid on the two-year anniversary of Executive’s separation from service.

(v)	Any monthly pension to which Executive is entitled under the Pall Corporation Supplementary Pension Plan (the “SPP”) will be calculated at the time of the two-year anniversary of Executive’s separation from service and will commence payment on the later of the first day of the month after Executive has attained his Early Retirement Date (as defined in the SPP) and the two-year anniversary of Executive’s separation from service. Upon separation from service, Executive shall be credited with two years of age and two years of service for purposes of eligibility and vesting under the SPP.
(vi)	During the period beginning on the date of Executive’s separation from service and ending on the two-year anniversary thereof, Executive shall continue to participate in the Company’s Comprehensive Welfare Benefits Plan, to the extent permitted by such Plan and applicable law; provided all expenses are incurred, and in-kind benefits provided, prior to such two-year anniversary and all expenses are reimbursed within 12 months following such two-year anniversary.
(vii)	In the event that Executive gives notice under Section 4(c):

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(A) for purposes of Section 4(d)(ii), Executive will cease to receive such monthly payments on the date specified in the notice given by the Executive (and not on the two-year anniversary of separation from service) and

(B) for purposes of Section 4(d)(iv)(A), the period of such continued vesting and, for purposes of Sections 4(d)(iii) and (iv)(A), the period of such continued settlement shall end on the date specified in the notice given by Executive (and not on the two-year anniversary of separation from service), provided, however, that any units the settlement date for which under Sections 4(d)(iii) and (iv)(A) would have been the two-year anniversary of separation from service shall continue to be settled on such two-year anniversary.

(e) Supplementary Pension Plan. In no event will any monthly pension to which Executive is entitled under the SPP commence payment prior to the two-year anniversary of Executive’s separation from service, except that on or after the date executive attains 65 years of age, upon a separation from service for any reason, the monthly pension shall be payable at the time and in the form set forth under the terms of the SPP.

5. Section 5 is renamed “Restrictive Covenants”, the paragraph that currently comprises Section 5 is designated “(a) Covenant Not to Compete.”, and the following is added at the end of Section 5:

(b) Non-Disparagement. While employed by the Company, and for a period of 18 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 Sections 1 or 4 hereof, or for a period of 12 months after the end of the Term of Employment if the Term of Employment is terminated by notice to Executive given by the Company under Section 1 or Section 4 hereof or terminated under Section 4 by reason of Executive’s attaining the age of 65 (the “Non-Disparagement Period”), Executive shall not make any disparaging or untruthful remarks concerning the Company or any of its subsidiaries, or their officers, directors, employees or agents, whether acting in their individual or representative capacities. Executive shall not be deemed to have breached Executive’s obligations under the foregoing sentence if during Executive’s employment with the Company Executive criticizes the job performance of employees who report to Executive, as part of such employees’ performance reviews and evaluations, provided such remarks are made in the ordinary course of business, not malicious or unfounded, are not publicly made or widely disseminated and are not in violation of Executive’s obligations to comply with laws, regulations and Company policies and procedures. Additionally, in the event that Executive is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose during the Non-Disparagement Period any information that may be disparaging, Executive shall comply with such requests, provided that Executive shall give the Company prompt notice of any such request so that the Company may seek an appropriate protective order, and provided that Executive shall comply with the terms of any protective order so obtained. Similarly, during the Non-Disparagement Period, the Company shall not make any disparaging or untruthful remarks concerning the Executive, except that the Company

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shall not be deemed to have breached its obligations hereunder: (i) if during the Executive’s employment with the Company, any Company director, employee, agent or representative criticizes the Executive’s job performance as part of performance reviews and evaluations or in response to questions from members of management, the board of directors or Company advisors, provided such remarks are made in the ordinary course of business, not malicious or unfounded, are not publicly made or widely disseminated and are not in violation of laws, regulations and Company policies and procedures, or (ii) in the event that the Company is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose during the Non-Disparagement Period any information that may be disparaging, the Company complies with such requests, provided that the Company shall give the Executive prompt notice of any such request so that the Executive may seek an appropriate protective order, and provided that the Company shall comply with the terms of any protective order so obtained.

(c) Non-Solicitation of Employees or Customers. While employed by the Company, and during the Non-Disparagement Period, Executive will not (i) indirectly or directly solicit, encourage, induce, or recruit any person who is then an employee of the Company or any of its subsidiaries to seek or accept employment with any other employer, or (ii) indirectly or directly solicit, encourage, or induce any customer of the Company to become the customer of any business that is competitive to any material extent with the business of the Company or any of its subsidiaries, provided, however, that if the Company terminates under Section 1 following a Change in Control (as defined in the Bonus Plan), the foregoing non-solicitation covenant shall not apply.

6.	Section 6 of the Agreement is amended by adding the following at the end of such Section:
	The parties also acknowledge and agree that, if, in any judicial proceeding, a court shall deem any of the restrictive covenants in Section 5(a) or 5(c), invalid, illegal or unenforceable because its scope is considered excessive, such restrictive covenant shall be modified so that the scope of the restrictive covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable, and if any such restrictive covenant (or portion thereof) is deemed invalid, illegal or unenforceable in any jurisdiction, as to that jurisdiction such restrictive covenant (or portion thereof) shall be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining restrictive covenants (or portion thereof) in such jurisdiction or rendering that or any other restrictive covenant (or portion thereof) invalid, illegal, or unenforceable in any other jurisdiction. The parties hereto intend that the validity and enforceability of any provision of this Agreement shall not affect or render invalid any other provision of this Agreement.
7.	Section 15 of the Agreement is renamed “Section 409A”, the paragraph that currently comprises Section 15 is designated “(a) Delay in Payment”, and the following is added to the end of Section 15:

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(b) Section 409A Compliance. This Agreement is intended to comply with the requirements of Section 409A or an exemption and shall in all respects be administered and interpreted in accordance with Section 409A. Notwithstanding anything in the Agreement to the contrary, distributions upon termination of employment may only be made upon a “separation from service” as determined under Section 409A and each installment of any payments and benefits provided to the Executive under this Agreement that would be considered to be deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)(1)) will be treated as a separate “payment” for purposes of Section 409A. In the event the parties determine that the terms of this Agreement do not comply with Section 409A, they will negotiate reasonably and in good faith to amend the terms of this Agreement such that it complies (in a manner that attempts to minimize the economic impact of such amendment on Executive and the Company) within the time period permitted by Section 409A. In no event shall the Company be required to pay Executive any gross-up or other payment with respect to any taxes or penalties imposed under Section 409A with respect to any benefit paid to Executive hereunder.

8.	New Section 16 is hereby appended to the Agreement, and reads in its entirety as follows:
	Release.
	The payments and benefits under Section 4(d)(ii), (iii), (iv), (vi) and (vii) are subject to the condition that Executive has delivered to the Company an executed copy of a release substantially in the form attached hereto as Exhibit A (with such changes as may be required under applicable law) and such release has become irrevocable within 30 days after the date of Executive’s separation from service. In that event, payment that otherwise would have been made within such 30-day period shall be paid at the expiration of such 30-day period; provided that any payments or benefits payable by reason of the death of Executive shall not be subject to the condition set forth in this Section 16.

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

PALL CORPORATION

By: Name:	/s/ ERIC KRASNOFF Eric Krasnoff
Title:	Chairman and Chief Executive Officer

EXECUTIVE

/s/ ROBERTO PEREZ          

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Exhibit A

GENERAL RELEASE

          1. Release of Claims and Waiver of Rights.

          (a) In consideration of the payments and benefits being provided to me under Section 4 (d)(ii), (iii), (iv), (vi) and (vii) of the amended and restated employment agreement (the “Employment Agreement”) dated September 12, 2005, as it may have been amended to the date hereof, between me and Pall Corporation (the “Company”), those payments and benefits being good and valuable consideration, the adequacy and sufficiency of which are acknowledged by me (the “Payments”), I, Roberto Perez, hereby release, remise and acquit Company, its present and past parents, subsidiaries and affiliates, their successors, assigns, benefit plans and/or committees, and their respective present or past officers, directors, managers, supervisors, employees, shareholders, attorneys, advisors, agents and representatives in their individual and corporate capacity, and their successors and assigns (the “Releasees”), from, and hold them harmless against, any and all claims, obligations, or liabilities (including attorneys, fees and expenses), asserted or unasserted, known or unknown, that I, my heirs, successors or assigns have or might have, which have arisen by reason of any matter, cause or thing whatsoever on or prior to the date on which this General Release is signed.

          (b) The terms “claims, obligations, or liabilities” (whether denominated claims, demands, causes of action, obligations, damages or liabilities) include, but are not limited to, any and all claims under any contract with the Company, claims of age, disability, race, religion, national origin, sex, retaliation, and/or other forms of employment discrimination, breach of express or implied contract, breach of employee handbook, practices or procedures, libel, slander, intentional tort or wrongful dismissal, claims for reinstatement or reemployment, arising under any federal, state, or local common or statutory law; claims for unpaid salary, commission or fringe benefits; or any other statutory claim before any state or federal court, tribunal or administrative agency, arising out of or in any way related to my employment relationship with the Company and its affiliates and the termination of that relationship. I will not file or permit to be filed on my behalf any such claim.

          (c) This General Release constitutes, among other things, a waiver of all rights and claims I may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. 621, et seq.) (“ADEA”), the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of the United States Civil Rights Act of 1964, all as amended including the amendment set forth in 42 U.S.C. § 1981 concerning damages in cases of intentional discrimination in employment, the New York State Human Rights Law, including N.Y. Exec. Law § 296, the New York City Human Rights Law, including § 8-107 of the Administration Code and Charter of New York City, and the New York Labor Law, and any other comparable national or state laws, all as amended.

          (d) Notwithstanding the preceding paragraph (c) or any other provision of this Agreement, this General Release is not intended to interfere with my right to file a charge with the Equal Employment Opportunity Commission (the “EEOC”) in connection with any claim I believe I may have against the Company or its affiliates. However, by executing this General

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Release, I hereby waive the right to recover in any proceeding I may bring before the EEOC or any state human rights commission or in any proceeding brought by the EEOC or any state human rights commission on my behalf. In addition, this General Release is not intended to interfere with my right to challenge that my waiver of any and all ADEA claims pursuant to this General Release is a knowing and voluntary waiver, notwithstanding my specific representation that I have entered into this General Release knowingly and voluntarily.

          (e) This General Release is for any relief, no matter how denominated, including, but not limited to, injunctive relief, wages, back pay, front pay, compensatory damages, or punitive damages.

          (f) This General Release shall not apply to any rights in the nature of indemnification which I may have with respect to claims against me relating to or arising out of my employment with the Company and its affiliates or my service on their respective boards of directors, or any vested benefit to which I am entitled under any tax qualified pension plan of the Company or its affiliates, COBRA continuation coverage benefits or any other similar benefits required to be provided by statute. Notwithstanding anything to the contrary contained in this Section 1, I do not release any of the Releasees from the Company’s obligation to timely provide me with all payments and benefits to which I am entitled pursuant to the terms of the Employment Agreement, or any other obligations of the Company under the Employment Agreement.

     2. Continued Cooperation. In consideration of the Payments, I also agree to fully cooperate with the Company with respect to any reasonable assistance the Company may request from me upon reasonable notice to me, including but not limited to in connection with any legal claims, demands, or causes of action against the Company which relate to or are based on events that arose during the period of my employment with the Company. The Company shall pay me for such cooperation, at an hourly rate, calculated on the basis of my regular salary (not including bonus or any benefits) immediately prior to the termination of my employment with the Company, for each hour of assistance that I provide to the Company at its request, and shall reimburse me for all expenses I reasonably incur in connection with such cooperation, provided I deliver to the Company an invoice(s) in respect of such amounts, which invoice details with reasonable sufficiency the assistance provided and the number of hours spent providing such assistance. Notwithstanding the foregoing, in no case shall the Company require me to provide such assistance on more than 20 days in any year, nor shall the Company require me to travel outside the United States to provide such assistance. A condition for me providing any such assistance is that the Company shall agree to indemnify me for any and all liability I may incur in connection with providing such assistance to the same extent as if I was still an executive officer of the Company.

     3. Representations and Covenants. I hereby represent and agree to all of the following:

          (a) I have carefully read this General Release.

          (b) I understand it fully.

          (c) I am freely, voluntarily and knowingly releasing the Releasees in accordance with the terms contained above.

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          (d) Before executing this General Release, I had twenty-one (21) days to consider my rights and obligations under this General Release.

          (e) The period of time I had to consider my rights and obligations under this General Release was reasonable.

          (f) Before signing this General Release, I was advised to consult with an attorney and given a reasonable period of time to do so and in executing this General Release have not relied on any representation or statement not set forth herein.

          (g) Execution of this General Release and the General Release becoming enforceable (in accordance with paragraph (h) below) within 30 days from the date of my “separation from service” (as determined under Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder) is a condition to the Payments, which payments and benefits are in addition to anything of value to which I am already entitled to receive from the Company and its affiliates.

          (h) For a period of seven (7) days following the date on which I sign this General Release, I may revoke it. Any such revocation must be made in writing and received by the Corporate Secretary of the Company, by the seventh day following the date on which I sign this General Release. The Company’s obligation to pay the consideration as set forth in Section 1 above shall not become effective or enforceable until this seven (7) day revocation period has expired without my having exercised my right to revoke.

          (i) I have reported to the Company any and all work-related injuries incurred by me during my employment by the Company.

          (j) There are no pending lawsuits, charges, employee dispute resolution proceedings, administrative proceedings or other claims of any nature whatsoever, that I have brought (and which are pending) against any Releasee, in any state or federal court, before any agency or other administrative body or in any other forum.

          (k) I am not aware of any material violation of any laws or Company policies or procedures by a Company employee or officer that has not been reported to Company officials.

          (l) My obligations under the Employee Agreement (attached hereto) including my obligations under the sections entitled Covenant Not to Compete, Non-Disparagement, Non-Solicitation, Inventions and Patents, Trade Secrets and Confidential Information, are reasonable, are necessary to protect legitimate interests of the Company, and continue beyond the termination of my employment and the execution of this General Release. If I violate my obligations under the Employee Agreement and such violation causes material harm to the Company, I understand that, in addition to other relief to which the Company may be entitled, the Company shall be entitled to cease providing the Payments and benefits provided to me pursuant to Section 1 above unless such violation is cured (if capable of being cured) within 30 days of notification by the Company to me of such violation (and, following such cure, all suspended payments shall be made in a single lump sum), and this General Release will remain in full force and effect.

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          (m) If I should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Releasees with respect to any matter, cause or thing which is the subject of the release under Section 1 of this General Release, this General Release may be raised as a complete bar to any such action, claim or proceeding, and the applicable Releasee may recover from me all costs incurred in connection with such action, claim or proceeding, including attorneys’ fees.

          (n) If any provision of this General Release is declared illegal, invalid, or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such provisions will immediately become null and void, leaving the remainder of this General Release in full force and effect, provided, however, that if the general release of all claims given by me herein is declared illegal, invalid, or unenforceable, this General Release will become null and void and, to the fullest extent permitted by law, any Payments (which are being provided to me as a result of my execution of this General Release) which have not yet been made by the Company to me shall no longer be required to be made.

          (o) Except as necessary to enforce my rights under this General Release or except as required to comply with requirements of applicable law or an order or subpoena of a court of competent jurisdiction (as to which I will notify the Company reasonably in advance of disclosure) or except to the extent such information has become public knowledge, I shall keep confidential and not disclose to any person, other than my spouse or attorneys, accountants and/or tax advisors who shall be obligated to and agree to keep confidential, the existence, nature and terms of this General Release, the amount and fact of any payment to me, any and all discussions, communications, and correspondence leading to this General Release and any and all events, conduct, statements and/or communications giving rise to or relating in any way to any and all claims, obligations or liabilities, I have or may have. This General Release shall not be construed as an admission by the Company or any other Releasee of any liability whatsoever for any damages, injuries or other claims, obligations or liabilities alleged or which may be alleged by me.

          (p) This General Release shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles.

          4. Declaration. I declare under penalty of perjury under the laws of the State of New York that the foregoing is true and correct.

	Date:
Roberto Perez

Acknowledged before me this                                         

                                        , NOTARY PUBLIC

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EX-10.3

Exhibit 10.3

AMENDMENT DATED DECEMBER 31, 2008 TO EMPLOYMENT AGREEMENT

          The AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated June 1, 2004 between PALL CORPORATION, a New York Corporation (the “Company”) and Lisa McDermott (“Executive”) as amended by amendments dated May 3, 2006, and July 18, 2006 (said Amended and Restated Employment Agreement as so amended being hereinafter called the “Agreement”) is hereby further amended as follows:

1.	Section 4(c) is amended by the addition of the following at the end of Section 4(c):
	In addition, any of Executive’s restricted stock units not yet vested under the 2005 Stock Compensation Plan, as amended (the “Stock Plan”), outstanding on the date on which a Change in Control (as defined in the Stock Plan) occurs will vest on such date.

2. Section 4 is amended to add paragraphs (d) and (e) as follows:

(d) Payments Upon Notice. If, in connection with any notice given under Section 1 or 4(c), upon written consent of the Company, the Executive no longer performs any services for the Company under Section 2 of this Agreement or otherwise and Executive experiences a “separation from service” as determined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations issued thereunder (“Section 409A”) (“separation from service”) then subject to Executive’s compliance with Section 16 below (where applicable) and with Executive’s other continuing obligations under Section 5 below, Executive will receive the following compensation and benefits under this Agreement in lieu of any compensation or benefits to which he might otherwise be entitled under Section 3 of this Agreement or any benefit plans referenced therein:

(i)

Any Plan Bonus or pro rata portion thereof (based on actual Company performance for the full fiscal year as certified by the Compensation Committee and taking into account any negative discretion the Compensation Committee has the right to exercise) that Executive may be entitled to receive under the Bonus Plan with respect to the year in which Executive’s separation from service takes place, less any amount Executive elected to defer under the Management Stock Purchase Plan, paid in accordance with the terms of the Bonus Plan..

(ii)

Each month for a period of 12 consecutive months, beginning with the month following the month in which Executive’s separation from service occurs, the Company shall make a payment in an amount equal to (X) the sum of (1) Base Salary at the annual rate at which Executive’s Base Salary was payable immediately prior to Executive’s separation from service and (2) the amount determined under clause (X)(1) multiplied by 70% of the Target Bonus Percentage, divided by (Y) 12; provided that on any August 1st occurring after Executive’s separation from service, the annual rate of Base Salary set forth in

(X)(1) shall be adjusted for changes in the Consumer Price Index in the manner set forth in Section 3(d) hereof). Each installment will be paid on the first business day of the applicable month.

(iii)

During the period beginning on the date of Executive’s separation from service and ending on the one-year anniversary thereof, any of Executive’s restricted stock units not yet vested under the 2005 Stock Compensation Plan, as amended (the “Stock Plan”), outstanding on the date of Executive’s separation from service will not be cancelled, but will continue to vest and be settled in the manner and at the times set forth in their grant agreements and the Stock Plan as though Executive had not experienced a separation from service until such one-year anniversary. For the sake of clarity, if by their terms Executive’s restricted stock units vest upon a Change in Control (as defined in the Stock Plan), such vested units will be settled in accordance with the terms of their grant agreements and the Stock Plan as though Executive had not experienced a separation from service until the one-year anniversary of Executive’s separation from service.

(iv)

(A) During the period beginning on the date of Executive’s separation from service and ending on the one-year anniversary thereof, any of Executive’s units not yet vested under the Management Stock Purchase Plan, as amended (the “MSPP”), as of the date of Executive’s separation from service will not be cancelled, but will continue to be settled in the manner and at the times set forth under the MSPP as though Executive had not experienced a separation from service until such one-year anniversary.

(B) Any vested units Executive had previously deferred under the MSPP, to the extent payable upon a Termination of Employment (as defined in the MSPP), will be paid on the one-year anniversary of Executive’s separation from service.

(v)	Any monthly pension to which Executive is entitled under the Pall Corporation Supplementary Pension Plan (the “SPP”) will be calculated at the time of the one-year anniversary of Executive’s separation from service and will commence payment on the later of the first day of the month after Executive has attained her Early Retirement Date (as defined in the SPP) and the one-year anniversary of Executive’s separation from service. Upon separation from service, Executive shall be credited with one year of age and one year of service for purposes of eligibility and vesting under the SPP.
(vi)	During the period beginning on the date of Executive’s separation from service and ending on the one-year anniversary thereof, Executive shall continue to participate in the Company’s Comprehensive Welfare Benefits Plan, to the extent permitted by such Plan; provided all expenses are incurred, and in-kind benefits provided, prior to such one-year anniversary and all expenses are reimbursed within 12 months following such one-year anniversary.
(vii)	In the event that Executive gives notice under Section 4(c):

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(A) for purposes of Section 4(d)(ii), Executive will cease to receive such monthly payments on the date specified in the notice given by the Executive (and not on the one-year anniversary of separation from service) and

(B) for purposes of Section 4(d)(iv)(A), the period of such continued vesting and, for purposes of Sections 4(d)(iii) and (iv)(A), the period of such continued settlement shall end on the date specified in the notice given by Executive (and not on the one-year anniversary of separation from service), provided, however, that any units the settlement date for which under Sections 4(d)(iii) and (iv)(A) would have been the one-year anniversary of separation from service shall continue to be settled on such one-year anniversary.

(e) Supplementary Pension Plan. In no event will any monthly pension to which Executive is entitled under the SPP commence payment prior to the one-year anniversary of Executive’s separation from service, except that on or after the date executive attains 65 years of age, upon a separation from service for any reason, the monthly pension shall be payable at the time and in the form set forth under the terms of the SPP.

3. Section 5 is renamed “Restrictive Covenants”, the paragraph that currently comprises Section 5 is designated “(a) Covenant Not to Compete.”, and the following is added at the end of Section 5:

(b) Non-Disparagement. While employed by the Company, and for a period of 18 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 Sections 1 or 4 hereof, or for a period of 12 months after the end of the Term of Employment if the Term of Employment is terminated by notice to Executive given by the Company under Section 1 or Section 4 hereof or terminated under Section 4 by reason of Executive’s attaining the age of 65 (the “Non-Disparagement Period”), Executive shall not make any disparaging or untruthful remarks concerning the Company or any of its subsidiaries, or their officers, directors, employees or agents, whether acting in their individual or representative capacities. Executive shall not be deemed to have breached Executive’s obligations under the foregoing sentence if during Executive’s employment with the Company Executive criticizes the job performance of employees who report to Executive, as part of such employees’ performance reviews and evaluations, provided such remarks are made in the ordinary course of business, not malicious or unfounded, are not publicly made or widely disseminated and are not in violation of Executive’s obligations to comply with laws, regulations and Company policies and procedures. Additionally, in the event that Executive is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose during the Non-Disparagement Period any information that may be disparaging, Executive shall comply with such requests, provided that Executive shall give the Company prompt notice of any such request so that the Company may seek an appropriate protective order, and provided that Executive shall comply with the terms of any protective order so obtained. Similarly, during the Non-Disparagement Period, the Company shall not make any disparaging or untruthful remarks concerning the Executive, except that the Company shall not be deemed to have breached its obligations hereunder: (i) if during the

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Executive’s employment with the Company, any Company director, employee, agent or representative criticizes the Executive’s job performance as part of performance reviews and evaluations or in response to questions from members of management, the board of directors or Company advisors, provided such remarks are made in the ordinary course of business, not malicious or unfounded, are not publicly made or widely disseminated and are not in violation of laws, regulations and Company policies and procedures, or (ii) in the event that the Company is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose during the Non-Disparagement Period any information that may be disparaging, the Company complies with such requests, provided that the Company shall give the Executive prompt notice of any such request so that the Executive may seek an appropriate protective order, and provided that the Company shall comply with the terms of any protective order so obtained.

(c) Non-Solicitation of Employees or Customers. While employed by the Company, and during the Non-Disparagement Period, Executive will not (i) indirectly or directly solicit, encourage, induce, or recruit any person who is then an employee of the Company or any of its subsidiaries to seek or accept employment with any other employer, or (ii) indirectly or directly solicit, encourage, or induce any customer of the Company to become the customer of any business that is competitive to any material extent with the business of the Company or any of its subsidiaries, provided, however, that if the Company terminates under Section 1 following a Change in Control (as defined in the Bonus Plan), the foregoing non-solicitation covenant shall not apply.

4.	Section 6 of the Agreement is amended by adding the following at the end of such Section:
	The parties also acknowledge and agree that, if, in any judicial proceeding, a court shall deem any of the restrictive covenants in Section 5(a) or 5(c), invalid, illegal or unenforceable because its scope is considered excessive, such restrictive covenant shall be modified so that the scope of the restrictive covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable, and if any such restrictive covenant (or portion thereof) is deemed invalid, illegal or unenforceable in any jurisdiction, as to that jurisdiction such restrictive covenant (or portion thereof) shall be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining restrictive covenants (or portion thereof) in such jurisdiction or rendering that or any other restrictive covenant (or portion thereof) invalid, illegal, or unenforceable in any other jurisdiction. The parties hereto intend that the validity and enforceability of any provision of this Agreement shall not affect or render invalid any other provision of this Agreement.
5.	Section 15 of the Agreement is renamed “Section 409A”, the paragraph that currently comprises Section 15 is designated “(a) Delay in Payment”, and the following is added to the end of Section 15:

(b) Section 409A Compliance. This Agreement is intended to comply with the requirements of Section 409A or an exemption and shall in all respects be administered

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and interpreted in accordance with Section 409A. Notwithstanding anything in the Agreement to the contrary, distributions upon termination of employment may only be made upon a “separation from service” as determined under Section 409A and each installment of any payments and benefits provided to the Executive under this Agreement that would be considered to be deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)(1)) will be treated as a separate “payment” for purposes of Section 409A. In the event the parties determine that the terms of this Agreement do not comply with Section 409A, they will negotiate reasonably and in good faith to amend the terms of this Agreement such that it complies (in a manner that attempts to minimize the economic impact of such amendment on Executive and the Company) within the time period permitted by Section 409A. In no event shall the Company be required to pay Executive any gross-up or other payment with respect to any taxes or penalties imposed under Section 409A with respect to any benefit paid to Executive hereunder.

6.	New Section 16 is hereby appended to the Agreement, and reads in its entirety as follows:
	Release.
	The payments and benefits under Section 4(d)(ii), (iii), (iv), (vi) and (vii) are subject to the condition that Executive has delivered to the Company an executed copy of a release substantially in the form attached hereto as Exhibit A (with such changes as may be required under applicable law) and such release has become irrevocable within 30 days after the date of Executive’s separation from service. In that event, payment that otherwise would have been made within such 30-day period shall be paid at the expiration of such 30-day period; provided that any payments or benefits payable by reason of the death of Executive shall not be subject to the condition set forth in this Section 16.

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

PALL CORPORATION

By: Name:	/s/ ERIC KRASNOFF Eric Krasnoff
Title:	Chairman and Chief Executive Officer

EXECUTIVE

/s/ LISA MCDERMOTT

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Exhibit A

GENERAL RELEASE

          1. Release of Claims and Waiver of Rights.

          (a) In consideration of any payments and benefits being provided to me under Section 4(d)(ii), (iii), (iv), (vi) and (vii) of the amended and restated employment agreement (the “Employment Agreement”) dated June 1, 2004, as it may have been amended to the date hereof, between me and Pall Corporation (the “Company”), those payments and benefits being good and valuable consideration, the adequacy and sufficiency of which are acknowledged by me (the “Payments”), I, Lisa McDermott, hereby release, remise and acquit Company, its present and past parents, subsidiaries and affiliates, their successors, assigns, benefit plans and/or committees, and their respective present or past officers, directors, managers, supervisors, employees, shareholders, attorneys, advisors, agents and representatives in their individual and corporate capacity, and their successors and assigns (the “Releasees”), from, and hold them harmless against, any and all claims, obligations, or liabilities (including attorneys, fees and expenses), asserted or unasserted, known or unknown, that I, my heirs, successors or assigns have or might have, which have arisen by reason of any matter, cause or thing whatsoever on or prior to the date on which this General Release is signed.

          (b) The terms “claims, obligations, or liabilities” (whether denominated claims, demands, causes of action, obligations, damages or liabilities) include, but are not limited to, any and all claims under any contract with the Company, claims of age, disability, race, religion, national origin, sex, retaliation, and/or other forms of employment discrimination, breach of express or implied contract, breach of employee handbook, practices or procedures, libel, slander, intentional tort or wrongful dismissal, claims for reinstatement or reemployment, arising under any federal, state, or local common or statutory law; claims for unpaid salary, commission or fringe benefits; or any other statutory claim before any state or federal court, tribunal or administrative agency, arising out of or in any way related to my employment relationship with the Company and its affiliates and the termination of that relationship. I will not file or permit to be filed on my behalf any such claim.

          (c) This General Release constitutes, among other things, a waiver of all rights and claims I may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. 621, et seq.) (“ADEA”), the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of the United States Civil Rights Act of 1964, all as amended including the amendment set forth in 42 U.S.C. § 1981 concerning damages in cases of intentional discrimination in employment, the New York State Human Rights Law, including N.Y. Exec. Law § 296, the New York City Human Rights Law, including § 8-107 of the Administration Code and Charter of New York City, and the New York Labor Law, and any other comparable national or state laws, all as amended.

          (d) Notwithstanding the preceding paragraph (c) or any other provision of this Agreement, this General Release is not intended to interfere with my right to file a charge with the Equal Employment Opportunity Commission (the “EEOC”) in connection with any claim I believe I may have against the Company or its affiliates. However, by executing this General

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Release, I hereby waive the right to recover in any proceeding I may bring before the EEOC or any state human rights commission or in any proceeding brought by the EEOC or any state human rights commission on my behalf. In addition, this General Release is not intended to interfere with my right to challenge that my waiver of any and all ADEA claims pursuant to this General Release is a knowing and voluntary waiver, notwithstanding my specific representation that I have entered into this General Release knowingly and voluntarily.

          (e) This General Release is for any relief, no matter how denominated, including, but not limited to, injunctive relief, wages, back pay, front pay, compensatory damages, or punitive damages.

          (f) This General Release shall not apply to any rights in the nature of indemnification which I may have with respect to claims against me relating to or arising out of my employment with the Company and its affiliates or my service on their respective boards of directors, or any vested benefit to which I am entitled under any tax qualified pension plan of the Company or its affiliates, COBRA continuation coverage benefits or any other similar benefits required to be provided by statute. Notwithstanding anything to the contrary contained in this Section 1, I do not release any of the Releasees from the Company’s obligation to timely provide me with all payments and benefits to which I am entitled pursuant to the terms of the Employment Agreement, or any other obligations of the Company under the Employment Agreement.

     2. Continued Cooperation. In consideration of the Payments, I also agree to fully cooperate with the Company with respect to any reasonable assistance the Company may request from me upon reasonable notice to me, including but not limited to in connection with any legal claims, demands, or causes of action against the Company which relate to or are based on events that arose during the period of my employment with the Company. The Company shall pay me for such cooperation, at an hourly rate, calculated on the basis of my regular salary (not including bonus or any benefits) immediately prior to the termination of my employment with the Company, for each hour of assistance that I provide to the Company at its request, and shall reimburse me for all expenses I reasonably incur in connection with such cooperation, provided I deliver to the Company an invoice(s) in respect of such amounts, which invoice details with reasonable sufficiency the assistance provided and the number of hours spent providing such assistance. Notwithstanding the foregoing, in no case shall the Company require me to provide such assistance on more than 20 days in any year, nor shall the Company require me to travel outside the United States to provide such assistance. A condition for me providing any such assistance is that the Company shall agree to indemnify me for any and all liability I may incur in connection with providing such assistance to the same extent as if I was still an executive officer of the Company.

     3. Representations and Covenants. I hereby represent and agree to all of the following:

          (a) I have carefully read this General Release.

          (b) I understand it fully.

          (c) I am freely, voluntarily and knowingly releasing the Releasees in accordance with the terms contained above.

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          (d) Before executing this General Release, I had twenty-one (21) days to consider my rights and obligations under this General Release.

          (e) The period of time I had to consider my rights and obligations under this General Release was reasonable.

          (f) Before signing this General Release, I was advised to consult with an attorney and given a reasonable period of time to do so and in executing this General Release have not relied on any representation or statement not set forth herein.

          (g) Execution of this General Release and the General Release becoming enforceable (in accordance with paragraph (h) below) within 30 days from the date of my “separation from service” (as determined under Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder) is a condition to the Payments, which payments and benefits are in addition to anything of value to which I am already entitled to receive from the Company and its affiliates.

          (h) For a period of seven (7) days following the date on which I sign this General Release, I may revoke it. Any such revocation must be made in writing and received by the Corporate Secretary of the Company, by the seventh day following the date on which I sign this General Release. The Company’s obligation to pay the consideration as set forth in Section 1 above shall not become effective or enforceable until this seven (7) day revocation period has expired without my having exercised my right to revoke.

          (i) I have reported to the Company any and all work-related injuries incurred by me during my employment by the Company.

          (j) There are no pending lawsuits, charges, employee dispute resolution proceedings, administrative proceedings or other claims of any nature whatsoever, that I have brought (and which are pending) against any Releasee, in any state or federal court, before any agency or other administrative body or in any other forum.

          (k) I am not aware of any material violation of any laws or Company policies or procedures by a Company employee or officer that has not been reported to Company officials.

          (l) My obligations under the Employee Agreement (attached hereto) including my obligations under the sections entitled Covenant Not to Compete, Non-Disparagement, Non-Solicitation, Inventions and Patents, Trade Secrets and Confidential Information, are reasonable, are necessary to protect legitimate interests of the Company, and continue beyond the termination of my employment and the execution of this General Release. If I violate my obligations under the Employee Agreement and such violation causes material harm to the Company, I understand that, in addition to other relief to which the Company may be entitled, the Company shall be entitled to cease providing the Payments and benefits provided to me pursuant to Section 1 above unless such violation is cured (if capable of being cured) within 30 days of notification by the Company to me of such violation (and, following such cure, all suspended payments shall be made in a single lump sum), and this General Release will remain in full force and effect.

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          (m) If I should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Releasees with respect to any matter, cause or thing which is the subject of the release under Section 1 of this General Release, this General Release may be raised as a complete bar to any such action, claim or proceeding, and the applicable Releasee may recover from me all costs incurred in connection with such action, claim or proceeding, including attorneys’ fees.

          (n) If any provision of this General Release is declared illegal, invalid, or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such provisions will immediately become null and void, leaving the remainder of this General Release in full force and effect, provided, however, that if the general release of all claims given by me herein is declared illegal, invalid, or unenforceable, this General Release will become null and void and, to the fullest extent permitted by law, any Payments (which are being provided to me as a result of my execution of this General Release) which have not yet been made by the Company to me shall no longer be required to be made.

          (o) Except as necessary to enforce my rights under this General Release or except as required to comply with requirements of applicable law or an order or subpoena of a court of competent jurisdiction (as to which I will notify the Company reasonably in advance of disclosure) or except to the extent such information has become public knowledge, I shall keep confidential and not disclose to any person, other than my spouse or attorneys, accountants and/or tax advisors who shall be obligated to and agree to keep confidential, the existence, nature and terms of this General Release, the amount and fact of any payment to me, any and all discussions, communications, and correspondence leading to this General Release and any and all events, conduct, statements and/or communications giving rise to or relating in any way to any and all claims, obligations or liabilities, I have or may have. This General Release shall not be construed as an admission by the Company or any other Releasee of any liability whatsoever for any damages, injuries or other claims, obligations or liabilities alleged or which may be alleged by me.

          (p) This General Release shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles.

          4. Declaration. I declare under penalty of perjury under the laws of the State of New York that the foregoing is true and correct.

	Date:
Lisa McDermott

Acknowledged before me this                                         

                                        , NOTARY PUBLIC

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EX-10.4

Exhibit 10.04

PALL CORPORATION

SUPPLEMENTARY PENSION PLAN

(As Amended and Restated on October 16, 2008, effective as of January 1, 2009)

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) payable for such Plan Year to the Member from all Affiliated Corporations plus (b) amounts which would have been payable for such Plan Year to the Member 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 401(k) 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 401(k) Plan and Supplementary Profit-Sharing Plan.

     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 “Disabled” means that the Member is, by reason of physical or mental disability, incapable of performing the Member’s principal duties for an aggregate of 130 working days out of any period of twelve consecutive months.

     Section 1.7 “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 1.8 “Effective Date” means August 1, 1978.

     Section 1.9 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 or her Compensation was highest out of the last five (5) or fewer Plan Years in which he or she 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 or she was a Member for only one full Plan Year, then his or her Compensation for that Plan Year or if he or she was a Member for two full Plan Years, then the average of his or her Compensation for those two Plan Years and (b) the average of his or her Compensation for all Plan Years in which he or she 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 or she was not a Member for the entire Plan Year.

     Section 1.10 “Former Member” means a person who at the time he or she ceased to be a Member was entitled to benefits under Article II or Article III.

     Section 1.11 “Member” means:

     (a) each person who on the Effective Date (i) had a written contract in effect with the Corporation concerning his or her 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 or her 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.

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

     Section 1.12 “Normal Retirement Date” means the last day of the month coinciding with or immediately following the date a Member attains age 65.

     Section 1.13 “Other Retirement Program” means (i) the Qualified Pension Plan; (ii) the Pall (UK) Pension Fund; (iii) in the case of a person who becomes a Member or after August 1, 2003, the Pall Supplementary Pension Scheme and the Pall Executive Pension Scheme; and (iv) 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.

     Section 1.14 “Plan Year” means the twelve consecutive month period beginning on August 1 and ending on July 31 of the following year.

     Section 1.15 “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 or her Normal Retirement Date, as computed under the provisions of Title II of the Social Security Act in effect on his or her Normal Retirement Date and, in the case of a person who becomes a Member on or after August 1, 2003, as computed under the provisions of any similar governmental old-age insurance benefit program of any country other than the United States (including but not limited to the UK State Pension Scheme) if and to the extent applicable to such Member;

     (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 or her Normal Retirement Date, as computed under the provisions of Title II of the Social Security Act in effect on the date his or her pension commences under Section 2.2 or Section 3.2 and, in the case of a person who becomes a Member on or after August 1, 2003, as computed under the provisions of any similar governmental old-age insurance benefit program of any country other than the United States (including but not limited to the UK State Pension Scheme) if and to the extent applicable to such Member; 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 or her Normal Retirement Date in the same amount as the Compensation he or she received in the last Plan Year during which he or she 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 or her pension commences under Section 3.3 and, in the case of a person who becomes a Member on or after August 1, 2003, as computed under the provisions of any similar governmental old-age insurance benefit program of any country other than the

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United States (including but not limited to the UK State Pension Scheme) if and to the extent applicable to such Member.

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

     Section 1.16 “Qualified Domestic Trust” means a trust described in section 2056A of the Internal Revenue Code of 1986, as amended.

     Section 1.17 “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.

     Section 1.18 “Retirement” (including references to “Retired” or “Retires”) shall mean the (i) the cessation of a Member’s employment with the Corporation and all of its Affiliated Corporations irrespective of the reason therefor and irrespective of whether initiated by the Corporation, an Affiliated Corporation, the Member or otherwise, and (ii) for Members subject to taxation in the United States, a “separation from service,” as defined in Section 409A.

     Section 1.19 “Section 409A” shall mean Section 409A of the Internal Revenue Code of 1986, as amended, the regulations promulgated thereunder, and any successor legislation or regulations.

ARTICLE II

VESTING

     Section 2.1 (a) Normal Vesting. Each Member who Retires for any reason (other than his or her death) under circumstances in which he or she 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 II, provided, however, that, notwithstanding the foregoing, a person who becomes a Member on or after February 10, 1982 shall not be entitled to a vested pension under this Article unless he or she is an employee of an Affiliated Corporation on either

(i)	his or her 60th birthday or, if later, the fifth anniversary of becoming a Member of the Plan, or
(ii)	the date on which he or she has been employed by an Affiliated Corporation or Corporations for a period of 25 years.

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     In addition, any Member who has held the position of Executive Vice President of the Corporation at any time after February 10, 1982 shall be entitled to a vested pension under this Article.

     (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 who (A) Retires for any reason (other than his or her death) under circumstances in which he or she is not entitled to retirement benefits under any of the provisions of Article III and (B) who was a member of the Executive Management Team 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:

(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 or her 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 or her 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 or her pension under this Article, and if such Member is survived by a spouse to whom he or she has been lawfully married for at least one year prior to his or her 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 or she 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

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entitled to receive if he or she had retired on the later of his or her Early Retirement Date or the date of his or her death.

     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 or her 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 or her Normal Retirement Date shall be entitled to receive a monthly pension commencing on the first day of the month following his or her 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 beginning on the date the monthly pension under this Plan commences (the “Commencement Date”), whether or not the Member receives payment of such pension in such form or at such time. In the case of a reduction in a monthly pension by virtue of clause (b)(i) next above, any foreign currency in which the annual pension under any Other Retirement Program is payable shall be translated into U.S. dollars initially at the exchange rate reported by the Wall Street Journal in its issue published on or nearest to the Commencement Date and such exchange rate shall remain in effect until the first anniversary of the Commencement Date. On such first and each subsequent anniversary of the Commencement Date, the monthly pension payable hereunder during the preceding 12 months shall be recalculated based on the rate in the Wall Street Journal in its issue published on or nearest to each dates on which a monthly pension payment hereunder is payable and the

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difference between the amount deducted during the preceding 12 months and the recalculated amount, if in favor of the Member, shall be paid to him or her (or surviving spouse if a surviving spouse is the payee) with the next monthly payment or, if in favor of the Corporation, shall be deducted from the next monthly payment or payments due to the Member (or surviving spouse) hereunder. On each anniversary of the Commencement Date, the amount of the reduction in the monthly pension hereunder pursuant to clause (b)(i) next above shall be recalculated based on the exchange rate reported by the Wall Street Journal in its issue published on or nearest to such anniversary and that rate shall be used in determining the amount of the monthly pension payable hereunder for the ensuing 12 months, until the next annual recalculation provided for above.

     Section 3.2 Early Retirement Pension. A Member who has attained his or her Early Retirement Date may retire on the last day of any month which is not less than thirty (30) days after he or she 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 or her or her 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 or her Normal Retirement Date.

     Section 3.3 Disability Retirement Pension. A Member who Retires as a result of becoming Disabled 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 is Disabled. Notwithstanding the foregoing, the pension of any Member who ceases to be Disabled after he or she has attained his or her Normal Retirement Date shall continue during his or her 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 or her Normal Retirement Date.

     Section 3.4 Delayed Retirement Pension. Each Member who Retires after his or her Normal Retirement Date shall be entitled to receive a monthly pension commencing on the first day of the month after his or her 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.

     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 or her pension and the Member is survived by a spouse to whom he or she has been lawfully married for at least one year prior to his or her 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 or she

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retired on the date of his or her death under the Plan and all Other Retirement Programs in which he or she 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 or her 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 or her pension (if any was being paid) shall continue, including upon his or her subsequent Retirement.

     Section 3.7 Delay of Payment to Key Employees. Notwithstanding any provision in this Article III or in Section 4.1 to the contrary, in the case of any Member (i) who Retires on or at any time after January 1, 2005 and (ii) who immediately prior to Retirement was a “specified employee” of the Corporation within the meaning of Section 409A, the payments otherwise required to be made hereunder to such Member shall be subject to the following provisions:

     (a) Except as provided in (c) below, no amount otherwise required to be paid to such Member under any Section of this Article III on or after the Member’s Retirement that would be considered to be deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)(1)) shall be paid to the Member before the date (the Member’s Delayed Payment Date”) which is six months after his or her Retirement. On the Member’s Delayed Payment Date, there shall be paid to the Member, in a single cash lump sum, an amount equal to the aggregate amount of the monthly pension payments he or she would have received by such date in the absence of the provisions of the preceding sentence (the Member’s “Delayed Pension Payments”), plus interest thereon at the Delayed Payment Interest Rate (as defined in (d) below) computed from the date on which each such payment otherwise would have been made to the Member until the Member’s Delayed Payment Date.

     (b) If any such Member whose monthly pension payments are delayed pursuant to (a) above should die before his or her Delayed Payment Date, his or her Delayed Pension Payments, plus interest thereon at the Delayed Payment Interest Rate computed from the date on which each such payment otherwise would have been made to the Member until the day before the date of payment, shall be paid, in a single lump sum, to the Member’s surviving spouse if the Member is survived by a spouse to whom the Member had been lawfully married for at least one year prior to the Member’s death or, if the Member is not survived by such a spouse, to the Member’s estate. Such payment shall be deemed paid into a constructive trust for the benefit of the spouse or estate as applicable upon the Participant’s death, and distributed by no later than seven business days after the Corporation receives written notice of the Member’s death.

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     (c) In the case of any such Member whose Retirement occurs at any time during 2005, the monthly pension payments scheduled to be made to such Member during 2005 shall not be subject to delay in accordance with the provisions of (a) above, to the extent such payments are in fact made on or prior to December 31, 2005. The payments so made shall be treated as having been made to such Member upon his or her partial termination of participation in this Plan, for purposes of Q & A 20 of IRS Notice 2005-1.

     (d) For purposes of (a) and (b) above, the “Delayed Payment Interest Rate” shall mean, with respect to any Member any of whose monthly pension payments are delayed pursuant to (a) above, the national average annual rate of interest payable on jumbo six month bank certificates of deposit, as quoted in the business section of the most recently published Sunday edition of the New York Times preceding the Member’s Retirement.

     (e) Notwithstanding any delay in the payment of a Member’s pension pursuant to this Section 3.7, payment of such Member’s pension shall be treated as having commenced on the first day of the month following the Member’s Retirement for purposes of Sections 3.5 and 4.2 and for all other purposes of the Plan.

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 or her 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.

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     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.

     At the time such election is made, the Member or Former Member may also elect an alternative form of payment for his or her pension hereunder, provided that the alternate form so selected does not result in a delay in the date of the commencement of payment, and have payment of his or her 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 or her election, the Member or Former Member is married at the time payment of his or her pension is to commence or (b) in the case of a Member or Former Member who is married at the time of his or her election, such Member or Former Member is not married or is legally separated at the time payment of his or her 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 or her 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 or her 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 or her Retirement or other termination of employment shall such Member or Former Member violate the provisions of his or her 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 or she 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 or her discharge by the Corporation or another Affiliated Corporation.

     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 or her 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 or her spouse or beneficiary has become bankrupt or has attempted to anticipate, alienate, sell, transfer, assign, pledge, encumber

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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 or her affairs because of illness or accident or because he or she 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.

     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.

     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

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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 or her duties under the Plan in good faith and in a prudent manner.

     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 or her 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

14

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 or her 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 or her own benefit or for his or her 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.

     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 or her 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 or her 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 or her 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 or her 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.

15

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

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

     Section 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.

16

SUPPLEMENTARY PENSION PLAN

APPENDIX A (as amended on March 28, 2003)

     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 or she 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 or she 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 or she was a Member; (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 or she was a Member; and (e) in the case of Charles Grimm, for the purpose of determining his Final Average Compensation under § 1.8, his compensation for the Plan Year ending July 31, 2003 shall be deemed to include a bonus of the greater of (i) 70% of the Base Salary payable to him for said Plan Year under his Employment Agreement dated November 15, 2001 as amended by Amendment dated July 16, 2002, or (ii) the Bonus Compensation in fact payable to him for said Plan Year under said Employment Agreement as so amended.

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.

EX-10.5

Exhibit 10.5

Note: Certain information has been omitted from this exhibit and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The locations of these omissions are indicated in the exhibit by the following markings: [**].

Pall Corporation
2200 Northern Blvd
East Hills, NY 11548

Attn: Mary Ann Bartlett

Dear Ms. Bartlett:

I am the holder of an option, granted on March 19, 2001 pursuant to the Company’s 1998 Stock Option Plan, to purchase 9052 shares of the Company’s common stock at a price of $22.09.

Please take notice that I hereby exercise my option to purchase 9052 of such shares. I enclose my check in the amount of $68,568.90 as partial payment of the shares hereby, which amount is computed as follows:

Number of shares		9052
Option price per share	$	22.09
Total purchase price	$	199,958.68
Market value at close of previous day 5/25/05	$	29.03
Total Market Value	$	262,779.55
Good faith loan value	$	131,389.78
(not to exceed 50% of the market value)
Balanced paid herewith		68,568.90

Donald Stevens  

EMPLOYEE 

/s/ DONALD STEVENS  

Employee Signature 

ADDRESS [**] 

Social Security# [**]

EX-10.6

Exhibit 10.6

Note: Certain information has been omitted from this exhibit and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The locations of these omissions are indicated in the exhibit by the following markings: [**].

MORTGAGE NOTE

$207,000.00	Mineola, New York
	March 2000

FOR VALUE RECEIVED, Roberto Perez and Astrid Perez, both residing at [**], promises to pay to PALL CORPORATION or order at 2200 Northern Boulevard, East Hills, New York or at such other place as may be designated in writing by the holder of this note, the principal sum of TWO HUNDRED SEVEN THOUSAND ($207,000.00) dollars with interest thereon to be computed from the date hereof, at the rate of -0- per centum per annum and to be paid as follows:

See Schedule A annexed hereto and made a part hereof.

IT IS HEREBY EXPRESSLEY AGREED, that the said principal sum secured by this note shall become due at the option of the holder thereof on the happening of any default or event by which, under the terms of the mortgage securing this note, said principal sum may or shall become due and payable; also, that all of the covenants, conditions and agreements contained in said mortgage are hereby made part of this instrument.

Presentment for payment, notice of dishonor, protest and notice of protest are hereby waived.

This note is spoured by a mortgage made by the maker to the payee of even date herewith, on property situate in the county of Suffolk, known as [**].

This note may not be changed or terminated orally.

/s/ ROBERTO PEREZ  

Roberto Perez 

/s/ ASTRID PEREZ  

Astrid Perez 

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Eric Krasnoff, certify that:

1.	I have reviewed this report on Form 10-Q of Pall Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 12, 2009

/s/ ERIC KRASNOFF
	Eric Krasnoff
	Chairman of the Board and      Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002

I, Lisa McDermott, certify that:

1.	I have reviewed this report on Form 10-Q of Pall Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 12, 2009

/s/ LISA MCDERMOTT
	Lisa McDermott
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Quarterly Report of Pall Corporation (the “Company”) on Form 10-Q for the quarterly period ending January 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eric Krasnoff, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to my knowledge:

     (i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 12, 2009

/s/ ERIC KRASNOFF
	Eric Krasnoff
	Chairman of the Board and      Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Quarterly Report of Pall Corporation (the “Company”) on Form 10-Q for the quarterly period ending January 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lisa McDermott, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to my knowledge:

     (i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

March 12, 2009

/s/ LISA MCDERMOTT
	Lisa McDermott
	Chief Financial Officer