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<SEC-DOCUMENT>0000897101-02-000531.txt : 20020807
<SEC-HEADER>0000897101-02-000531.hdr.sgml : 20020807
<ACCEPTANCE-DATETIME>20020807162049
ACCESSION NUMBER:		0000897101-02-000531
CONFORMED SUBMISSION TYPE:	S-8
PUBLIC DOCUMENT COUNT:		4
FILED AS OF DATE:		20020807
EFFECTIVENESS DATE:		20020807

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DONALDSON CO INC
		CENTRAL INDEX KEY:			0000029644
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564]
		IRS NUMBER:				410222640
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0731

	FILING VALUES:
		FORM TYPE:		S-8
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-97771
		FILM NUMBER:		02721869

	BUSINESS ADDRESS:	
		STREET 1:		1400 W. 94TH ST.
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55431
		BUSINESS PHONE:		6128873131

	MAIL ADDRESS:	
		STREET 1:		1400 W 94TH STREET
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55431
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>donaldson023856_s8.txt
<DESCRIPTION>DONALDSON COMPANY, INC. FORM S-8
<TEXT>
     As filed with the Securities and Exchange Commission on August 7, 2002

                                                     Registration No. 333-______

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              ---------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                        Under The Securities Act of 1933

                              ---------------------

                             DONALDSON COMPANY, INC.
             (Exact name of registrant as specified in its charter)

                    Delaware                                41-0222640
          (State or other jurisdiction                   (I.R.S. Employer
        of incorporation or organization)              Identification No.)

              1400 West 94th Street
             Minneapolis, Minnesota                           55431
    (Address of principal executive offices)                (Zip Code)

                             DONALDSON COMPANY, INC.
                        2001 MASTER STOCK INCENTIVE PLAN
                            (Full title of the plan)

                                Norman C. Linnell
                             Donaldson Company, Inc.
                              1400 West 94th Street
                          Minneapolis, Minnesota 55431
                     (Name and address of agent for service)

                                 (612) 887-3131
          (Telephone number, including area code, of agent for service)

                         CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===========================================================================================
                                             Proposed         Proposed
      Title of                               maximum          maximum
     securities             Amount           offering         aggregate        Amount of
       to be                 to be          price per         offering       registration
     registered           Registered         share(1)         price(1)            fee
===========================================================================================
<S>                    <C>                    <C>           <C>                 <C>
    Common Stock
 ($5 par value)(2)     6,850,000 shares       $33.12        $226,872,000        $20,873
===========================================================================================
</TABLE>

(1)      Estimated solely for the purpose of calculating the registration fee in
         accordance with Rule 457(h)(1) and (c) under the Securities Act of
         1933, as amended. The proposed maximum offering price is based upon the
         average of the high and low sale prices of such Common Stock as quoted
         on the New York Stock Exchange on August 1, 2002 for the 6,850,000
         shares of such Common Stock issuable pursuant to the Donaldson Company,
         Inc. 2001 Master Stock Incentive Plan.

(2)      Including Preferred Stock Purchase Rights, which are attached to and
         trade with the Common Stock.

<PAGE>


                                    PART II.

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference.
         ----------------------------------------

         The following documents which have been filed with the Securities and
Exchange Commission (the "Commission") by Donaldson Company, Inc. (the
"Company") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this Registration Statement:

         (a)      The Company's Annual Report on Form 10-K for the fiscal year
                  ended July 31, 2001;

         (b)      The Company's Quarterly Reports on Form 10-Q for the quarters
                  ended October 31, 2001, January 31, 2002 and April 30, 2002;

         (c)      The Company's Current Reports on Form 8-K filed on August 13,
                  2001, August 28, 2001, April 24, 2002 and June 14, 2002; and

         (d)      The description of the Company's Common Stock and the
                  Company's Preferred Stock Purchase Rights contained in any
                  Registration Statement of the Company filed under the Exchange
                  Act, and any amendment or report filed for the purpose of
                  updating such descriptions filed subsequent to the date of
                  this Registration Statement.

         All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities remaining unsold shall
be deemed to be incorporated by reference herein and to be a part hereof from
the respective dates of filing of such documents. Any statement contained herein
or in a document all or part of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.

                   Information Regarding Financial Statements
                   ------------------------------------------
           Incorporated by Reference into this Registration Statement
           ----------------------------------------------------------

         On April 19, 2002, we filed a Form 8-K reporting that on April 18,
2002, we had dismissed Arthur Andersen LLP as our independent public accountants
and engaged PricewaterhouseCoopers LLP to serve as our independent public
accountants for fiscal year 2002. Our consolidated balance sheet for the year
ended July 31, 2001, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the two years in the period
ended July 31, 2001, which are incorporated by reference in this registration
statement, were audited by Arthur Andersen. After reasonable efforts, we have
been unable to obtain Arthur Andersen's consent to incorporate by reference in
this registration statement their report on those audited financial statements.
Under these circumstances, Rule 437(a) under the Securities Act of 1933, as
amended, permits us to file this registration statement without such consent
from Arthur Andersen. The absence of such consent may limit recovery by
investors on certain claims, including the inability of investors to assert
claims against Arthur Andersen under Section 11 of the Securities Act for any
untrue statements of a material fact contained, or any omissions to state a
material fact required to be stated, in those audited financial statements. In
addition, the ability of Arthur Andersen to satisfy any claims (including claims
arising from Arthur Andersen's provision of auditing and other services to us)
may be limited as a practical matter due to recent events regarding Arthur
Andersen.

Item 4.  Description of Securities.
         --------------------------

         The description of the Company's Common Stock to be offered pursuant to
this Registration Statement has been incorporated by reference into this
Registration Statement as described in Item 3 of this Part II.


                                      II-1
<PAGE>


Item 5.  Interests of Named Experts and Counsel.
         ---------------------------------------

         Not applicable.

Item 6.  Indemnification of Directors and Officers.
         ------------------------------------------

         Section 145 of the Delaware General Corporate Law, as amended, provides
that, under certain circumstances, a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that the person is or was a director,
officer, employee or agent of the corporation, or is or was serving at its
request in such capacity in another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful.

         The Company's Bylaws provide that the officers and directors of the
Company shall be indemnified to the fullest extent permitted by the Delaware
Corporation Law, as amended from time to time.

         The Company maintains directors' and officers' liability insurance
which covers certain liabilities and expenses of the officers and directors of
the Company and covers the Company for reimbursement of payments to directors
and officers in respect of such liabilities and expenses.

Item 7.  Exemption from Registration Claimed.
         ------------------------------------

         No securities are to be reoffered or resold pursuant to this
Registration Statement.

Item 8.  Exhibits.
         ---------

           4.1      Donaldson Company, Inc. 2001 Master Stock Incentive Plan.

           4.2      Certificate of Incorporation of the Company as currently in
                    effect (incorporated by reference to Exhibit 3-A to the
                    Company's Form 10-Q Quarterly Report for the fiscal quarter
                    ended January 31, 1998 (SEC file number 1-7891)).

           4.3      Bylaws of the Company as currently in effect (incorporated
                    by reference to Exhibit 3-B to the Company's Form 10-Q
                    Quarterly Report for the fiscal quarter ended January 31,
                    1999 (SEC file number 1-7891)).

           4.4      Preferred Stock Amended and Restated Rights Agreement, dated
                    January 12, 1996 (incorporated by reference to Exhibit 4.1
                    to the Company's Form 8-K Report dated January 12, 1996 (SEC
                    file number 1-7891)).

           5.1      Opinion and Consent of Dorsey & Whitney LLP.

          23.2      Consent of Dorsey & Whitney LLP (included in Exhibit 5.1
                    above).

          24.1      Power of Attorney.

Item 9.  Undertakings.
         -------------

         (a) The undersigned registrant hereby undertakes:


                                      II-2
<PAGE>


                  (1) To file, during any period in which offers or sales are
         being made, a post-effective amendment to this registration statement:

                           (i) To include any prospectus required by Section
                  10(a)(3) of the Securities Act of 1933, as amended (the
                  "Securities Act");

                           (ii) To reflect in the prospectus any facts or events
                  arising after the effective date of the Registration Statement
                  (or the most recent post-effective amendment thereof) which,
                  individually or in the aggregate, represent a fundamental
                  change in the information set forth in the Registration
                  Statement. Notwithstanding the foregoing, any increase or
                  decrease in volume of securities offered (if the total dollar
                  value of securities offered would not exceed that which was
                  registered) and any deviation from the low or high end of the
                  estimated maximum offering range may be reflected in the form
                  of prospectus filed with the Securities and Exchange
                  Commission (the "Commission") pursuant to Rule 424(b) under
                  the Securities Act if, in the aggregate, the changes in volume
                  and price represent no more than a 20% change in the maximum
                  aggregate offering price set forth in the "Calculation of
                  Registration Fee" table in the effective Registration
                  Statement; and

                           (iii) To include any material information with
                  respect to the plan of distribution not previously disclosed
                  in the Registration Statement or any material change to such
                  information in the Registration Statement;

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the Registration Statement is on Form S-3, Form S-8, or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.

                  (2) That, for the purpose of determining any liability under
         the Securities Act, each such post-effective amendment shall be deemed
         to be a new registration statement relating to the securities offered
         therein, and the offering of such securities at that time shall be
         deemed to be the initial bona fide offering thereof.

                  (3) To remove from registration by means of a post-effective
         amendment any of the securities being registered which remain unsold at
         the termination of the offering.

         (b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefits plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

         (c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.


                                      II-3
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on the 6th day of
August, 2002.


                             DONALDSON COMPANY, INC.


                             By: /s/ William G. Van Dyke
                                 -----------------------------------------------
                                 William G. Van Dyke
                                 Chairman, President and Chief Executive Officer

         Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities indicated
on August 6, 2002.

           Signature                                Title
           ---------                                -----

/s/ William G. Van Dyke             Chairman, President and Chief Executive
- -------------------------------     Officer
       William G. Van Dyke          (PRINCIPAL EXECUTIVE OFFICER)


/s/ William M. Cook                 Senior Vice President, International and
- -------------------------------     Chief Financial Officer
         William M. Cook            (PRINCIPAL FINANCIAL OFFICER)


/s/ Thomas A. Windfeldt             Vice President, Controller and Treasurer
- -------------------------------     (PRINCIPAL ACCOUNTING OFFICER)
       Thomas A. Windfeldt


                *                           Director
- -------------------------------
     F. Guillaume Bastiaens

                                            Director
- -------------------------------
          Paul B. Burke

                *                           Director
- -------------------------------
         Janet M. Dolan

                *                           Director
- -------------------------------
        Jack W. Eugster

                *                           Director
- -------------------------------
       John F. Grundhofer

                *                           Director
- -------------------------------
      Kendrick B. Melrose

                *                           Director
- -------------------------------
       Paul David Miller

<PAGE>


                *                           Director
- -------------------------------
         Jeffrey Noddle

                *                           Director
- -------------------------------
        S. Walter Richey

                *                           Director
- -------------------------------
        Stephen W. Sanger


*By: /s/ Norman C. Linnell
     ----------------------
     Norman C. Linnell
     AS ATTORNEY-IN-FACT

<PAGE>


                                  EXHIBIT INDEX


 Exhibit                                                            Page
 -------                                                            ----

    4.1     Donaldson Company, Inc. 2001 Master Stock       Electronically Filed
            Incentive Plan.

    5.1     Opinion and Consent of Dorsey & Whitney LLP.    Electronically Filed

   23.2     Consent of Dorsey & Whitney LLP (included in
            Exhibit 5.1).

   24.1     Power of Attorney.                              Electronically Filed

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>3
<FILENAME>donaldson023856_ex4-1.txt
<DESCRIPTION>2001 MASTER STOCK INCENTIVE PLAN
<TEXT>
                                                                     EXHIBIT 4.1

                             DONALDSON COMPANY, INC.
                        2001 MASTER STOCK INCENTIVE PLAN


SECTION 1.        PURPOSE

         The purpose of the Plan is to promote the interests of the Company and
its stockholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors and non-employee directors
capable of assuring the future success of the Company, to offer such persons
incentives to put forth maximum efforts for the success of the Company's
business and to afford such persons an opportunity to acquire a proprietary
interest in the Company, thereby aligning the interests of such persons with the
Company's stockholders.

SECTION 2.        DEFINITIONS

         As used in the Plan, the following terms shall have the meanings set
forth below:

         (a)      "Affiliate" shall mean (i) any entity that, directly or
                  indirectly through one or more intermediaries, is controlled
                  by the Company and (ii) any entity in which the Company has a
                  significant equity interest, in each case as determined by the
                  Committee.

         (b)      "Award" shall mean any Option, Stock Appreciation Right,
                  Restricted Stock, Performance Award, Dividend Equivalent or
                  Other Stock-Based Award granted under the Plan.

         (c)      "Award Agreement" shall mean any written agreement, contract
                  or other instrument or document evidencing any Award granted
                  under the Plan.

         (d)      "Board" shall mean the Board of Directors of the Company.

         (e)      "Code" shall mean the Internal Revenue Code of 1986, as
                  amended from time to time, and any regulations promulgated
                  thereunder.

         (f)      "Committee" shall mean a committee of Directors designated by
                  the Board to administer the Plan. The Committee shall be
                  comprised of not less than such number of Directors as shall
                  be required to permit Awards granted under the Plan to qualify
                  under Rule 16b-3, and each member of the Committee shall be a
                  "Non-Employee Director" within the meaning of Rule 16b-3 and
                  an "outside director" within the meaning of Section 162(m) of
                  the Code. The Company expects to have the Plan administered in
                  accordance with the requirements for the award of "qualified
                  performance-based compensation" within the meaning of Section
                  162(m) of the Code.

         (g)      "Company" shall mean Donaldson Company, Inc., a Delaware
                  corporation, and any successor corporation.


                                       1
<PAGE>


         (h)      "Director" shall mean a member of the Board.

         (i)      "Dividend Equivalent" shall mean any right granted under
                  Section 6(e) of the Plan.

         (j)      "Eligible Person" shall mean any employee, officer, Director
                  (including any Non-Employee Director), consultant or
                  independent contractor providing services to the Company or
                  any Affiliate who the Committee determines to be an Eligible
                  Person.

         (k)      "Exchange Act" shall mean the Securities Exchange Act of 1934,
                  as amended.

         (l)      "Fair Market Value" shall mean, with respect to any property
                  (including, without limitation, any Shares or other
                  securities), the fair market value of such property determined
                  by such methods or procedures as shall be established from
                  time to time by the Committee. Notwithstanding the foregoing,
                  unless otherwise determined by the Committee, the Fair Market
                  Value of a Share as of a given date shall be, if the Shares
                  are then traded on the New York Stock Exchange, the closing
                  price of one Share as reported on the New York Stock Exchange
                  on such date or, if the New York Stock Exchange is not open
                  for trading on such date, on the most recent preceding date
                  when the New York Stock Exchange is open for trading.

         (m)      "Incentive Stock Option" shall mean an option granted under
                  Section 6(a) of the Plan that is intended to meet the
                  requirements of Section 422 of the Code or any successor
                  provision.

         (n)      "Limitation Amount" shall mean, with respect to any Plan Year,
                  one and one-half (1.50) percent of the Outstanding Shares.

         (o)      "Non-Employee Director" shall mean any Director who is not
                  also an employee of the Company.

         (p)      "Non-Qualified Stock Option" shall mean an option granted
                  under Section 6(a) of the Plan that is not intended to be an
                  Incentive Stock Option.

         (q)      "Option" shall mean an Incentive Stock Option or a
                  Non-Qualified Stock Option.

         (r)      "Other Stock-Based Award" shall mean any right granted under
                  Section 6(f) of the Plan.

         (s)      "Outstanding Shares" shall mean, with respect to any Plan
                  Year, the sum of the outstanding Shares, the outstanding Share
                  equivalents (as determined by the Company in the calculation
                  of earnings per share on a fully diluted basis) and Shares
                  held in the treasury of the Company, as reported in the Annual
                  Report on Form 10-K of the Company, as filed with the
                  Securities and Exchange Commission, for the most recent fiscal
                  year that ends during such Plan Year.

         (t)      "Participant" shall mean an Eligible Person designated to be
                  granted an Award under the Plan.


                                       2
<PAGE>


         (u)      "Performance Award" shall mean any right granted under Section
                  6(d) of the Plan.

         (v)      "Person" shall mean any individual, corporation, partnership,
                  association or trust.

         (w)      "Plan" shall mean the Donaldson Company, Inc. 2001 Master
                  Stock Incentive Plan, as amended from time to time, the
                  provisions of which are set forth herein.

         (x)      "Plan Year" shall mean a consecutive 12-month period ending on
                  December 31 of each year.

         (y)      "Reload Option" shall mean any Option granted under Section
                  6(a)(iv) of the Plan.

         (z)      "Restricted Stock" shall mean any Shares granted under Section
                  6(c) of the Plan.

         (aa)     "Restricted Stock Unit" shall mean any unit granted under
                  Section 6(c) of the Plan evidencing the right to receive a
                  Share (or a cash payment equal to the Fair Market Value of a
                  Share) at some future date.

         (bb)     "Rule 16b-3" shall mean Rule 16b-3 promulgated by the
                  Securities and Exchange Commission under the Securities
                  Exchange Act, or any successor rule or regulation.

         (cc)     "Share" or "Shares" shall mean shares of common stock, $5.00
                  par value per share, of the Company or such other securities
                  or property as may become subject to Awards pursuant to an
                  adjustment made under Section 4(c) of the Plan.

         (dd)     "Stock Appreciation Right" shall mean any right granted under
                  Section 6(b) of the Plan.

SECTION 3.        ADMINISTRATION

         (a)      POWER AND AUTHORITY OF THE COMMITTEE. The Plan shall be
                  administered by the Committee. Subject to the express
                  provisions of the Plan and to applicable law, the Committee
                  shall have full power and authority to: (i) designate
                  Participants; (ii) determine the type or types of Awards to be
                  granted to each Participant under the Plan; (iii) determine
                  the number of Shares to be covered by (or with respect to
                  which payments, rights or other matters are to be calculated
                  in connection with) each Award; (iv) determine the terms and
                  conditions of any Award or Award Agreement; (v) amend the
                  terms and conditions of any Award or Award Agreement and
                  accelerate the exercisability of Options or the lapse of
                  restrictions relating to Restricted Stock, Restricted Stock
                  Units or other Awards; (vi) determine whether, to what extent
                  and under what circumstances Awards may be exercised in cash,
                  Shares, other securities, other Awards or other property, or
                  canceled, forfeited or suspended; (vii) determine whether, to
                  what extent and under what circumstances cash, Shares,
                  promissory notes, other securities, other Awards, other
                  property and other amounts payable with respect to an Award
                  under the Plan shall be deferred either automatically or at
                  the election of the holder thereof or the Committee; (viii)
                  interpret and administer the Plan and any instrument or


                                       3
<PAGE>


                  agreement, including an Award Agreement, relating to the Plan;
                  (ix) establish, amend, suspend or waive such rules and
                  regulations and appoint such agents as it shall deem
                  appropriate for the proper administration of the Plan; (x)
                  establish any special rules for Eligible Persons, former
                  employees, or Participants located in any particular country
                  other than the United States, which such rules shall be set
                  forth in Appendices to the Plan and shall be deemed
                  incorporated into and form part of the Plan; and (xi) make any
                  other determination and take any other action that the
                  Committee deems necessary or desirable for the administration
                  of the Plan. Unless otherwise expressly provided in the Plan,
                  all designations, determinations, interpretations and other
                  decisions under or with respect to the Plan or any Award shall
                  be within the sole discretion of the Committee, may be made at
                  any time and shall be final, conclusive and binding upon any
                  Participant, any holder or beneficiary of any Award and any
                  employee of the Company or any Affiliate.

         (b)      DELEGATION. The Committee may delegate to one or more officers
                  of the Company or any Affiliate or a committee of such
                  officers, but only to the extent such officer or officers are
                  also members of the Board of Directors of the Company, the
                  authority, subject to such terms and limitations as the
                  Committee shall determine, to grant Awards to Eligible Persons
                  who are not officers or directors of the Company for purposes
                  of Section 16 of the Exchange Act. The Committee shall not
                  delegate its powers and duties under the Plan (i) with regard
                  to officers or directors of the Company or any Affiliate who
                  are subject to Section 16 of the Exchange Act or (ii) in such
                  a manner as would cause the Plan not to comply with the
                  requirements of Section 162(m) of the Code.

         (c)      POWER AND AUTHORITY OF THE BOARD OF DIRECTORS. Notwithstanding
                  anything to the contrary contained herein, the Board may, at
                  any time and from time to time, without any further action of
                  the Committee, exercise the powers and duties of the Committee
                  under the Plan.

SECTION 4.        SHARES AVAILABLE FOR AWARDS

         (a)      SHARES AVAILABLE. Subject to adjustment as provided in Section
                  4(c) of the Plan, the aggregate number of Shares that may be
                  issued under all Awards under the Plan in any Plan Year shall
                  not exceed the Limitation Amount; PROVIDED THAT, any Shares
                  with respect to which Awards may be issued, but are not
                  issued, under the Plan in any Plan Year shall be carried
                  forward and shall be available to be covered by Awards issued
                  in any subsequent Plan Year in which Awards may be issued
                  under the Plan. Shares to be issued under the Plan may be
                  either authorized but unissued Shares or Shares acquired in
                  the open market or otherwise. Any Shares that are used by a
                  Participant as full or partial payment to the Company of the
                  purchase price relating to an Award, or in connection with the
                  satisfaction of tax obligations relating to an Award, shall
                  again be available for granting Awards (other than Incentive
                  Stock Options) under the Plan. In addition, if any Shares
                  covered by an Award or to which an Award relates are not
                  purchased or are forfeited, or if an Award otherwise
                  terminates without delivery of any Shares, then the number of
                  Shares counted against the aggregate number of Shares
                  available


                                       4
<PAGE>


                  under the Plan with respect to such Award, to the extent of
                  any such forfeiture or termination, shall again be available
                  for granting Awards under the Plan.

         (b)      ACCOUNTING FOR AWARDS. For purposes of this Section 4, if an
                  Award entitles the holder thereof to receive or purchase
                  Shares, the number of Shares covered by such Award or to which
                  such Award relates shall be counted on the date of grant of
                  such Award against the aggregate number of Shares available
                  for granting Awards under the Plan.

         (c)      ADJUSTMENTS. In the event that the Committee shall determine
                  that any dividend or other distribution (whether in the form
                  of cash, Shares, other securities or other property),
                  recapitalization, stock split, reverse stock split,
                  reorganization, merger, consolidation, split-up, spin-off,
                  combination, repurchase or exchange of Shares or other
                  securities of the Company, issuance of warrants or other
                  rights to purchase Shares or other securities of the Company
                  or other similar corporate transaction or event affects the
                  Shares such that an adjustment is determined by the Committee
                  to be appropriate in order to prevent dilution or enlargement
                  of the benefits or potential benefits intended to be made
                  available under the Plan, then the Committee shall, in such
                  manner as it may deem equitable, adjust any or all of (i) the
                  number and type of Shares (or other securities or other
                  property) that thereafter may be made the subject of Awards,
                  (ii) the number and type of Shares (or other securities or
                  other property) subject to outstanding Awards and (iii) the
                  purchase or exercise price with respect to any Award;
                  provided, however, that the number of Shares covered by any
                  Award or to which such Award relates shall always be a whole
                  number.

         (d)      AWARD LIMITATIONS UNDER THE PLAN. No Eligible Person may be
                  granted any Award or Awards under the Plan, the value of which
                  Award or Awards is based solely on an increase in the value of
                  the Shares after the date of grant of such Award or Awards,
                  for more than 500,000 Shares (subject to adjustment as
                  provided for in Section 4(c) of the Plan), in the aggregate in
                  any calendar year, beginning with the calendar year commencing
                  on January 1, 2001. The foregoing annual limitation
                  specifically includes the grant of any Award or Awards
                  representing "qualified performance-based compensation" within
                  the meaning of Section 162(m) of the Code. Notwithstanding
                  anything to the contrary in this Section 4, but subject at all
                  times to the annual Limitation Amount, the number of Shares
                  available for (i) granting Incentive Stock Options under the
                  Plan in the aggregate shall not exceed 2,000,000, and (ii)
                  Restricted Stock, and Restricted Stock Units under the Plan,
                  shall not exceed 600,000, subject to adjustment as provided in
                  as provided in Section 4(c) of the Plan and subject to the
                  provisions of Section 422 or 424 of the Code or any successor
                  provision.

SECTION 5.        ELIGIBILITY

         Any Eligible Person shall be eligible to be designated a Participant.
In determining which Eligible Persons shall receive an Award and the terms of
any Award, the Committee may take into account the nature of the services
rendered by the respective Eligible Persons, their


                                       5
<PAGE>


present and potential contributions to the success of the Company or such other
factors as the Committee, in its discretion, shall deem relevant.
Notwithstanding the foregoing, an Incentive Stock Option may only be granted to
full or part-time employees (which term as used herein includes, without
limitation, officers and Directors who are also employees), and an Incentive
Stock Option shall not be granted to an employee of an Affiliate unless such
Affiliate is also a "subsidiary corporation" of the Company within the meaning
of Section 424(f) of the Code or any successor provision.

SECTION 6.        AWARDS

         (a)      OPTIONS. The Committee is hereby authorized to grant Options
                  to Participants with the following terms and conditions and
                  with such additional terms and conditions not inconsistent
                  with the provisions of the Plan as the Committee shall
                  determine:

                  (i)      EXERCISE PRICE. The purchase price per Share
                           purchasable under an Option shall be determined by
                           the Committee; PROVIDED, HOWEVER, that such purchase
                           price shall not be less than 100% of the Fair Market
                           Value of a Share on the date of grant of such Option.

                  (ii)     OPTION TERM. The term of each Option shall be fixed
                           by the Committee, but, with respect to any Incentive
                           Stock Option, shall in no event exceed 10 years from
                           the date on which such Incentive Stock Option is
                           granted.

                  (iii)    TIME AND METHOD OF EXERCISE. The Committee shall
                           determine the time or times at which an Option may be
                           exercised in whole or in part and the method or
                           methods by which, and the form or forms (including,
                           without limitation, cash, Shares, promissory notes,
                           other securities, other Awards or other property, or
                           any combination thereof, having a Fair Market Value
                           on the exercise date equal to the relevant exercise
                           price) in which, payment of the exercise price with
                           respect thereto may be made or deemed to have been
                           made.

                  (iv)     RELOAD OPTIONS. The Committee may grant Reload
                           Options, separately or together with another Option,
                           pursuant to which, subject to the terms and
                           conditions established by the Committee, the
                           Participant would be granted a new Option when the
                           payment of the exercise price of a previously granted
                           option is made by the delivery of Shares owned by the
                           Participant pursuant to Section 6(a)(iii) hereof or
                           the relevant provisions of another plan of the
                           Company, and/or when Shares are tendered or withheld
                           as payment of the amount to be withheld under
                           applicable income tax laws in connection with the
                           exercise of an Option, which new Option would be an
                           Option to purchase the number of Shares not exceeding
                           the sum of (A) the number of Shares so provided as
                           consideration upon the exercise of the previously
                           granted option to which such Reload Option relates
                           and (B) the number of Shares, if any, tendered or
                           withheld as payment of the amount to be withheld
                           under applicable tax laws in connection with the
                           exercise of


                                       6
<PAGE>


                           the option to which such Reload Option relates
                           pursuant to the relevant provisions of the plan or
                           agreement relating to such option. Reload Options may
                           be granted with respect to Options previously granted
                           under the Plan or any other stock option plan of the
                           Company or may be granted in connection with any
                           Option granted under the Plan or any other stock
                           option plan of the Company at the time of such grant.
                           Such Reload Options shall have a per share exercise
                           price equal to the Fair Market Value of one Share as
                           of the date of grant of the new Option. Any Reload
                           Option shall be subject to availability of sufficient
                           Shares for grant under the Plan. Shares surrendered
                           as part or all of the exercise price of the Option to
                           which it relates that have been owned by the optionee
                           less than six months will not be counted for purposes
                           of determining the number of Shares that may be
                           purchased pursuant to a Reload Option.

         (b)      STOCK APPRECIATION RIGHTS. The Committee is hereby authorized
                  to grant Stock Appreciation Rights to Participants subject to
                  the terms of the Plan and any applicable Award Agreement. A
                  Stock Appreciation Right granted under the Plan shall confer
                  on the holder thereof a right to receive upon exercise thereof
                  the excess of (i) the Fair Market Value of one Share on the
                  date of exercise (or, if the Committee shall so determine, at
                  any time during a specified period before or after the date of
                  exercise) over (ii) the grant price of the Stock Appreciation
                  Right as specified by the Committee, which price shall not be
                  less than 100% of the Fair Market Value of one Share on the
                  date of grant of the Stock Appreciation Right. Subject to the
                  terms of the Plan and any applicable Award Agreement, the
                  grant price, term, methods of exercise, dates of exercise,
                  methods of settlement and any other terms and conditions of
                  any Stock Appreciation Right shall be as determined by the
                  Committee. The Committee may impose such conditions or
                  restrictions on the exercise of any Stock Appreciation Right
                  as it may deem appropriate.

         (c)      RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The Committee is
                  hereby authorized to grant Restricted Stock and Restricted
                  Stock Units to Participants with the following terms and
                  conditions and with such additional terms and conditions not
                  inconsistent with the provisions of the Plan as the Committee
                  shall determine:

                  (i)      RESTRICTIONS. Shares of Restricted Stock and
                           Restricted Stock Units shall be subject to such
                           restrictions as the Committee may impose (including,
                           without limitation, a waiver by the Participant of
                           the right to vote or to receive any dividend or other
                           right or property with respect thereto), which
                           restrictions may lapse separately or in combination
                           at such time or times, in such installments or
                           otherwise as the Committee may deem appropriate.

                  (ii)     STOCK CERTIFICATES. Any Restricted Stock granted
                           under the Plan shall be evidenced by issuance of a
                           stock certificate or certificates, which certificate
                           or certificates shall be held by the Company until
                           the applicable restrictions lapse or are waived, or
                           the Shares are forfeited. Such certificate or
                           certificates shall be registered in the name of the
                           Participant who has been granted such Shares and
                           shall bear an appropriate legend


                                       7
<PAGE>


                           referring to the terms, conditions and restrictions
                           applicable to such Restricted Stock. Stock
                           certificates registered in the name of a Participant
                           with respect to grants of Restricted Stock shall be
                           delivered to such Participant promptly after the
                           applicable restrictions lapse or are waived. In the
                           case of Restricted Stock Units, no Shares shall be
                           issued at the time such Awards are granted. Upon the
                           lapse or waiver of restrictions and the restricted
                           period relating to Restricted Stock Units evidencing
                           the right to receive Shares, Shares shall be issued
                           to, and certificates representing such Shares shall
                           be registered in the name of, and delivered to, the
                           holder of the Restricted Stock Units.

                  (iii)    FORFEITURE. Except as otherwise determined by the
                           Committee, upon termination of employment (as
                           determined under criteria established by the
                           Committee) during the applicable restriction period,
                           all Shares of Restricted Stock and Restricted Stock
                           Units subject to restriction at such time shall be
                           forfeited and reacquired by the Company; provided,
                           however, that the Committee may, when it finds that a
                           waiver would be in the best interest of the Company,
                           waive in whole or in part any or all remaining
                           restrictions with respect to Shares of Restricted
                           Stock or Restricted Stock Units.

         (d)      PERFORMANCE AWARDS. The Committee is hereby authorized to
                  grant Performance Awards to Participants subject to the terms
                  of the Plan and any applicable Award Agreement. A Performance
                  Award granted under the Plan (i) may be denominated or payable
                  in cash, Shares (including, without limitation, Restricted
                  Stock), other securities, other Awards or other property and
                  (ii) shall confer on the holder thereof the right to receive
                  payments, in whole or in part, upon the achievement of such
                  performance goals during such performance periods as the
                  Committee shall establish. Subject to the terms of the Plan
                  and any applicable Award Agreement, the performance goals to
                  be achieved during any performance period, the length of any
                  performance period, the amount of any Performance Award
                  granted, the amount of any payment or transfer to be made
                  pursuant to any Performance Award and any other terms and
                  conditions of any Performance Award shall be determined by the
                  Committee.

         (e)      DIVIDEND EQUIVALENTS. The Committee is hereby authorized to
                  grant Dividend Equivalents to Eligible Persons under which the
                  Participant shall be entitled to receive payments (in cash,
                  Shares, other securities, other Awards or other property as
                  determined in the discretion of the Committee) equivalent to
                  the amount of cash dividends paid by the Company to holders of
                  Shares with respect to a number of Shares determined by the
                  Committee. Subject to the terms of the Plan and any applicable
                  Award Agreement, such Dividend Equivalents may have such terms
                  and conditions as the Committee shall determine.

         (f)      OTHER STOCK-BASED AWARDS. The Committee is hereby authorized
                  to grant to Participants subject to the terms of the Plan and
                  any applicable Award Agreement, such other Awards that are
                  denominated or payable in, valued in whole or in part


                                       8
<PAGE>


                  by reference to, or otherwise based on or related to, Shares
                  (including, without limitation, securities convertible into
                  Shares), as are deemed by the Committee to be consistent with
                  the purpose of the Plan. Shares or other securities delivered
                  pursuant to a purchase right granted under this Section 6(f)
                  shall be purchased for such consideration, which may be paid
                  by such method or methods and in such form or forms
                  (including, without limitation, cash, Shares, promissory
                  notes, other securities, other Awards or other property or any
                  combination thereof), as the Committee shall determine, the
                  value of which consideration, as established by the Committee,
                  shall not be less than 100% of the Fair Market Value of such
                  Shares or other securities as of the date such purchase right
                  is granted.

         (g)      GENERAL

                  (i)      CONSIDERATION FOR AWARDS. Awards shall be granted for
                           no cash consideration or for any cash or other
                           consideration as may be determined by the Committee
                           or required by applicable law.

                  (ii)     AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards
                           may, in the discretion of the Committee, be granted
                           either alone or in addition to, in tandem with or in
                           substitution for any other Award or any award granted
                           under any plan of the Company or any Affiliate other
                           than the Plan. Awards granted in addition to or in
                           tandem with other Awards or in addition to or in
                           tandem with awards granted under any such other plan
                           of the Company or any Affiliate may be granted either
                           at the same time as or at a different time from the
                           grant of such other Awards or awards.

                  (iii)    FORMS OF PAYMENT UNDER AWARDS. Subject to the terms
                           of the Plan and of any applicable Award Agreement,
                           payments or transfers to be made by the Company or an
                           Affiliate upon the grant, exercise or payment of an
                           Award may be made in such form or forms as the
                           Committee shall determine (including, without
                           limitation, cash, Shares; promissory notes, other
                           securities, other Awards or other property or any
                           combination thereof), and may be made in a single
                           payment or transfer, in installments or on a deferred
                           basis, in each case in accordance with rules and
                           procedures established by the Committee. Such rules
                           and procedures may include, without limitation,
                           provisions for the payment or crediting of reasonable
                           interest on installment or deferred payments or the
                           grant or crediting of Dividend Equivalents with
                           respect to installment or deferred payments.

                  (iv)     LIMITS ON TRANSFER OF AWARDS. No Award and no right
                           under any such Award shall be transferable by a
                           Participant otherwise than by will or by the laws of
                           descent and distribution; provided, however, that, if
                           so determined by the Committee, a Participant may, in
                           the manner established by the Committee, designate a
                           beneficiary or beneficiaries to exercise the rights
                           of the Participant and receive any property
                           distributable with respect to any Award upon the
                           death of the Participant; and provided, further,
                           that, except in the case of an Incentive Stock
                           Option, Awards may


                                       9
<PAGE>


                           be transferable as specifically provided in any
                           applicable Award Agreement or amendment thereto
                           pursuant to terms determined by the Committee. Except
                           as otherwise provided in any applicable Award
                           Agreement or amendment thereto (other than an Award
                           Agreement relating to an Incentive Stock Option),
                           pursuant to terms determined by the Committee, each
                           Award or right under any Award shall be exercisable
                           during the Participant's lifetime only by the
                           Participant or, if permissible under applicable law,
                           by the Participant's guardian or legal
                           representative. Except as otherwise provided in any
                           applicable Award Agreement or amendment thereto
                           (other than an Award Agreement relating to an
                           Incentive Stock Option), no Award or right under any
                           such Award may be pledged, alienated, attached or
                           otherwise encumbered, and any purported pledge,
                           alienation, attachment or encumbrance thereof shall
                           be void and unenforceable against the Company or any
                           Affiliate.

                  (v)      TERM OF AWARDS. The term of each Award shall be for
                           such period as may be determined by the Committee;
                           provided, however, that in the case of an Incentive
                           Stock Option, such Option shall not be exercisable
                           after the expiration of 10 years from the date such
                           Option is granted.

                  (vi)     RESTRICTIONS; SECURITIES EXCHANGE LISTING. All Shares
                           or other securities delivered under the Plan pursuant
                           to any Award or the exercise thereof shall be subject
                           to such restrictions as the Committee may deem
                           advisable under the Plan, applicable federal or state
                           securities laws and regulatory requirements, and the
                           Committee may cause appropriate entries to be made or
                           legends to be affixed to reflect such restrictions.
                           If any securities of the Company are traded on a
                           securities exchange, the Company shall not be
                           required to deliver any Shares or other securities
                           covered by an Award unless and until such Shares or
                           other securities have been admitted for trading on
                           such securities exchange.

SECTION 7.        AMENDMENT AND TERMINATION; CORRECTIONS

         (a)      AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
                  discontinue or terminate the Plan at any time; provided,
                  however, that, notwithstanding any other provision of the Plan
                  or any Award Agreement, without the approval of the
                  stockholders of the Company, no such amendment, alteration,
                  suspension, discontinuation or termination shall be made that,
                  absent such approval:

                  (i)      would violate the rules or regulations of the New
                           York Stock Exchange or any other securities exchange
                           that are applicable to the Company; or

                  (ii)     would cause the Company to be unable, under the Code,
                           to grant Incentive Stock Options under the Plan.

         (b)      AMENDMENTS TO AWARDS. Except as otherwise explicitly provided
                  herein, the Committee may waive any conditions of or rights of
                  the Company under any


                                       10
<PAGE>


                  outstanding Award, prospectively or retroactively. Except as
                  otherwise provided herein or in the Award Agreement, the
                  Committee may not amend, alter, suspend, discontinue or
                  terminate any outstanding Award, prospectively or
                  retroactively, if such action would adversely affect the
                  rights of the holder of such Award, without the consent of the
                  Participant or holder or beneficiary thereof

                  (i)      PROHIBITION ON OPTION REPRICING. Except as provided
                           in Section 4(c) hereof, no Option may be amended to
                           reduce its initial exercise price and no Option shall
                           be canceled and replaced with an Option or Options
                           having a lower exercise price, without the approval
                           of the stockholders of the Company.

         (c)      CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
                  Committee may correct any defect, supply any omission or
                  reconcile any inconsistency in the Plan or any Award in the
                  manner and to the extent it shall deem desirable to carry the
                  Plan into effect.

SECTION 8.        TAX WITHHOLDING

         (a)      Participants are responsible for the payment of all income
                  taxes, employment, social insurance, welfare and other taxes
                  under applicable law relating to any amounts deemed under the
                  laws of the country of their residency or of the organization
                  of the participating Affiliate which employs them to
                  constitute income arising out of participation in the Plan. In
                  order to comply with all applicable national, federal, state
                  or local income tax laws or regulations, the Company may take
                  such action as it deems appropriate to ensure that all
                  applicable national, federal, state or local payroll,
                  withholding, income or other taxes, which are the sole and
                  absolute responsibility of a Participant, are withheld or
                  collected from such Participant, and, by accepting an Award
                  pursuant to the terms of this Plan and an Award Agreement,
                  each Participant hereby authorizes the Company or the relevant
                  participating Affiliate to make the appropriate withholding
                  from the Participant's compensation. In order to assist a
                  Participant in paying all or a portion of the national,
                  federal, state and local taxes to be withheld or collected
                  upon exercise or receipt of (or the lapse of restrictions
                  relating to) an Award, the Committee, in its discretion and
                  subject to such additional terms and conditions as it may
                  adopt, may permit the Participant to satisfy such tax
                  obligation by (i) electing to have the Company withhold a
                  portion of the Shares otherwise to be delivered upon exercise
                  or receipt of (or the lapse of restrictions relating to) such
                  Award with a Fair Market Value equal to the amount of such
                  taxes or (ii) delivering to the Company Shares other than
                  Shares issuable upon exercise or receipt of (or the lapse of
                  restrictions relating to) such Award with a Fair Market Value
                  equal to the amount of such taxes. The election, if any, must
                  be made on or before the date that the amount of tax to be
                  withheld is determined.


                                       11
<PAGE>


SECTION 9.        GENERAL PROVISIONS

         (a)      NO RIGHTS TO AWARDS. No Eligible Person, Participant or other
                  Person shall have any claim to be granted any Award under the
                  Plan, and there is no obligation for uniformity of treatment
                  of Eligible Persons, Participants or holders or beneficiaries
                  of Awards under the Plan. The terms and conditions of Awards
                  need not be the same with respect to any Participant or with
                  respect to different Participants.

         (b)      AWARD AGREEMENTS. No Participant will have rights under an
                  Award granted to such Participant unless and until an Award
                  Agreement shall have been duly executed on behalf of the
                  Company and, if requested by the Company, signed by the
                  Participant.

         (c)      PLAN PROVISIONS CONTROL. In the event that any provision of an
                  Award Agreement conflicts with or is inconsistent in any
                  respect with the terms of the Plan as set forth herein or
                  subsequently amended, the terms of the Plan shall control.

         (d)      NO RIGHTS OF SHAREHOLDERS. Except with respect to Shares of
                  Restricted Stock as to which the Participant has been granted
                  the right to vote, neither a Participant nor the Participant's
                  legal representative shall be, or have any of the rights and
                  privileges of, a stockholder of the Company with respect to
                  any Shares issuable to such Participant upon the exercise or
                  payment of any Award, in whole or in part, unless and until
                  such Shares have been issued in the name of such Participant
                  or such Participant's legal representative without restriction
                  thereto.

         (e)      NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
                  in the Plan shall prevent the Company or any Affiliate from
                  adopting or continuing in effect other or additional
                  compensation arrangements, and such arrangements may be either
                  generally applicable or applicable only in specific cases.

         (f)      NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
                  construed as giving a Participant the right to be retained in
                  the employ of the Company or any Affiliate, nor will it affect
                  in any way the right of the Company or an Affiliate to
                  terminate such employment at any time, with or without cause.
                  In addition, the Company or an Affiliate may at any time
                  dismiss a Participant from employment free from any liability
                  or any claim under the Plan or any Award, unless otherwise
                  expressly provided in the Plan or in any Award Agreement.
                  Nothing in this Plan shall confer on any person any legal or
                  equitable right against the Company or any Affiliate, directly
                  or indirectly, or give rise to any cause of action at law or
                  in equity against the Company or an Affiliate. The Awards
                  granted hereunder shall not form any part of the wages or
                  salary of any Eligible Person for purposes of severance pay or
                  termination indemnities, irrespective of the reason for
                  termination of employment. Under no circumstances shall any
                  person ceasing to be an employee of the Company or any
                  Affiliate be entitled to any compensation for any loss of any
                  right or benefit under the Plan which such employee might
                  otherwise have enjoyed but for termination of employment,
                  whether such compensation is claimed by way of damages for
                  wrongful or unfair dismissal,


                                       12
<PAGE>


                  breach of contract or otherwise. By participating in the Plan,
                  each Participant shall be deemed to have accepted all the
                  conditions of the Plan and the terms and conditions of any
                  rules and regulations adopted by the Committee and shall be
                  fully bound thereby.

         (g)      GOVERNING LAW. The validity, construction and effect of the
                  Plan or any Award, and any rules and regulations relating to
                  the Plan or any Award, shall be determined in accordance with
                  the internal laws, and not the law of conflicts, of the State
                  of Delaware.

         (h)      SEVERABILITY. If any provision of the Plan or any Award is or
                  becomes or is deemed to be invalid, illegal or unenforceable
                  in any jurisdiction or would disqualify the Plan or any Award
                  under any law deemed applicable by the Committee, such
                  provision shall be construed or deemed amended to conform to
                  applicable laws, or if it cannot be so construed or deemed
                  amended without, in the determination of the Committee,
                  materially altering the purpose or intent of the Plan or the
                  Award, such provision shall be stricken as to such
                  jurisdiction or Award, and the remainder of the Plan or any
                  such Award shall remain in full force and effect.

         (i)      NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
                  create or be construed to create a trust or separate fund of
                  any kind or a fiduciary relationship between the Company or
                  any Affiliate and a Participant or any other Person. To the
                  extent that any Person acquires a right to receive payments
                  from the Company or any Affiliate pursuant to an Award, such
                  right shall be no greater than the right of any unsecured
                  general creditor of the Company or any Affiliate.

         (j)      OTHER BENEFITS. No compensation or benefit awarded to or
                  realized by any Participant under the Plan shall be included
                  for the purpose of computing such Participant's compensation
                  under any compensation-based retirement, disability, or
                  similar plan of the Company unless required by law or
                  otherwise provided by such other plan.

         (k)      NO FRACTIONAL SHARES. No fractional Shares shall be issued or
                  delivered pursuant to the Plan or any Award, and the Committee
                  shall determine whether cash shall be paid in lieu of any
                  fractional Shares or whether such fractional Shares or any
                  rights thereto shall be canceled, terminated or otherwise
                  eliminated.

         (l)      HEADINGS. Headings are given to the Sections and subsections
                  of the Plan solely as a convenience to facilitate reference.
                  Such headings shall not be deemed in any way material or
                  relevant to the construction or interpretation of the Plan or
                  any provision thereof.

SECTION 10.       EFFECTIVE DATE OF THE PLAN

         The Plan shall be effective as of the date of its approval by the
stockholders of the Company.


                                       13
<PAGE>


SECTION 11.       TERMS OF THE PLAN

         Awards shall only be granted under the Plan during the period beginning
on the effective date of the Plan and ending on December 31, 2011, unless the
Plan is terminated earlier pursuant to Section 7(a) of the Plan. However, unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may extend beyond the end of such 10-year period,
and the authority of the Committee provided for hereunder with respect to the
Plan and any Awards, and the authority of the Board of Directors of the Company
to amend the Plan, shall extend beyond the termination of the Plan.


                                       14

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>4
<FILENAME>donaldson023856_ex5-1.txt
<DESCRIPTION>OPINION RE: LEGALITY
<TEXT>
                                                                     EXHIBIT 5.1

                      [Letterhead of Dorsey & Whitney LLP]



                                 August 6, 2002




Donaldson Company, Inc.
1400 West 94th Street
Minneapolis, Minnesota 55431

                  Re: Registration Statement on Form S-8

Ladies and Gentlemen:

                  We have acted as counsel to Donaldson Company, Inc., a
Delaware corporation (the "Company"), in connection with a Registration
Statement on Form S-8 relating to the sale by the Company from time to time of
up to 6,850,000 shares of Common Stock, $5.00 par value, of the Company (the
"Shares"), initially issuable upon the exercise of stock options granted
pursuant to the Donaldson Company, Inc. 2001 Master Stock Incentive Plan (the
"Plan").

                  We have examined such documents and have reviewed such
questions of law as we have considered necessary and appropriate for the
purposes of our opinion set forth below. In rendering our opinion set forth
below, we have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures and the conformity to authentic
originals of all documents submitted to us as copies. As to questions of fact
material to our opinion, we have relied upon certificates of officers of the
Company and of public officials.

                  Based on the foregoing, we are of the opinion that the Shares
have been duly authorized and, upon issuance, delivery and payment therefor in
accordance with the terms of the Plan, will be validly issued, fully paid and
nonassessable.

                  Our opinion expressed above is limited to the laws of the
State of Delaware.

                  We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.


                                        Very truly yours,


                                        /s/ Dorsey & Whitney LLP

RAR

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-24.1
<SEQUENCE>5
<FILENAME>donaldson023856_ex24-1.txt
<DESCRIPTION>POWER OF ATTORNEY
<TEXT>
                                                                    EXHIBIT 24.1


                                POWER OF ATTORNEY


         Each of the undersigned hereby constitutes and appoints William G. Van
Dyke, William M. Cook and Norman C. Linnell, and each of them, the undersigned's
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their name, place and stead, for the purpose
of signing in the undersigned's name and on the undersigned's behalf as a
Director of Donaldson Company, Inc. ("Donaldson"), the Registration Statement on
Form S-8 of Donaldson to be filed under the Securities Act of 1933 for the
registration of up to 6,850,000 shares of Common Stock of Donaldson under the
Donaldson Company, Inc. 2001 Master Stock Incentive Plan and any and all
amendments (including post-effective amendments) to such Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that said attorneys-in-fact and agents or either of
them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.

         Dated as of August 2, 2002.


                                        /s/ F. Guillaume Bastiens
                                        ----------------------------------
                                             F. Guillaume Bastiaens


                                        ----------------------------------
                                             Paul B. Burke

                                        /s/ Janet M. Dolan
                                        ----------------------------------
                                             Janet M. Dolan

                                        /s/ Jack W. Eugster
                                        ----------------------------------
                                             Jack W. Eugster

                                        /s/ John F. Grundhofer
                                        ----------------------------------
                                             John F. Grundhofer

                                        /s/ Kendrick B. Melrose
                                        ----------------------------------
                                             Kendrick B. Melrose

                                        /s/ Paul David Miller
                                        ----------------------------------
                                             Paul David Miller

                                        /s/ Jeffrey Noddle
                                        ----------------------------------
                                             Jeffrey Noddle

                                        /s/ Walter Richey
                                        ----------------------------------
                                             S. Walter Richey

                                        /s/ Stephen W. Sanger
                                        ----------------------------------
                                             Stephen W. Sanger

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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