Exhibit 10.A



Exhibit 10.A


DONALDSON COMPANY, INC.

1980 MASTER STOCK COMPENSATION PLAN


I. GENERAL


Section 1.01 Purposes of the Plan.


          The
purposes of the 1980 Master Stock Compensation Plan are to further the long-term growth
earnings of Donaldson by offering stock options and performance awards as
long-term incentives in addition to current compensation to those officers and key employees of
Donaldson who will be largely responsible for such growth and to aid Donaldson in attracting
and retaining persons of outstanding ability.


Section
1.02 Definitions.


          For
all purposes of the Plan, the following terms shall have the meanings assigned to them, unless the context otherwise
requires:


	
 

	
 

	
 


	
 

	
(a)

	
“Plan”
 means this 1980 Master Stock Compensation Plan.


	
 

	
 

	
 


	
 

	
(b)

	
“Donaldson” means Donaldson
 Company, Inc. and its subsidiaries.


	
 

	
 

	
 


	
 

	
(c)

	
“Common
 Stock” means the Common Stock of Donaldson, par value $5.00 per share.


	
 

	
 

	
 


	
 

	
(d)

	
“Market
 Value” of Common Stock as of any date means the closing sales price on such date on
 the New York Stock Exchange, or if there was no sale on that date, on
 the next preceeding date on which a sale occurred.


	
 

	
 

	
 


	
 

	
(e)

	
“Committee” means the
 subcommittee of the Human Resources Committee of the Board of Directors appointed to administer the Plan.


	
 

	
 

	
 


	
 

	
(f)

	
“Change
 in Control”. A “Change in Control” of Donaldson shall have occurred if (i) any
 “person”, as such term is used in Sections 13(d) and 14(d) of the
 Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than
 Donaldson, any trustee or other fiduciary holding securities under an employee benefit plan
 of Donaldson or any corporation owned,
 directly or indirectly, by the stockholders of Donaldson in substantially the
 same proportions as their ownership of stock of Donaldson), either is
 or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of
 Donaldson representing 25% or more of the combined voting power of Donaldson’s
 then outstanding securities or purchases shares of Common Stock pursuant to a tender offer or exchange
 offer other than an offer by Donaldson (“Offer”) for all, or any part of, the
 outstanding shares of
















	
 

	
 

	
 


	
 

	
 

	
Common
 Stock, (ii) during any period of two consecutive years (not including any
 period prior to the execution of this Agreement), individuals who at the beginning
 of such period constitute the Board of Directors of Donaldson (the
 “Board”), and any new director (other than a director designated by a person
 who has entered into an agreement with Donaldson to effect a transaction
 described in clause (i), (iii) or (iv) of this subparagraph) whose election by the Board or
 nomination for election by Donaldson’s shareholders was approved by a vote of at
 least two-thirds (2/3) of the directors then still in office who either were directors
 at the beginning
 of the period or whose election or nomination for election was previously so
 approved, cease for any reason to constitute at least a majority thereof,
 (iii) the shareholders of Donaldson approve a merger or consolidation of
 Donaldson with any other corporation, other than (A) a merger or
 consolidation which would result in the voting securities of Donaldson outstanding
 immediately prior thereto continuing to represent (either by remaining
 outstanding or by being converted into voting securities of the surviving
 entity) more than 80% of the combined voting power of the voting securities
 of Donaldson or such surviving entity outstanding immediately after such
 merger or consolidation or (B) a merger or consolidation effected to
 implement a recapitalization of Donaldson (or similar transaction) in which
 no “person” (as hereinabove defined) acquires more than 25% of the combined voting power of
 Donaldson’s then outstanding
 securities or (iv) the shareholders of Donaldson approve a plan of complete liquidation of Donaldson or an
 agreement for the sale or disposition by Donaldson of all or substantially
 all of Donaldson’s assets or any
 transaction having a similar effect (the date upon which an event described
 in clause (i), (ii), (iii) or (iv) of this paragraph 1 (d) occurs shall be referred to herein as an “Acceleration
Date”).


	
 

	
 

	
 


	
 

	
 

	
Notwithstanding
 the foregoing, if an event first giving rise to a “potential change in control”
 involves a transaction proposed by the employee, and such proposed transaction results in a
 Change in Control hereunder (whether or not
 the transaction constituting such Change in Control is the same transaction the announcement of which first
 gave rise to a “potential change in
 control”), then such Change in Control shall be deemed to have not occurred
 with respect to the employee. For purposes of the Plan, a “potential change
 in control of Donaldson” shall be deemed to have occurred if (i) Donaldson
 enters into an agreement, the consummation of which would result in the
 occurrence of a Change in Control of Donaldson, (ii) any person
 (including Donaldson) publicly announces an intention to take or to consider taking actions which if
 consummated would constitute a Change in Control of Donaldson, (iii)
 Donaldson receives any written communication
 from any third party or parties, acting as principal or as authorized representative of a disclosed
 principal, which is publicly disclosed and proposes (or indicates a
 desire to engage in discussions relating to
 the possibility of or with a view toward) a transaction the consummation of which would result in the
 occurrence of a Change in Control, (iv) any person, other than a trustee or
 other fiduciary holding securities under an employee benefit plan of
 Donaldson (or a company owned, directly or
 indirectly, by the stockholders of Donaldson in
















	
 

	
 

	
 


	
 

	
 

	
substantially
 the same proportions as their ownership of stock of Donaldson), who is or
 becomes the beneficial owner, directly or indirectly, of securities of
 Donaldson representing 9.5% or more of the combined voting power of
 Donaldson’s then outstanding securities, increases his beneficial ownership
 of such securities by 5% or more over the percentage so owned by such person
 on the date hereof, or (v) the Board adopts a resolution to the effect that, for purposes of
 this Plan a potential change in control of Donaldson has occurred.





Section 1.03 Shares Subject to the Plan.


          Subject
to adjustments authorized by Section 1.05, an aggregate of 900,000 shares of Common Stock shall be subject to
issuance under the Plan. The shares to be delivered under the Plan may be
either authorized but unissued shares or shares held in the treasury of Donaldson.


          In
the event any options granted under the Plan shall terminate or expire for any
reason without having been exercised in full, the shares not purchased under
such options shall again
be available under the Plan.


          In the event restricted
shares issued pursuant to a performance award shall be forfeited to Donaldson
pursuant to the Plan, such shares shall again be available under the Plan.


Section 1.04 Administration of the Plan.


          The
Plan shall be administered by the Committee, consisting of not less than three directors of Donaldson. No director shall be
eligible to be a member of the Committee
if he is, or was at any time within one year prior to appointment to the Committee, eligible to participate in the Plan.


          Subject
to the provisions of the Plan, the Committee shall have full authority to:


	
 

	
 

	
 


	
 

	
(1)

	
Select
 the employees to participate in the Plan.


	
 

	
 

	
 


	
 

	
(2)

	
Determine the number of
 shares to be covered by options granted under the Plan and the terms of such options.


	
 

	
 

	
 


	
 

	
(3)

	
Determine the size and
 terms of performance awards, the performance periods and objectives, and
 range of achievement percentages.


	
 

	
 

	
 


	
 

	
(4)

	
Interpret,
 construe and implement the Plan.





          All
determinations of the Committee shall be by a majority of its members. Decisions and
determinations by the Committee shall be final.


Section 1.05 Adjustments Upon Changes in
Capitalization.


          In
the event of any change in the outstanding shares of Common Stock by reason of any stock
dividend or split, recapitalization, merger, consolidation, combination










of
shares or other corporate structure change, then, if the Committee shall
determine in its sole discretion that such change equitably requires an adjustment in
the maximum number
of shares of Common Stock which may be distributed under the Plan, the number
of shares subject to outstanding options and the option price, the number of
Common Stock then subject to restrictions, the performance objectives, or any
other feature
of the Plan, then such adjustments shall be made by the Committee. Any shares
issued on account of outstanding restricted shares shall be subjected to the
same restrictions as the shares
originally issued under the Plan.


Section 1.06 Effective Date.


          The
effective date of the Plan shall be the date upon which the Plan shall be approved by the shareholders of Donaldson.


Section 1.07 Termination of the Plan.


          Unless
sooner terminated pursuant to the terms hereof no options may be granted under
the Plan after November 1, 1998 and the last year which may be used to calculate a performance
award shall be the fiscal year ending on July 31, 1998.


Section 1.08 Amendment of Plan.


          The
Board of Directors of Donaldson may at any time terminate the Plan or from time to time amend or
revise the terms of the Plan or any part thereof without further action of the
shareholders; provided, however, that the Board of Directors may not, without
shareholder approval, adopt an amendment which would:


	
 

	
 

	
 


	
 

	
(a)

	
Increase the total number
 of shares which may be issued under the Plan except in connection with an adjustment pursuant to Section 1.05;


	
 

	
 

	
 


	
 

	
(b)

	
Permit
 the granting of any option at a purchase price less than 100% of market value
 on date of grant or reduce the valuation to be assigned to shares issued pursuant to a performance
 award.


	
 

	
 

	
 


	
 

	
(c)

	
Change the class of
 employees eligible to receive options or performance awards under the Plan; or


	
 

	
 

	
 


	
 

	
(d)

	
Extend
 the term of the Plan or any option granted thereunder.





          No
termination or amendment of the Plan may impair an outstanding option or performance award except pursuant to
Section 1.05 or deprive any employee of shares acquired through the
Plan.


Section 1.09 No Registration
Requirements.


          Donaldson
shall not be deemed by reason of issuance of any Common Stock under the Plan to
have any obligation to register such shares under the Securities Act of 1933, as amended, or maintain in effect any
registration of such shares. In addition, unless shares have been so
registered, all options and performance awards granted under the Plan shall be
on the condition that the acquisition of shares thereunder shall be










for
investment purposes only and the employees acquiring the shares must bear the economic risk of the
investment for an indefinite period of time since the shares so acquired cannot be sold unless they are
subsequently registered or an exemption from such registration is available.


Section 1.10 Employment.


          Nothing
in the Plan and no grant of an option or performance award shall be deemed to grant any right
of continued employment to a participating employee or to limit or waive any
rights of Donaldson to terminate such employment at any time, with or without cause.


Section 1.11 Rights as Shareholders.


          A
participating employee shall have no rights whatsoever as a shareholder of
Donaldson with respect to any shares covered by an option or performance award
until the
date of issuance of a stock certificate pursuant to the terms of such option or
performance
award.


Section 1.12 Withholding of Tax.


          Each
participant, as a condition precedent to the issuance of shares hereunder, shall make arrangements with Donaldson for payment
or withholding of the amount of any tax required by any government authority to
be withheld and paid by Donaldson to such
government authority for the account of the participant.


Section 1.13 Reorganization.


          In
the event of a reorganization, merger or consolidation of Donaldson with one or more corporations in
which Donaldson is not the surviving corporation, the Committee or the Board of Directors shall
take the appropriate action described in (a) or (b) or both:


	
 

	
 

	
 


	
 

	
(a)

	
Make
 appropriate provision for the equitable protection of outstanding options, performance awards and Restricted
 Performance Shares which are still subject
 to restrictions granted under the Plan by the substitution on an equitable
 basis of the securities of the corporation surviving the reorganization, merger or consolidation which
 will be issued with respect to Common Stock.


	
 

	
 

	
 


	
 

	
(b)

	
Provide that all
 outstanding options and performance awards shall be immediately exercisable in full and that all restrictions with respect
 to Restricted Performance Shares shall lapse.





Section
1.14 Change in Control.


     In
the event of a Change in Control of Donaldson:


	
 

	
 

	
 


	
 

	
(a)

	
any outstanding options
 granted under the Plan not previously vested and exercisable shall become
 fully vested and exercisable and shall remain
















	
 

	
 

	
 


	
 

	
 

	
exercisable
 thereafter until they are either exercised or expire by their terms;


	
 

	
 

	
 


	
 

	
(b)

	
performance objectives
 applicable to Awards granted under the Plan shall be deemed to have been met;
 and


	
 

	
 

	
 


	
 

	
(c)

	
the restrictions
 applicable to any Restricted Performance Shares awarded under the Plan shall
 lapse and such shares shall become fully vested.





          Without
limiting the foregoing, as soon as practicable following the occurrence of a
Change in Control, with the prior consent of the participant, the Committee
shall pay to such participant the value of his outstanding options, Awards and
Restricted Performance Shares, in the form of cash or shares of Common Stock (as
determined by the Committee), based upon the Market Value of Common Stock on the date
on which the Change in Control
occurs.


II. STOCK OPTIONS


Section 2.01 Grant of Stock Options.


          Any
employee (including officers and employee directors) regularly employed on a salaried basis by Donaldson who shall be earning
compensation in excess of $30,000 shall be eligible to receive options
hereunder. No option may be granted to any employee
who owns more than 5% of the Common Stock. Any employee who has been granted a performance award or option under
this Plan or under any other stock option plan of Donaldson may be granted
additional options hereunder.


          Options
shall be evidenced by written stock option agreements consistent with the terms
of the Plan which shall be executed by Donaldson and the employee. The agreements, in such form
as the Committee shall from time to time approve, shall contain the following
terms and conditions:


	
 

	
 

	
 


	
 

	
(a)

	
Time of
 Exercise. An
 employee may exercise an option at such time or times as determined by the Committee at the time of the grant;
 provided, however, that all rights
 to exercise an option shall expire not less than ten years after the date
 such option is granted.


	
 

	
 

	
 


	
 

	
(b)

	
Purchase Price. The purchase price per share of Common Stock
 deliverable upon the exercise
 of an option shall be determined by the Committee at the time of grant, but shall not be less than 100%
 of the Market Value of the shares
 on the date the option is granted.





          In
addition, each employee shall agree to such other terms, provisions and conditions consistent with the Plan as may be
determined by the Committee.


Section 2.02 Exercise of Options.


          To
exercise an option in whole or in part, the employee shall give written notice to Donaldson’s Treasurer
at the principal offices of Donaldson of the exercise of the option, stating the
number of shares with respect to which the employee is so










	
 

	
 

	
 


	
 

	
 

	
upon
 the exercise of the option shall be determined by the Committee at the time of grant, but
 may not be less than 100% of the fair market value of the stock on the
 date the option is granted.


	
 

	
 

	
 


	
 

	
(c)

	
Prior Options. Incentive
stock options granted under the Plan shall not be exercisable while there is outstanding (within the meaning of the
subsection (c) (7) of Section 422A
of the Internal Revenue Code) any incentive stock option which was granted by Donaldson (or any
parent or predecessor corporation
thereof) to the employee before the granting of the option in question. 


	
 

	
 

	
 


	
 

	
(d)

	
Such
 other terms, provisions and conditions consistent with the Plan and not in
 conflict with Section 422A of the Internal Revenue Code as may be determined by the
 Committee.





          In
the case of an incentive stock option granted after December 31, 1980, the
aggregate fair market value (determined as of the time the option is granted)
of the stock for which any employee may be granted incentive stock options in
any calendar year (under all
such plans of Donaldson and any parent corporation) shall not exceed $100,000 plus any unused limit carryover to such
year within the meaning of subsection
(c)(4) of Section 422A of the Internal Revenue Code.


Section 2.06 Restoration (“Reload”)
Options.


          The
Committee may grant “reload” options pursuant to which, subject to the, terms and conditions established by the
Committee and any applicable requirements of Rule
16b-3 or any other applicable law, the employee would be granted a new option when
the payment of the exercise price of a previously granted option is made by the
delivery or attestation to ownership
of Common Stock owned by the employee, as described in Section 2.02 hereof, which new option (i) would be an option
to purchase the number of shares provided as consideration for, or withheld to
pay taxes upon, the exercise of the
previously granted option and (ii) would have a per share exercise price equal to the Market Value as of the date of grant
of the new option. “Reload” options may be granted with respect to options
previously granted under the Plan or in connection with any option at the time of grant of such option.


III. PERFORMANCE AWARDS


Section 3.01 Grant of Performance Awards.


          The
Committee will select as participants for performance awards under the Plan (the “Award”), from key executive full time
salaried employees, a limited number of persons who are in a position to enhance the growth and profitability of
Donaldson operations directly and
significantly. No performance award may be granted to any employee who owns more than 5% of the Common Stock.
Awards shall be granted in terms of
dollars, to such participants in such amounts as the Committee shall determine in its sole discretion. At the time of granting an
Award, the Committee shall select a performance
period, which shall be one or more fiscal years of the Company, and shall
select a performance objective for such period. The performance objective shall
be










exercising
and accompanying such notice with full payment of the exercise price for such number of shares. Payment of the
exercise price may be made in cash or, with the consent of the Committee, in whole or in part in Common Stock valued at
the Market Value on the day preceding
the date of exercise. Subject to rules established by the Committee, the amount of any tax required to be
paid or withheld pursuant to Section 1.12
may be satisfied by Donaldson withholding shares of Common Stock issued on
exercise having a Market Value on the day preceding the date of exercise equal
to such taxes; provided, that the number of shares so withheld shall be rounded
up to avoid the necessity of issuing
fractional shares.


Section 2.03 Effect of Termination of
Employment or Death on an Option.


          If
the holder of an option shall cease to be employed by Donaldson for any reason other than death, he may, but only within the five
years next succeeding such cessation of
employment in the case of retirement or within the one year next succeeding
such cessation of employment in any
other case, exercise the option but only to the extent of the exercise rights which had accrued at the date
of cessation of employment. In the event
the holder of an option dies while employed by Donaldson or within an extended
period following cessation of employment as provided in the preceding sentence,
such option may be exercised within
two years after the date of death, but only to the extent of the number of shares purchasable by such
employee at the time such employee ceased
to be an employee whether by death or otherwise, by such employee’s estate or
by the person or persons who acquire the right to exercise such option by
bequest, inheritance or otherwise by reason of such death. The foregoing
provisions of this Section 2.03 are limited in the respect that no option shall
be exercisable after the expiration
of the stated term of the option.


Section 2.04 Non-Transferability of
Options.


          Stock
options are not transferable by an employee other than by will or the laws of
descent and distribution. During the employee’s lifetime, stock options may be exercised only by such employee.


Section 2.05 Incentive Stock Options.


          At
the discretion of the Committee, it is intended that options granted under the Plan may be incentive
stock options in compliance with Section 422A of the Internal Revenue Code.


          Incentive
stock options shall be evidenced by written agreements consistent with the
terms of the Plan which shall be executed by Donaldson and by the employee. The
agreements, in such form as the Committee shall from time to time approve,
shall contain the following terms and conditions.


	
 

	
 

	
 


	
 

	
(a)

	
Time of
 Exercise. An
 employee may exercise the option at such time or times as determined by the Committee at the time of the grant;
 provided, however, that all rights
 to exercise the option shall expire 10 years after the date such
 option is granted.


	
 

	
 

	
 


	
 

	
(b)

	
Purchase
 Price. The purchase
 price per share of common stock deliverable
















expressed
in terms of consolidated primary net earnings per share of Donaldson. When
granting an Award, the Committee shall establish a range of percentage payments
to be applied
to the Award based on relative achievement of the performance objective over the performance period.
The Award shall be subject to increase, or decrease through forfeiture, depending
upon the percentage achievement of the performance objective over the performance
period (the “Adjusted Award”). The Committee may confer and consult with Donaldson
management in selecting performance objectives, but the Committee has the sole
and final discretion in such selection. The Committee may select a performance
period which commences prior to the date of the Award.


Section 3.02 Form and Timing of Payment
of Performance Awards.


          Payments
to the participants shall normally be one-half in cash and one-half in shares
of Common Stock. However, the Committee may authorize payments in other combinations of cash and shares or all in cash or
all in shares.


          The
number of shares of Common Stock representing the stock portion of 100%
achievement of the performance objective may be issued as Restricted
Performance Shares at the time of the Award. For purposes of this Section 3.02,
Restricted Performance
Shares shall be valued at the Market Value on the date of the Award. No cash portion of an Award
shall be paid until after the performance period and the determination of the
Adjusted Award.


          Promptly
after the audited financial statements for the last fiscal year of the performance period are
available, the Committee shall determine the percentage achievement of the
performance objective and any adjustments to be made to the amount of the Award. As
soon as practicable thereafter, the cash portion of the Adjusted Award shall be
determined and paid. The final number of shares of Common Stock included in the
Adjusted Award shall be determined and the restrictions shall lapse on the Restricted
Performance Shares covered by the Adjusted Award. Any Restricted Performance
Shares issued in excess of the stock portion of the Adjusted Award shall be
forfeited to the Company. Any additional shares of Common Stock required by the
Adjusted
Award shall be issued, valued at the Market Value on the last day of the performance period.


Section 3.03 Restricted Performance
Shares.


          Restricted
Performance Shares issued pursuant to the Performance Share Plan shall be subject to such restrictions as shall be
determined by the Committee. The shares may not be sold, pledged, assigned or
otherwise transferred until the restrictions imposed by the Committee shall
have been lifted or shall have expired by their terms. Participants will be entitled to receive any cash
dividends paid on and to vote Restricted Performance Shares registered in their
names. The Committee may impose such other restrictions on any shares issued
pursuant to the Plan as it may deem advisable; provided that no such restriction will retroactively affect shares
already issued. All certificates evidencing Restricted Performance
Shares shall bear an appropriate legend restricting transfer during the
applicable restriction period and shall be held by Donaldson until such restrictions lapse.










Section 3.04 Determination of
Consolidated Primary Net Earnings Per Share.


          Consolidated
primary net earnings per share to be used in setting performance objectives and
measuring achievement thereof shall be based on the consolidated primary net
earnings per share of the Company and its consolidated subsidiaries as reported in the audited consolidated statement of
earnings for the applicable fiscal year(s).
However, for such purpose, the Committee may make adjustments in the consolidated primary net earnings per share to
adjust for the effect of extraordinary items on earnings per share during
a performance period.


Section 3.05 Effect of Termination of
Employment on a Performance Award.


          In
the event a participant voluntarily ceases to perform executive duties for Donaldson during the
performance period, any right or entitlement to or in the Award, including Restricted
Performance Shares which are still subject to restrictions, shall be forfeited
upon such termination and returned to Donaldson. If a participant ceases to perform executive duties
by reason of death, disability, retirement after age 65 or discharge otherwise than
for cause, the Award shall be adjusted and settled on the basis of the number of full
calendar months elapsed since the start of the performance period divided by the total
number of months in the start of the performance period divided by the total number of
months in the performance period times the performance percentage based upon a
projection of the rate at which the performance objective has been met as of the date on which the
participant ceases to perform such duties. Such rate shall be determined from
Donaldson’s financial statements through the fiscal quarter immediately preceding or ending on
the date of such cessation of duties.


          “Cause”
is defined to mean gross negligence, willful misconduct, refusal to carry out
an order of a superior or any disloyal action inimical to Donaldson.


rfv1189

10/93