Document:

Exhibit
 10-P

2001
 MASTER STOCK INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT 

        This
 Stock Option Award
Agreement (the “Agreement”) is made as of this xx day of xxxx, by and
between Donaldson Company, Inc., a Delaware
corporation (together with its subsidiaries, “Donaldson”) and
«FIRSTNAME» «INITIAL»
«LASTNAME», an employee of Donaldson (“Employee”). 

        Donaldson
 has adopted the
2001 Master Stock Incentive Plan (the “Plan”) which permits issuance of
stock options for the purchase of shares of
Common Stock of Donaldson. Donaldson is now granting this option under
the Plan, and in consideration of the Employee’s and
Donaldson’s covenants in this Agreement. Capitalized terms not defined
below should have the meaning defined for such term in
the Plan. 

        1.   Grant
of
 Option.   Donaldson grants Employee the right and
option (the “Option”) to purchase all or any
part of an aggregate of «NUMBER» («SHARES») shares of Donaldson’s Common
 Stock, par value $5.00 per
share (“Shares”), at the Option purchase price of $xx.xx per share
subject to the terms and conditions in this Agreement
and in the Plan. A copy of the Plan will be furnished upon request of
Employee. The date of grant is xxxx. The Option terminates
at the close of business ten (10) years from the date of grant or at an
earlier time period specified in this Agreement.

        2.   Vesting
of
 Option Rights.   The Option is fully vested and may
be exercised by Employee from and after the date of
grant as to any or all of the Shares. 

        3.   Exercise
of
 Option after Death or Termination of Employment.   The
 Option shall terminate and may no longer be exercised
if Employee ceases to be employed by Donaldson, except that: 

	 
 	        (a)   If
Employee’s
 employment is terminated for any reason, voluntary or involuntary,
other than for Employee’s death or
disability (as set forth in Section 3(b)) or normal retirement (as set
forth in Section 3(c)), Employee may at any time within a
period of one (1) month after such termination exercise the Option to
the extent the Option was exercisable by Employee on the
date of the termination of Employee’s employment. 

	 
 	        (b)   If
Employee
 shall die while the Option is still exercisable according to its terms
and Employee shall not have fully exercised the
Option, such Option may be exercised at any time within thirty-six (36)
months after Employee’s death by the personal
representatives or administrators of Employee, as applicable, or by any
person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, to the extent
of the full number of shares Employee was entitled to
purchase under the Option on the date of death. 

 
 

	 
 	        (c)   If
employment
 is terminated because Employee has become disabled (within the meaning
of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the “Code”)) while in the employ of Donaldson and
Employee shall not have fully exercised the
Option, such Option may be exercised at any time within thirty-six (36)
months after Employee’s date of termination of
employment for disability by Employee, personal representatives or
administrators, or guardians of Employee, as applicable, to the
extent of the full number of shares Employee is entitled to purchase
under the Option. Employee shall continue to have exercise
rights accrue during such thirty-six (36) month period according to the
vesting schedule set forth in Section 2. 

	 
 	        (d)   Employee,
in
 the event of normal retirement on or after age 55, shall continue to
have the ten (10) year term to exercise this Option set
forth in Section 1 and shall continue to have exercise rights accrue
according to the vesting schedule set forth in Section 2.

        4.   Method
of
 Exercise of Option.   The Option may be exercised
only within the Option period by serving written notice of
exercise on Donaldson at its principal office which is as of this date
located at 1400 W. 94th Street, Bloomington,
Minnesota, Attention: Treasurer. The notice must state the number of
shares being exercised and include payment in full of the
purchase price. Payment of the purchase price shall be made in cash or,
with the approval of Donaldson (which may be given in its
sole discretion), in Common Stock of Donaldson having a fair market
value equal to the full purchase price of the shares being
acquired or a combination of cash and such shares. For these purposes,
the fair market value of Donaldson’s Common Stock as
of any date shall be as reasonably determined by Donaldson. 

        5.   Donaldson’s
Repurchase
 Right During Initial Three-Year Period.   If
Employee’s employment with Donaldson is terminated
for any reason whatsoever prior to xxxx (other than for death,
disability or normal retirement as defined in Section 3 or a
termination resulting from a Change in Control as defined in Section 7),
 then, in the event that Employee exercises this Option
within the period beginning six (6) months prior to such termination and
 ending on xxxx (the “Repurchase Period”),
Donaldson shall have the right and option in its sole discretion to
repurchase from Employee, and Employee agrees to sell to
Donaldson the Shares purchased by Employee upon the exercise of this
Option within the Repurchase Period for a purchase price
equal to the price paid by Employee for the Shares. Donaldson shall
notify Employee of its election to repurchase the Shares
within ninety (90) days following Employee’s termination of employment
within the Repurchase Period. Within thirty (30) days
of demand by Donaldson, Employee shall deliver to Donaldson either (i)
the stock certificates representing the number of Shares
that Donaldson has elected to repurchase and, in that event, Donaldson
shall pay to Employee the purchase price as provided above,
or (ii) at the election of Donaldson, in lieu of repurchasing such
shares, Donaldson shall have the right to collect from Employee
any gain received by Employee pursuant to the exercise of this Option
during the Repurchase Period. The gain on any exercise of
the Option shall be determined by multiplying the number of shares
purchased pursuant to the Option times the excess of the fair
market value of a Share on the date of exercise (without regard to any
subsequent increase or decrease in the fair market value)
over the exercise price. The fair market value of Donaldson’s Common
Stock as of any date shall be as reasonably determined
by Donaldson. Donaldson also shall have the right to set-off any amounts
 due to the Employee by Donaldson 

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under any plan,
contract or arrangement against the Employee’s
obligations to deliver cash or Shares under this Section 5. 

        6.   Forfeiture
of
 Option and Option Gain Resulting from Certain Activities.  

	 
 	        (a)   If,
at
 any time that (i) is within two (2) years after the date that Employee
has exercised the Option or (ii) within two (2) years
after the date of the termination of Employee’s employment with
Donaldson for any reason whatsoever while an option agreement
under the Plan is in effect, whichever is longer, Employee engages in
any Forfeiture Activity (as defined below) then (A) the
Option shall immediately terminate effective as of the date any such
activity first occurred, and (B) any gain received by
Employee pursuant to the exercise of this Option must be paid to
Donaldson within thirty (30) days of demand by Donaldson. The
gain on any exercise of the Option shall be determined by multiplying
the number of shares purchased pursuant to the Option times
the excess of the fair market value of a share of Donaldson’s Common
Stock on the date of exercise (without regard to any
subsequent increase or decrease in the fair market value) over the
exercise price. The fair market value of Donaldson’s
Common Stock as of any date shall be as reasonably determined by
Donaldson. 

	 
 	        (b)   Employee
shall
 be deemed to have engaged in a Forfeiture Activity if Employee (i)
directly or indirectly engages in any business activity
on his or her own behalf or as a partner, shareholder, director,
trustee, principal, agent, employee, consultant or otherwise of
any person or entity which is in any respect in competition with or
competitive with Donaldson, or solicits, entices or induces
any employee or representative of Donaldson to engage in any such
activity, (ii) directly or indirectly solicits, entices or
induces (or assists any other person or entity in soliciting, enticing
or inducing) any customer or potential customer (or agent,
employee or consultant of any customer or potential customer) with whom
Employee had contact in the course of his or her
employment with Donaldson to deal with a competitor of Donaldson, or
(iii) fails to hold in a fiduciary capacity for the benefit
of Donaldson all confidential information, knowledge and data, including
 customer lists and information, business plans and
business strategy (“Confidential Data”) relating in any way to the
business of Donaldson for so long as such
Confidential Data remains confidential. 

	 
 	        (c)   If
any
 court of competent jurisdiction shall determine that this forfeiture
provision is invalid in any respect, the court so holding
may limit such covenant either or both in time, in area or in any other
manner which the court determines such that the covenant
shall be enforceable against Employee. Employee shall acknowledge that
the remedy of law for any breach of this covenant not to
compete will be inadequate, and that Donaldson shall be entitled, in
addition to any remedy of law, to preliminary and permanent
injunctive relief. 

        7.   Exercisability
upon
 Change in Control.   In the event of a “Change in
Control” of Donaldson, any outstanding Options
granted under this Agreement shall no longer be subject to Section 5 and
 shall remain exercisable thereafter until they are either
exercised or expire by their terms. The term “Change in Control” shall
have the following meaning assigned to it in this
Agreement. A “Change in Control” of Donaldson shall have occurred if (i)
 any “person” as such 

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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 shareholders 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 30%
or more of the combined voting power of Donaldson’s then outstanding
securities, (ii) during any period of two (2)
consecutive years, 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, unless the approval of the election or
nomination for election of such new directors was in connection with an
actual or threatened election or proxy contest, (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 30% 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 of Donaldson of all or
substantially all of Donaldson’s assets or any transaction
having a similar effect. 

        8.   Miscellaneous.
  

	 
 	        (a)   Neither
the
 Plan nor this Agreement shall (i) be deemed to give any individual a
right to remain an employee of Donaldson, (ii) restrict
the right of Donaldson to discharge any employee, with or without cause,
 or (iii) be deemed to be a written contract of
employment. Employee shall have none of the rights of a shareholder with
 respect to shares subject to the Option until such shares
shall have been issued to Employee upon exercise of the Option. 

	 
 	        (b)   The
exercise
 of all or any parts of the Option shall only be effective at such time
that the sale of shares of Common Stock pursuant
to such exercise will not violate any state or federal securities or
other laws. 

	 
 	        (c)   The
Option
 may not be transferred, except by will or the laws of descent and
distribution to the extent provided in subsection 3(b),
and during Employee’s lifetime the Option is exercisable only by
Employee, provided, however, that notwithstanding the above,
this Option shall be transferable by Employee to immediate family
members and

4 

	 
 	related
 estate planning entities designated in a stock transfer
form approved by Donaldson and delivered to Donaldson as provided in
Section 4 for written notice. 

	 
 	        (d)   It
is
 understood and agreed that the Option price is the per share fair
market value of such shares on the date of this Agreement.
The Option is not intended to be an Incentive Stock Option within the
meaning of Section 422 of the Code. The Option is issued
pursuant to the Plan and is subject to its terms. 

	 
 	        (e)   If
there
 shall be any change in the Common Stock subject to the Option through
merger, consolidation, reorganization,
recapitalization, dividend or other distribution, stock split or other
similar corporate transaction or event of Donaldson,
appropriate adjustments shall be made by Donaldson in the number of
shares and the price per share of the shares subject to the
Option in order to prevent dilution or enlargement of the Option rights
granted hereunder; provided, however, that the number of
shares subject to the Option shall always be a whole number. 

	 
 	        (f)   In
order
 to provide Donaldson with the opportunity to claim the benefit of any
income tax deduction which may be available to it upon
the exercise of the Option and in order to comply with all applicable
federal or state income tax laws or regulations, Donaldson
may take such action as it deems appropriate to insure that, if
necessary, all applicable federal or state payroll, withholding,
income or other taxes are withheld or collected from Employee. 

	 
 	        (g)   Donaldson,
in
 its sole and absolute discretion, may allow Employee to satisfy
Employee’s federal and state income tax withholding
obligations (including FICA) upon exercise of the Option by (i) having
Donaldson withhold a portion of the shares of Common Stock
otherwise to be delivered upon exercise of the Option having a fair
market value equal to the amount of federal and state income
tax required to be withheld upon such exercise, in accordance with such
rules as Donaldson may from time to time establish, or
(ii) delivering to Donaldson shares of its Common Stock other than the
shares issuable upon exercise of the Option with a fair
market value equal to such taxes, in accordance with such rules. 

	 
 	        (h)   This
Option
 grant shall be effective only after signature by both parties and
delivering a signed original copy to the Company at the
address in Section 4. Employee shall not disclose either the contents or
 any of the terms and conditions of the Option to any
other person and agrees that Donaldson shall have the right in its sole
discretion to immediately terminate the Option without the
right to exercise any part thereof in the event of such disclosure by
Employee. 

	 
 	        (i)   This
Agreement
 shall be construed and enforced in accordance with the laws of the
State of Minnesota, except with respect to its rules
relating to conflicts of law. Employee consents to the exclusive
jurisdiction of the state and federal courts of the State of
Minnesota in connection with any controversies relating to or arising
out of this Agreement, and agrees that any and all
litigation relating to or arising out of this Agreement shall be venued
in Hennepin County, Minnesota. 

5 

        IN
 WITNESS WHEREOF,
Donaldson and Employee have duly executed this Agreement as of the date
set forth in the first paragraph. 

	 	 	 	 	 	 
	 	 	DONALDSON COMPANY, INC. 
	

   		

By:  	 	

    	 
	 	

	   		Its:  	 	President and Chief Executive Officer 	 
	

 	

 	

EMPLOYEE: 
	

   		

  	 	

    	 
	 	

	  	  	‹‹FIRST
NAME››   ‹‹INITIAL››   ‹‹LAST NAME›› 	 
	

   		

Date:  	 	

    	 
	 	

6Exhibit
 10-Q 

NON-EMPLOYEE
 DIRECTOR

NON-QUALIFIED STOCK OPTION AGREEMENT 

        OPTION
 AGREEMENT made this
xxx day of xxx, xxxx, by and between Donaldson Company, Inc., a Delaware
 corporation (hereinafter, together with its subsidiaries,
called “Donaldson”), and «FirstName» «Initial» «LastName», a
non-employee Director
of Donaldson (hereinafter called “Participant”). 

        In
 consideration of the
mutual covenants hereinafter set forth and for other good and valuable
consideration, the parties agree as follows: 

        1.   Donaldson
irrevocably
 grants to the Participant the right and option to purchase all or any
part of an aggregate of xxx shares of Common
Stock, par value of $5.00 per share, of Donaldson together with a
restoration option (“Reload”). This option is granted
pursuant to the Donaldson Company Non-Qualified Stock Option Program for
 Non-Employee Directors (the “Plan”). A Reload
shall be automatically granted if Participant exercises this option when
 the market value of Common Stock exceeds the purchase
price, in paragraph 2, by 25%. The Reload is applicable only on the
exercise by Participant while a Director. The Reload provision
shall not be applicable if Participant transfers the option grant as
provided for in paragraph 4, except that the Reload provision
shall continue to apply to a transfer to a revocable trust where the
Participant retains beneficial ownership and control.
Participant acknowledges receipt of a copy of the Plan. 

        2.   The
purchase
 price of the shares of Common Stock subject to this option is xx.xx per
 share. The date of grant is xxxx. 

        3.   The
term
 of this option is for the period of ten years from and after the date
of grant, or such shorter period as may be provided by
the provisions of the Plan. The option may be exercised during the
period from and after the date of grant. Subject to the
limitations herein and to the extent not exercised in prior years, the
right to exercise this option shall be cumulative and may
be exercised at any time or from time to time during the term as to any
or all full shares which may be purchasable under the
provisions of this Agreement. 

        4.   This
option
 shall not be transferable otherwise than by will or the laws of descent
 and distribution and may be exercised during the
lifetime of the Participant only by Participant; provided, however, that
 notwithstanding the above, this option shall be
transferable by Participant to immediate family members and related
estate planning entities. 

        5.   Participant
may
 exercise this option in whole or in part at any time during the term as
 specified above but not after ten years from the date
of grant; provided, that if Participant dies, this option may be
exercised within three years after death, but not after ten years
from the date granted, by Participant’s estate or by the person or
persons who acquire the right to exercise this option by
bequest, inheritance or otherwise by reason of such death. Donaldson and
 Participant 

 
 

recognize that
this Agreement in no way restricts the right of Donaldson to
terminate Participant’s membership consistent with applicable Delaware
laws. 

        6.   Subject
to
 the terms and conditions of this Agreement, this option may be
exercised by written notice to the Company at its principal
office, which is now located at 1400 West 94th Street, Bloomington,
Minnesota, Attention: Treasurer. Such notice shall state the
election to exercise the option and the number of shares in respect of
which it is being exercised, shall be signed by the person
or persons so exercising the option. Such notice shall be accompanied by
 payment in full of the purchase price of the shares
purchased. Payment of the exercise price may be made in cash or in whole
 or in part in Common Stock of the Company valued at the
Market Value (as defined in the Master Plan) on the day preceding the
date of exercise. The Company will issue and deliver a
certificate or certificates representing the shares to be received as
soon as practicable after completion of these requirements.
In the event the option shall be exercised pursuant to paragraphs 4 or 5
 by any person or persons other than the Participant such
notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the option. 

        7.   In
the
 event of a Change in Control of Donaldson (as defined below), any
outstanding options granted under this Agreement 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. The term “Change in Control”
shall have the following meaning assigned to it
in this Agreement. 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 shareholders 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 30% or more of the
combined voting power of Donaldson’s then outstanding
securities, (ii) during any period of two consecutive years (not
including any period prior to the effective date of this Master
Plan), 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, unless the
approval of the election or nomination for election of such new
directors was in connection with an actual or threatened election or 

2 

proxy contest,
(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 30% 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. 

        8.   If
all
 or any portion of the option is exercised subsequent to any stock
dividend or split, recapitalization, consolidation, or the
like, occurring after the date hereof, as a result of which securities
of any class shall be issued in respect of outstanding
shares of Common Stock, or shares of Common Stock shall be changed into
the same or a different number of shares or other
securities of the same or other class or classes, then the Board of
Directors shall determine if any equitable adjustment is
necessary to protect the Participant against dilution and shall
determine the terms of such adjustment, if any. In the case of any
stock dividend or split effected after the date hereof, the number of
shares to be granted hereunder shall be automatically
adjusted to prevent dilution of the potential benefits intended to be
made available hereunder. 

        IN
 WITNESS WHEREOF, Donaldson
and the Participant have duly executed this Agreement as of the day and
year first above written.

	DONALDSON COMPANY, INC. 	PARTICIPANT 
	

By:   	 	 	 	 	 
		
	 	

	  	William M. Cook	 	‹‹FIRST
NAME››   ‹‹INITIAL››   ‹‹LAST NAME›› 
	Its:  	President and Chief Executive Officer 	 

3

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