--------------------------------------------------------------------------------
 As filed with the Securities and Exchange Commission on November 25, 1998 - 
                                                           Registration No. 333-

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933


                              DONNELLY CORPORATION
             (Exact name of registrant as specified in its charter)

            Michigan                                    38-0493110
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

               49 West Third Street, Holland, Michigan 49423-2813
               (Address of Principal Executive Offices) (Zip Code)

              Donnelly Corporation 1998 Employee Stock Option Plan
                            (Full Title of the Plan)

       Maryam Komejan, 49 West Third Street, Holland, Michigan 49423-2813
                     (Name and address of agent for service)

                          Copies of Communications to:
                             William J. Lawrence III
                    Varnum, Riddering, Schmidt & Howlett LLP
                      333 Bridge Street, N.W., P.O. Box 352
                        Grand Rapids, Michigan 49501-0352
                                 (616) 336-6000

<TABLE>
                         CALCULATION OF REGISTRATION FEE
========================================================================================================================
                                                              Proposed              Proposed
           Title of                                            Maximum               Maximum
       Securities to be              Amount to be          Offering Price           Aggregate             Amount of
          Registered                  Registered            Per Share(2)         Offering Price       Registration Fee
------------------------------------------------------------------------------------------------------------------------
<S>                                <C>                        <C>                  <C>                     <C>
Class A Common Stock
($.10 Par Value)                   850,000 Shares(1)          $15.1875             $12,909,375             $3,810
========================================================================================================================
</TABLE>
(1)      Represents the number of shares of Common Stock authorized for issuance
         under the Donnelly  Corporation  1998  Employee  Stock Option Plan (the
         "Plan").  This Registration  Statement also covers such  indeterminable
         additional number of shares as may be issuable under the Plan by reason
         of adjustments in the number of shares covered  thereby as described in
         the Prospectus.
(2)      For the purpose of computing the registration fee only, the price shown
         is based upon the price of $15.1875 per share,  the average of the high
         and low sales  prices for the Common Stock of Donnelly  Corporation  on
         the New York Stock  Exchange on November 20, 1998, in  accordance  with
         Rule 457(h).


Pursuant  to  Rule  416(a)  of the  General  Rules  and  Regulations  under  the
Securities Act of 1933, this Registration  Statement shall cover such additional
securities as may be offered or issued to prevent dilution  resulting from stock
splits, stock dividends or similar transactions.
<PAGE>
                 INFORMATION REQUIRED IN REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference

     The Company's  Annual Report on Form 10-K for the year ended June 27, 1998,
which has been filed by the Company with the Commission  (File No.  1-9716),  is
incorporated  herein  by  reference.  All  other  reports  filed by the  Company
pursuant to Section  13(a) or 15(d) of the  Securities  Exchange Act of 1934, as
amended  (the  "Exchange  Act") since the end of the fiscal year  covered by the
foregoing Annual Report on Form 10-K are incorporated  herein by reference.  All
other reports or documents filed by the Company  pursuant to the requirements of
Sections 13(a),  13(c), 14 and 15(d) of the Exchange Act, subsequent to the date
of this  Registration  Statement and prior to the termination of the offering of
the securities  offered hereby shall be deemed to be  incorporated  by reference
herein  and to be a part  hereof  from the date of  filing  of such  reports  or
documents.  Any  statements  contained  in a  document  incorporated  herein  by
reference  shall be deemed to be modified  or  superseded  for  purposes of this
Prospectus  to  the  extent  that  a  statement   contained  herein  or  in  any
subsequently  filed  document  which also is  incorporated  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.

     The  consolidated   financial   statements  of  Donnelly   Corporation  and
subsidiaries as of June 27, 1998 and June 28, 1997, and for each of the years in
the  three-year  period  ended June 27,  1998,  have been  incorporated  in this
Registration   Statement  by  reference  in  reliance  upon  the  report,   also
incorporated in this  Registration  Statement by reference,  of BDO Seidman LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.

     The  description  of the  Company's  Class A  Common  Stock,  the  class of
securities offered pursuant to this Registration  Statement, is contained in the
Company's  Registration  Statement  filed pursuant to Section 12 of the Exchange
Act,  and  is  incorporated  herein  by  reference,   including  any  subsequent
amendments or reports filed for the purpose of updating that description.

Item 4.  Description of Securities

     The class of securities to be offered is registered under Section 12 of the
Exchange Act.

Item 5.  Interests of Named Experts and Counsel

     Not applicable.

Item 6.  Indemnification of Directors and Officers

     The Articles of Incorporation of the Company provide that its directors and
officers are to be indemnified as of right to the fullest extent permitted under
the Michigan  Business  Corporation  Act  ("MBCA").  Under the MBCA,  directors,
officers,  employees or agents are entitled to indemnification  against expenses
(including  attorneys' fees) whenever they successfully defend legal proceedings
brought  against them by reason of the fact that they hold such a position  with
the corporation.  In addition,  with respect to actions not brought by or in the
right  of the  corporation,  indemnification  is  permitted  under  the MBCA for
expenses (including attorneys' fees), judgments, fines, penalties and reasonable
settlement if it is determined that the person seeking  indemnification acted in
a good  faith  and in a manner  he or she  reasonably  believed  to be in or not
opposed to the best interests of the corporation or its  shareholders  and, with
respect to criminal  proceedings,  he or she had no reasonable  cause to believe
that his or her conduct was unlawful.  With respect to actions  brought by or in
the right of the  corporation,  indemnification  is permitted under the MBCA for
expenses  (including  attorneys'  fees)  and  reasonable  settlements,  if it is
determined that the person seeking  indemnification acted in good faith and in a
manner  he or she  reasonably  believed  to be in or  not  opposed  to the  best
interests of the corporation or its shareholders;  provided,  indemnification is
not permitted if the person is found liable

                                       S-1
<PAGE>
to the corporation  unless the court in which the action or suit was brought has
determined  that  indemnification  is  fair  and  reasonable  in view of all the
circumstances of the case.

     The MBCA  specifically  provides  that it is not the  exclusive  source  of
indemnity.   As  a  result,  the  Company  adopted  individual   indemnification
agreements  with its  directors.  Approved by the  Company's  shareholders,  the
indemnification agreements provide a contractually enforceable right, upon which
written notice, for prompt  indemnification,  except that indemnification is not
required  where:  (i)  indemnification  is provided  under an insurance  policy,
except for amounts in excess of insurance coverage;  (ii) a director is entitled
to  indemnification  by reason of having given notice of any circumstance  which
might  give rise to a claim  under any policy of  insurance,  the terms of which
have expired  prior to the  effective  date of the  indemnity  agreement;  (iii)
indemnification  is provided by the Company  outside of the agreement;  (iv) the
claim for indemnity is based upon or attributable to any transaction  involving:
intentional  misconduct  or a knowing  violation  of law, a violation of Section
551(1) or any  successor  provision  of the  MBCA,  or from  which the  director
derived an improper  personal  benefit;  (v) the claim  involved a violation  of
Section 16(b) of the Securities  Exchange Act of 1934 and amendments thereto, or
similar  provisions  of state law;  or (vi)  indemnification  by the  Company is
otherwise  prohibited  by  applicable  law. In the case of a derivative or other
action by or in the  right of the  Company  where a  director  is found  liable,
indemnity is predicted on the determination that indemnification is nevertheless
appropriate,  by:  majority  vote of a  committee  of two or more  disinterested
directors  appointed by the Board of Directors;  independent  legal counsel in a
written  opinion;  or the court in which the claim is  litigated,  whichever the
indemnitee chooses. The protection provided by the indemnification agreements is
broader than that under the MBCA, where indemnification in such circumstances is
available  only where  specifically  authorized  by the court where the claim is
litigated.

     In addition to the available  indemnification,  the  Company's  Articles of
Incorporation,  as amended,  limit the personal  liability of the members of its
Board of Directors for monetary damages with respect to claims by the Company or
its shareholders resulting from certain negligent acts or omissions.

Item 7.  Exemption from Registration Claimed

     Not applicable.

Item 8.  Exhibits

     Reference is made to the Exhibit Index which appears on page S-5.

Item 9.  Undertakings

     The undersigned registrant hereby undertakes:

          (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;

               (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,  represents a  fundamental  change in the  information  set
          forth in the registration statement;

               (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 (1)(i) and
          (1) (ii) 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

                                       S-2
<PAGE>
          paragraphs is contained in periodic  reports  filed by the  registrant
          pursuant to Section 13 or Section 15 (d) of Securities Exchange Act of
          1934 that are incorporated by reference in the registration statement.

          (2) That,  for the  purpose of  determining  any  liability  under the
     Securities Act of 1933, 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.

     The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  section  15(d)  of  the
Securities  Exchange  Act of 1934)  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 bonafide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted  to  directors,  officers  and  controlling
persons of the registrant pursuant to the foregoing  provisions  otherwise,  the
registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is,  therefore,  unenforceable.  In the  event a claim  for  indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred  or  paid by a  director,  officer  or 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 Act and will be governed by the final adjudication of
such issue.

                                       S-3
<PAGE>
                                   SIGNATURES

     Pursuant to the  requirements  of the  Securities  Act of 1933, the Company
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  Holland,  State  of  Michigan,  on the 16th day of
October, 1998.

                                      DONNELLY CORPORATION


                                      By   /s/ J. Dwane Baumgardner  
                                           J. Dwane Baumgardner, President and
                                           Chief Executive Officer


                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below constitutes and appoints J. Dwane Baumgardner and Maryam Komejan, and each
of them, his or her true and lawful  attorney-in-fact and agent, with full power
of substitution  and  resubstitution,  for him and in his or her name, place and
stead,  in any and all  capacities,  to sign any and all  amendments  (including
post-effective  amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any other regulatory authority,  granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing  required and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person,  hereby  ratifying and  confirming  all that said  attorney-in-fact  and
agent, or his or her  substitute,  may lawfully do or cause to be done by virtue
hereof.

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been  signed  below on  October  16,  1998,  by the
following persons in the capacities indicated.



/s/ John A. Borden                            /s/ B. Patrick Donnelly, III
John A. Borden, Director                      B. Patrick Donnelly, III, Director

/s/ R. Eugene Goodson                         /s/ Joan E. Donnelly      
R. Eugene Goodson, Director                   Joan E. Donnelly, Director

/s/ Donald R. Uhlmann                         /s/ Thomas E. Leonard       
Donald R. Uhlmann, Director                   Thomas E. Leonard, Director

/s/ J. Dwane Baumgardner                      /s/ Gerald T. McNeive, Jr.      
J. Dwane Baumgardner, Director                Gerald T. McNeive, Jr., Director

/s/ Arnold F. Brookstone                      /s/ Scott E. Reed           
Arnold F. Brookstone, Director                Scott E. Reed, Senior Vice
                                              President and Chief Financial
                                              Officer

/s/ Rudolph B. Pruden                         /s/ Ronald L. Winowiecki   
Rudolph B. Pruden, Director                   Ronald L. Winowiecki, Corporate
                                              Controller and Chief Accounting
                                              Officer

::ODMA\PCDOCS\GRR\212671\1
                                       S-4
<PAGE>
                                  EXHIBIT INDEX

     The following exhibits are filed as a part of the Registration Statement:




Exhibit 4          Donnelly Corporation 1998 Employee Stock Option Plan

Exhibit 5          Opinion of Varnum, Riddering, Schmidt & Howlett LLP

Exhibit 23(a)      Consent of BDO Seidman LLP

Exhibit 23(b)      Consent of Varnum, Riddering, Schmidt & Howlett LLP (included
                   in Exhibit 5)

Exhibit 24         Power of Attorney - included on page S-4 hereof




                                       S-5
<PAGE>
                                    EXHIBIT 4







                              DONNELLY CORPORATION


                         1998 EMPLOYEE STOCK OPTION PLAN
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page

ARTICLE 1
         ESTABLISHMENT AND PURPOSE OF THE PLAN.................................1
         1.1      Establishment of the Plan....................................1
         1.2      Purpose of the Plan..........................................1
         1.3      Term of Plan.................................................1

ARTICLE 2
         DEFINITIONS...........................................................1

ARTICLE 3
         ADMINISTRATION........................................................3
         3.1      The Committee................................................3
         3.2      Committee Authority..........................................3

ARTICLE 4
         COMMON STOCK SUBJECT TO THE PLAN......................................4

ARTICLE 5
         ELIGIBILITY...........................................................5

ARTICLE 6
         STOCK OPTIONS.........................................................5
         6.1      Options......................................................5
         6.2      Grants.......................................................5
         6.3      Incentive Stock Options......................................5
         6.4      Terms of Options.............................................5

ARTICLE 7
         TERMINATION OR AMENDMENT OF THE PLAN..................................8

ARTICLE 8
         UNFUNDED PLAN.........................................................8

ARTICLE 9
         ADJUSTMENT PROVISIONS.................................................8
         9.1      Antidilution.................................................8
         9.2      Change in Control............................................8
         9.3      Adjustments by Committee.....................................9


                                       -i-
<PAGE>
ARTICLE 10
         GENERAL PROVISIONS....................................................9
         10.1     Legend.......................................................9
         10.2     No Right to Employment......................................10
         10.3     Withholding of Taxes........................................10
         10.4     No Assignment of Benefits...................................10
         10.5     Governing Law...............................................10
         10.6     Application of Funds........................................10
         10.7     Rights as a Shareholder.....................................10
         10.8     Laws of Foreign Jurisdictions...............................10

ARTICLE 11
         SHAREHOLDER APPROVAL.................................................11


                                      -ii-
<PAGE>
                              DONNELLY CORPORATION
                         1998 EMPLOYEE STOCK OPTION PLAN


                                    ARTICLE 1
                      ESTABLISHMENT AND PURPOSE OF THE PLAN

     1.1 Establishment of the Plan. Donnelly Corporation, a Michigan corporation
(the  "Company"),  hereby  establishes  a stock  option  plan to be known as the
"Donnelly  Corporation  1998 Employee  Stock Option Plan" (the  "Plan"),  as set
forth in this  document.  The Plan permits the granting of stock  options to key
employees of the Company and its subsidiaries.

     1.2  Purpose  of the  Plan.  The  purpose  of the  Plan is to  promote  the
long-term success of the Company for the benefit of the Company's  shareholders,
through  stock-based  compensation,  by aligning the  personal  interests of the
Company's  key  employees  with  those  of its  shareholders.  The  Plan is also
designed to allow key employees to participate in the Company's  future, as well
as to  enable  the  Company  to  attract,  retain  and  reward  such  employees.
Compensation  related to Awards under the Plan is generally  intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code").

     1.3 Term of Plan.  No Awards  shall be granted  pursuant  to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date.

                                    ARTICLE 2
                                   DEFINITIONS

     For purposes of this Plan, the following  terms shall have the meanings set
forth below:

     2.1 Act means the Securities Exchange Act of 1934.

     2.2 Award means any award under this Plan of any Options.

     2.3 Award  Agreement  means an agreement  evidencing  the grant of an Award
under this Plan.  Awards under the Plan shall be  evidenced by Award  Agreements
that set forth the  details,  conditions  and  limitations  for each  Award,  as
established by the Committee and shall be subject to the terms and conditions of
the Plan.

     2.4 Award Date  means the date that an Award is made,  as  specified  in an
Award Agreement.

     2.5 Board means the Board of Directors of the Company.

     2.6 Change in Control is defined in Article 9.

     2.7 Code means the Internal Revenue Code of 1986, as amended.
<PAGE>
     2.8 Committee means the Committee,  as specified in Article 3, appointed by
the Board to  administer  the Plan,  no members of which  shall be  eligible  to
receive an Award pursuant to the Plan.

     2.9 Common Stock means the Class A Common Stock, $0.10 par value per share,
of the Company.

     2.10 Disability  means permanent and total  disability as determined  under
the rules and guidelines established by the Committee for purposes of the Plan.

     2.11 Effective Date means January 1, 1999.

     2.12 Employee means a salaried employee  (including  officers and directors
who are also employees) of the Company or a Subsidiary.

     2.13 Fair  Market  Value If the shares are  listed on a  established  stock
exchange or  exchanges,  Fair Market  Value per share shall be the closing  sale
price on such  exchange or  exchanges  on the day of grant or, if no sale of the
shares shall be made on any stock  exchange on that day, the next  preceding day
on which  there was a sale of  shares.  If the  shares  are not listed on such a
stock  exchange  or  exchanges,  the Fair  Market  Value per share  shall be the
closing sale price as reported by the National  Association of Securities Dealer
Automated  Quotation  System  ("NASDAQ") on the day of grant or, if there are no
sales reported by the NASDAQ on that date, the next preceding day on which there
was a sale reported by NASDAQ.

     2.14  Incentive  Stock Option or ISO means an option to purchase  shares of
Common Stock granted under Article 6, which is designated as an Incentive  Stock
Option and is intended to meet the requirements of Section 422 of the Code.

     2.15 Nonemployee  Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.

     2.16  Nonqualified  Stock Option or NQSO means an option to purchase shares
of Common  Stock,  granted  under  Article  6, which is not an  Incentive  Stock
Option.

     2.17 Option means an Incentive Stock Option or a Nonqualified Stock Option.

     2.18 Option  Price means the price at which a share of Common  Stock may be
purchased  by a  Participant  pursuant  to  an  Option,  as  determined  by  the
Committee.

     2.19 Participant means an Employee of the Company or a Subsidiary who holds
an outstanding Award granted under the Plan.

                                       -2-
<PAGE>
     2.20 Permitted Transferee means (i) a spouse, a child, or a grandchild of a
Participant (each an "Immediate Family Member"),  (ii) a trust for the exclusive
benefit of a Participant and/or one or more Immediate Family Members, or (iii) a
partnership or limited  liability company whose only partners or members are the
Participant and/or one or more Immediate Family Members.

     2.21 Retirement  (including Normal, Early and Disability  Retirement) means
the termination of a  Participant's  employment with the Company or a Subsidiary
with eligibility for normal,  early or disability  retirement benefits under the
terms of the  Company's  pension  plan,  as amended and in effect at the time of
such termination of employment.

     2.22 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Act, as amended from time to time, or any successor rule.

     2.23  Subsidiary  means any corporation in which the Company owns directly,
or indirectly  through  subsidiaries,  at least fifty percent (50%) of the total
combined voting power of all classes of stock,  or any other entity  (including,
but  not  limited  to,  limited  liability  companies,  partnerships  and  joint
ventures) in which the Company owns at least fifty percent (50%) of the combined
equity thereof.

     2.24 Termination Date means January 1, 2004.

     2.25  Termination of Employment  means the  termination of a  Participant's
employment  with the  Company  or a  Subsidiary.  A  Participant  employed  by a
Subsidiary  shall also be deemed to incur a  Termination  of  Employment  if the
Subsidiary  ceases to be a Subsidiary and the  Participant  does not immediately
thereafter become an Employee of the Company or another Subsidiary.

                                    ARTICLE 3
                                 ADMINISTRATION

     3.1 The Committee. The Plan shall be administered by a committee designated
by the Board  consisting  of not less  than  three  (3)  directors  who shall be
appointed  from  time to time by the  Board,  each of whom  shall  qualify  as a
Nonemployee Director.

     3.2   Committee   Authority.   Subject  to  the   Company's   Articles   of
Incorporation,  Bylaws and the provisions of this Plan, the Committee shall have
full  authority to grant Awards to key Employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:

          (a) To select the key Employees of the Company or a Subsidiary to whom
     Awards may be granted under the Plan;

          (b) To determine  whether and to what extent Options are to be granted
     under the Plan;

                                       -3-
<PAGE>
          (c) To determine the number of shares of Common Stock to be covered by
     each Award;

          (d) To  determine  the terms and  conditions  of any Award  Agreement,
     including, but not limited to, the Option Price, any vesting restriction or
     limitation, any vesting schedule or acceleration thereof, or any forfeiture
     restrictions or waiver  thereof,  regarding any Award and the shares Common
     Stock  relating  thereto,  based on such  factors  as the  Committee  shall
     determine in its sole discretion;

          (e) To determine whether,  to what extent and under what circumstances
     grants of Awards  are to operate on a tandem  basis  and/or in  conjunction
     with or apart  from  other cash  compensation  arrangement  made by Company
     other than under the terms of this Plan;

          (f) To determine under what  circumstances  an Award may be settled in
     cash, Common Stock, or a combination thereof; and

          (g) To determine to what extent and under what circumstances shares of
     Common  Stock and other  amounts  payable with respect to an Award shall be
     deferred.

     The  Committee  shall have the  authority  to adopt,  alter and repeal such
administrative  rules,  guidelines and practices governing the Plan as it shall,
from time to time, deem advisable,  to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award  Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously  granted under the Plan or
cause  the Plan or the  Award  not to meet the  requirements  of Rule  16b-3.  A
majority of the Committee shall constitute a quorum,  and the acts of a majority
of a quorum at any  meeting,  or acts  reduced  to or  approved  in writing by a
majority  of the  members  of the  Committee,  shall  be the  valid  acts of the
Committee.   The  interpretation  and  construction  by  the  Committee  of  any
provisions  of the Plan or any Award  granted  under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs,  executors and assigns.  No member of the Board or the Committee shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or an Award granted hereunder.

                                    ARTICLE 4
                        COMMON STOCK SUBJECT TO THE PLAN

     Subject to  adjustment  as provided in Section 9.1,  the maximum  aggregate
number of shares of Common  Stock which may be issued  under this Plan shall not
exceed 850,000 shares,  which may be either authorized and unissued Common Stock
or issued Common Stock reacquired by the Company ("Plan Shares"). Determinations
as to the number of Plan Shares that remain  available  for  issuance  under the
Plan shall be made in accordance with such rules and procedures as the Committee
shall  determine  from  time  to  time,  which  shall  be  consistent  with  the
requirements of Rule 16b-3 and such interpretations thereof. If an Award expires
unexercised or is forfeited, cancelled, terminated or settled in cash in lieu of
Common Stock, the shares of Common Stock that

                                       -4-
<PAGE>
were  theretofore  subject (or  potentially  subject) to such Award may again be
made subject to an Award Agreement.

                                    ARTICLE 5
                                   ELIGIBILITY

     The  persons  eligible  to  receive  Awards  under  the Plan  shall be such
Employees as the Committee selects from time to time. In making such selections,
the Committee  shall  consider  such factors as the Committee in its  discretion
shall deem  relevant.  When  granting  Awards,  the  Committee  may consider the
recommendation(s)  of the Company and its officers.  Participants  may hold more
than one Award,  but only on the terms and subject to the restrictions set forth
in the Plan and their respective Award Agreements.

                                    ARTICLE 6
                                  STOCK OPTIONS

     6.1  Options.  Each  Option  granted  under  this  Plan  shall be either an
Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NQSO").

     6.2  Grants.  The  Committee  shall  have  the  authority  to  grant to any
Participant one or more Incentive Stock Options,  Nonqualified Stock Options, or
both types of  Options.  To the extent  that any Option  does not  qualify as an
Incentive Stock Option (whether  because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.

     6.3  Incentive  Stock  Options.  Anything  in  the  Plan  to  the  contrary
notwithstanding,  no term of this Plan relating to Incentive Stock Options shall
be  interpreted,  amended or  altered,  nor shall any  discretion  or  authority
granted  under the Plan be so  exercised,  so as to  disqualify  the Plan  under
Section 422 of the Code, or, without the consent of the  Participants  affected,
to disqualify  any  Incentive  Stock Option under such Section 422. An Incentive
Stock  Option shall not be granted to an  individual  who, on the date of grant,
owns stock  possessing  more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company.  The aggregate  Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987,  that are exercisable for the first time by
a Participant  during any calendar  year shall not exceed the dollar  limitation
imposed by the Code. Incentive Stock Options may be granted only to employees of
the Company and Subsidiaries which fit the definition of subsidiary  corporation
in Section 424(f) of the Code.

     6.4 Terms of Options.  Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Committee shall, from time to time approve,
which  Agreement  shall  comply with and be subject to the  following  terms and
conditions:

                                       -5-
<PAGE>
          (a)  Option  Price.  The  Option  Price  per  share  of  Common  Stock
     purchasable  under an Option shall be  determined  by the  Committee at the
     time of grant but shall be not less than one hundred  percent (100%) of the
     Fair Market Value of the Common Stock at the Award Date.

          (b)  Option  Term.  The  term of each  Option  shall  be  fixed by the
     Committee,  but no Option  shall be  exercisable  more than ten (10)  years
     after the date the Option is granted.

          (c) Exercisability. Except as provided in Section 9.2, no Option shall
     be exercisable either in whole or in part prior to the first anniversary of
     the Award Date. Thereafter,  an Option shall be exercisable at such time or
     times and subject to such terms and  conditions  as shall be  determined by
     the  Committee  and set  forth in the  Award  Agreement.  If the  Committee
     provides that any Option is exercisable only in installments, the Committee
     may at any time waive such installment exercise provisions,  in whole or in
     part, based on such factors as the Committee may determine.

          (d) Method of Exercise.  Subject to whatever  installment exercise and
     waiting period provisions apply under subsection (c) above,  Options may be
     exercised in whole or in part at any time during the term of the Option, by
     giving written  notice of exercise to the Company  specifying the number of
     shares to be purchased. Such notice shall be accompanied by payment in full
     of  the  purchase   price  in  such  form  as  the  Committee  may  accept.
     Notwithstanding  the  foregoing,  an Option shall not be  exercisable  with
     respect to less than 100 shares of Common Stock unless the remaining shares
     covered  by an  Option  are fewer  than 100  shares.  If and to the  extent
     determined  by the  Committee  in its sole  discretion  at or after  grant,
     payment  in full or in part may also be made in the  form of  Common  Stock
     owned  for at least  six  months  by the  Participant  (and for  which  the
     Participant has good title free and clear of any liens and encumbrances) or
     by reduction in the number of shares  issuable upon such exercise based, in
     each case, on the Fair Market Value of the Common Stock on the last trading
     date preceding  payment as determined by the Committee . No shares of stock
     shall be issued until payment has been made. A Participant  shall generally
     have the rights to dividends or other rights of a shareholder  with respect
     to shares  subject to the Option when the optionee has given written notice
     of  exercise,  has  paid  for such  shares  as  provided  herein,  and,  if
     requested,  has given the  representation  described in Section 10.1 of the
     Plan.

          (e) Nontransferability of Options. No Option may be sold, transferred,
     pledged,  assigned,  or otherwise alienated or hypothecated,  other than by
     will or by the laws of  descent  and  distribution,  provided,  however,  a
     Nonqualified Stock Option may be transferred,  without consideration,  to a
     Permitted  Transferee if the  Participant  satisfies such conditions to the
     transfer as may be required by the Committee.  A Permitted Transferee shall
     succeed to all rights and benefits (except any right to further transfer of
     the Option) and be subject to all obligations and limitations applicable to
     the original  Participant.  However,  such rights and benefits  (except any
     right to further  transfer of the Option),  and obligations and limitations
     shall be  determined as if the original  Participant  continued to hold the
     Option,

                                       -6-
<PAGE>
     whereby  provisions of this Plan dealing with  termination  of  employment,
     retirement,  disability or death of a Participant will continue to refer to
     the original Participant  regardless of whether a Nonqualified Stock Option
     has been transferred to a Permitted  Transferee.  The Company shall have no
     obligation  to  notify  a  Permitted   Transferee  of  the  termination  of
     employment, retirement, disability, or death of a Participant. Further, all
     Options shall be exercisable,  during the Participant's  lifetime,  only by
     such  Participant,  or, in the case of a  Nonqualified  Stock Option,  by a
     Participant or a Permitted Transferee,  as the case may be. The designation
     of a person  entitled to exercise an Option after a person's death will not
     be deemed a transfer.

          (f)  Termination  of  Employment  for Reasons  other than  Retirement,
     Disability,  or Death.  Upon Termination of Employment for any reason other
     than  Retirement or on account of Disability or death,  each Option held by
     the  Participant  shall, to the extent rights to purchase shares under such
     Option have accrued at the date of such Termination of Employment and shall
     not have been fully exercised, be exercisable,  in whole or in part, at any
     time  within  a  period  of  three  (3)  months  following  Termination  of
     Employment,  subject,  however,  to  prior  expiration  of the term of such
     Options and any other limitations on the exercise of such Options in effect
     at the date of exercise.

          (g)  Termination  of Employment  for  Retirement or  Disability.  Upon
     Termination  of  Employment by reason of  Retirement  or  Disability,  each
     Option held by such  Participant  shall,  to the extent  rights to purchase
     shares  under the Option  have  accrued at the date of such  Retirement  or
     Disability and shall not have been fully exercised,  remain  exercisable in
     whole or in part, for a period of two (2) years following such  Termination
     of Employment, subject, however, to prior expiration according to its terms
     and other  limitations  imposed by the Plan. If the Participant  dies after
     such  Retirement  or  Disability,   the  Participant's   Options  shall  be
     exercisable in accordance with Section 6.4(h) below.

          (h)  Termination  of  Employment  for  Death.   Upon   Termination  of
     Employment due to death, each Option held by such Participant shall, to the
     extent rights to purchase shares under the Options have accrued at the date
     of death and shall not have been fully exercised, be exercisable,  in whole
     or in part, by the personal  representative of the Participant's  estate or
     by any person or persons who shall have  acquired the Option  directly from
     the  Participant  by  bequest  or  inheritance  only  under  the  following
     circumstances and during the following periods: (i) if the Participant dies
     while  employed by the Company or a Subsidiary,  at any time within two (2)
     years after his or her death,  or (ii) if the  Participant  dies during the
     extended exercise period following  Termination of Employment  specified in
     Section  6.4(g),  at any time within the longer of such extended  period or
     one (1) year  after  death,  subject,  however,  in any case,  to the prior
     expiration  of the  term of the  Option  and any  other  limitation  on the
     exercise of such Option in effect at the date of exercise.

          (i)  Termination of Options.  Any Option that is not exercised  within
     whichever of the exercise periods specified in Sections 6.4(f),  (g) or (h)
     is applicable shall terminate upon expiration of such exercise period.

                                       -7-
<PAGE>
          (j) Purchase and Settlement Provisions.  The Committee may at any time
     offer to purchase  an Option  previously  granted,  based on such terms and
     conditions  as  the  Committee  shall  establish  and  communicate  to  the
     Participant at the time that such offer is made.

                                    ARTICLE 7
                      TERMINATION OR AMENDMENT OF THE PLAN

     The Board may at any time amend,  discontinue or terminate this Plan or any
part  thereof  (including  any  amendment  deemed  necessary  to ensure that the
Company  may  comply  with any  applicable  regulatory  requirement);  provided,
however,  that,  unless  otherwise  required by law, the rights of a Participant
with  respect  to Awards  granted  prior to such  amendment,  discontinuance  or
termination,  may not be impaired  without the consent of such  Participant and,
provided  further,  without  the  approval  of the  Company's  shareholders,  no
amendment may be made which would (i) increase the aggregate number of shares of
Common  Stock that may be issued under this Plan (except by operation of Section
9.1);  (ii) change the definition of Employees  eligible to receive Awards under
this  Plan;  (iii)  decrease  the  option  price of any  Option to less than one
hundred  percent  (100%)  of the Fair  Market  Value on the date of grant for an
Option;  (iv) extend the maximum option period under Section 6.4(b) of the Plan;
or (v) cause the Plan not to comply with either  Rule  16b-3,  or any  successor
rule under the Act, or Section  162(m) of the Code.  The Committee may amend the
terms of any Award theretofore  granted,  prospectively or  retroactively,  but,
subject to Section 9.2, no such amendment or other action by the Committee shall
impair the rights of any Participant without the Participant's  consent.  Awards
may not be granted under the Plan after the Termination Date, but Awards granted
prior to such date  shall  remain in effect or become  exercisable  pursuant  to
their respective terms and the terms of this Plan.

                                    ARTICLE 8
                                  UNFUNDED PLAN

     This Plan is intended to constitute  an  "unfunded"  plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company,  nothing  contained  herein shall give any such  Participant any
rights that are greater than those of a general creditor of the Company.

                                    ARTICLE 9
                              ADJUSTMENT PROVISIONS

     9.1  Antidilution.  Subject  to the  provisions  of this  Article 9, if the
outstanding shares of Common Stock are increased,  decreased, or exchanged for a
different number or kind of shares or other securities,  or if additional shares
or new or different  shares or other  securities are distributed with respect to
such shares of Common Stock or other securities,  through merger, consolidation,
sale of all or substantially  all of the assets of the Company,  reorganization,
recapitalization,  reclassification,  stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may

                                       -8-
<PAGE>
be made in (i) the  maximum  number and kind of shares  provided in Article 4 of
the Plan, (ii) the number and kind of shares or other securities  subject to the
then outstanding Awards, and (iii) the price for each share or other unit of any
other securities subject to the then outstanding Awards.

     9.2 Change in Control.  Notwithstanding Section 9.1, upon the occurrence of
a Change in Control,  all Awards then  outstanding  under the Plan will be fully
vested and exercisable and all restrictions will immediately  cease,  unless, in
the case of a  transaction  described in clause  (iii) or (iv) in the  following
definition of Change in Control,  provisions  are made in  connection  with such
transaction  for  the  continuance  of the  Plan  and the  assumption  of or the
substitution  for such Awards with new Awards  covering the stock of a successor
employer  corporation,  or a parent  or  subsidiary  thereof,  with  appropriate
adjustments  as to the  number and kind of shares  and  prices.  As used in this
Plan,  "Change in  Control"  shall mean a change in control of the  Company of a
nature  that  would be  required  to be  reported  in  response  to Item 6(e) of
Schedule 14A of Regulation  14A  promulgated  under the Act;  provided that, for
purposes of this Plan, a Change in Control  shall be deemed to have occurred if:
(i) any Person (other than the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act),  directly or indirectly,  of securities of
the Company  which  represent  20% or more of the  combined  voting power of the
Company's  then  outstanding  securities;  (ii)  during  any  period  of two (2)
consecutive  years,  individuals who at the beginning of such period  constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company's shareholders,  of
each new  director  is approved  by a vote of at least  two-thirds  (2/3) of the
directors then still in office who were directors at the beginning of the period
but excluding  any  individual  whose  initial  assumption of office occurs as a
result of either an actual or threatened  election contest (as such term is used
in Rule 14a-11 of Regulation 14A  promulgated  under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board;  (iii) there is consummated  any con solidation or merger of the
Company in which the Company is not the  continuing or surviving  corporation or
pursuant to which shares of Common Stock are converted into cash,  securities or
other  property,  other  than a merger of the  Company  in which the  holders of
Common  Stock  immediately  prior to the  merger  have  the  same  proportionate
ownership of common stock of the  surviving  corporation  immediately  after the
merger;  (iv) there is consummated any consolidation or merger of the Company in
which the  Company  is the  continuing  or  surviving  corporation  in which the
holders  of Common  Stock  immediately  prior to the  merger do not own at least
fifty percent (50%), or such greater percentage as shall be set in any agreement
with  any  Participant,  or  more  of the  stock  of the  surviving  corporation
immediately after the merger; (v) there is consummated any sale, lease, exchange
or other transfer (in one  transaction or a series of related  transactions)  of
all,  or  substantially  all,  of  the  assets  of  the  Company;  or  (vi)  the
shareholders  of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.

     9.3 Adjustments by Committee.  Any  adjustments  pursuant to this Article 9
will be made by the Committee,  whose  determination as to what adjustments will
be made and the  extent  thereof  will be final,  binding,  and  conclusive.  No
fractional  interest  will be  issued  under  the  Plan on  account  of any such
adjustments. Only cash payments will be made in lieu of fractional shares.

                                       -9-
<PAGE>
                                   ARTICLE 10
                               GENERAL PROVISIONS

     10.1  Legend.  The  Committee  may require  each person  purchasing  shares
pursuant to an Award under the Plan to  represent  to and agree with the Company
in writing  that the  Participant  is  acquiring  the  shares  without a view to
distribution  thereof.  In  addition to any legend  required  by this Plan,  the
certificates  for such shares may include any legend which the  Committee  deems
appropriate to reflect any restrictions on transfer.

     All  certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules,  regulations  and other  requirements of the
Securities and Exchange  Commission,  any stock exchange upon which the Stock is
then listed,  any applicable Federal or state securities law, and any applicable
corporate  law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

     10.2 No Right to  Employment.  Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other Employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall there be a
limitation in any way on the right of the Company or any  Subsidiary by which an
Employee is employed to terminate his or her employment at any time.

     10.3  Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require,  prior to
the  issuance or  delivery  of any shares of Common  Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.  Unless  otherwise  prohibited by the Committee,
each  Participant may satisfy any such  withholding tax obligation by any of the
following means or by a combination of such means: (a) tendering a cash payment;
(b)  authorizing the Company to withhold from the shares  otherwise  issuable to
the  Participant  a number of shares  having a Fair Market  Value as of the "Tax
Date",  less than or equal to the amount of the withholding  tax obligation;  or
(c)  delivering  to the Company  unencumbered  shares  owned by the  Participant
having a Fair Market Value, as of the Tax Date, less than or equal to the amount
of the  withholding  tax  obligation.  The "Tax Date" shall be the date that the
amount of tax to be withheld is determined.

     10.4 No Assignment of Benefits.  No Option,  Award or other benefit payable
under this Plan  shall,  except as  otherwise  specifically  provided by law, be
subject in any manner to anticipation,  alienation,  attachment, sale, transfer,
assignment,  pledge,  encumbrance  or charge,  and any  attempt  to  anticipate,
alienate,  attach, sell, transfer,  assign, pledge, encumber or charge, any such
benefits  shall be void,  and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person  who  shall be  entitled  to such  benefit,  nor shall it be  subject  to
attachment or legal process for or against such person.

     10.5  Governing  Law. This Plan and actions  taken in  connection  herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.

                                      -10-
<PAGE>
     10.6  Application of Funds.  The proceeds  received by the Company from the
sale of shares of Common Stock  pursuant to Awards  granted under this Plan will
be used for general corporate purposes.

     10.7  Rights as a  Shareholder.  Except as  otherwise  provided in an Award
Agreement,  a Participant  shall have no rights as a shareholder  of the Company
until he or she becomes the holder of record of Common Stock.

     10.8  Laws of  Foreign  Jurisdictions.  Without  amending  this  Plan,  the
Committee  may grant or amend Awards to Employees  who are foreign  nationals or
employed  outside  the  United  States or both,  on such  terms  and  conditions
different  from those  specified  in this Plan as may,  in the  judgment  of the
Committee,  be  necessary  to comply with foreign law or practice and to further
the purposes of this Plan.

                                   ARTICLE 11
                              SHAREHOLDER APPROVAL

     The Plan shall be  effective on the  Effective  Date and shall be submitted
for  approval  by the  shareholders  of the  Company  at the  Annual  Meeting of
Shareholders  in 1998. If the  shareholders do not approve the Plan, it, and any
action taken under the Plan, shall be void and of no effect.




::ODMA\PCDOCS\GRR\212671\1
                                      -11-
<PAGE>
                                    EXHIBIT 5


                                November 23, 1998



Donnelly Corporation
49 West Third Street
Holland, Michigan 49423-2813

         Re:      Registration Statement on Form S-8 Relating to the
                  Donnelly Corporation 1998 Employee Stock Option Plan

Gentlemen:

     With respect to the Registration  Statement on Form S-8 (the  "Registration
Statement"),   filed  by  Donnelly  Corporation,  a  Michigan  corporation  (the
"Company"),  with the  Securities  and  Exchange  Commission  for the purpose of
registering under the Securities Act of 1933, as amended,  850,000 shares of the
Company's Class A common stock, par value $0.10 per share, for issuance pursuant
to the Company's 1998 Employee Stock Option Plan (the "Plan"),  we have examined
such documents and questions of law we consider necessary or appropriate for the
purpose of giving this opinion.  On the basis of such evaluation,  we advise you
that in our opinion the 850,000  shares covered by the  Registration  Statement,
upon the exercise of stock options,  at the prices described in the Registration
Statement,  but not less than the par value  thereof,  and upon delivery of such
shares and payment  therefor in accordance with the terms stated in the Plan and
the  Registration  Statement,  will be duly and legally  authorized,  issued and
outstanding and will be fully paid and nonassessable.

     We hereby  consent  to the  filing of this  opinion  as an  exhibit  to the
Registration  Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required  under Section 7 of
the  Securities Act of 1933, as amended,  or under the rules and  regulations of
the Securities and Exchange Commission relating thereto.

                                   Sincerely,

                     VARNUM, RIDDERING, SCHMIDT & HOWLETTLLP

                  /s/ Varnum, Riddering, Schmidt & Howlett LLP




::ODMA\PCDOCS\GRR\212671\1
                                      -12-
<PAGE>
                                  EXHIBIT 23(a)

Consent of Independent Certified Public Accountants


Donnelly Corporation
Holland, Michigan

We  hereby  consent  to the  incorporation  by  reference  in this  Registration
Statement of Donnelly  Corporation  for its 1998 Employee  Stock Option Plan, of
our  reports  dated  August  6,  1998,  relating  to the  combined  consolidated
financial  statements  and  schedules of Donnelly  Corporation  appearing in the
Company's Annual Report on Form 10-K for the year ended June 27, 1998.

We  also  consent  to  the  reference  to us as  experts  in  this  Registration
Statement.


                                   /s/ BDO Seidman, LLP

Grand Rapids, Michigan
November 25, 1998
[{"type": "S-8", "sequence": "1", "secsgml_size_bytes": 58794}]
{"company-data": {"conformed-name": "DONNELLY CORP", "cik": "0000805583", "assigned-sic": "3231", "irs-number": "380493110", "state-of-incorporation": "MI", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-67967", "film-number": "98759479"}, "business-address": {"street1": "414 E FORTIETH ST", "city": "HOLLAND", "state": "MI", "zip": "49423", "phone": "6167867000"}, "mail-address": {"street1": "424 EAST 40TH STREET", "city": "HOLLAND", "state": "MI", "zip": "49423"}}
--------------------------------------------------------------------------------
 As filed with the Securities and Exchange Commission on November 25, 1998 - 
                                                           Registration No. 333-

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                              DONNELLY CORPORATION
             (Exact name of registrant as specified in its charter)

            Michigan                                    38-0493110
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

               49 West Third Street, Holland, Michigan 49423-2813
               (Address of Principal Executive Offices) (Zip Code)

              Donnelly Corporation 1998 Employee Stock Option Plan
                            (Full Title of the Plan)

       Maryam Komejan, 49 West Third Street, Holland, Michigan 49423-2813
                     (Name and address of agent for service)

                          Copies of Communications to:
                             William J. Lawrence III
                    Varnum, Riddering, Schmidt & Howlett LLP
                      333 Bridge Street, N.W., P.O. Box 352
                        Grand Rapids, Michigan 49501-0352
                                 (616) 336-6000

                         CALCULATION OF REGISTRATION FEE
========================================================================================================================
                                                              Proposed              Proposed
           Title of                                            Maximum               Maximum
       Securities to be              Amount to be          Offering Price           Aggregate             Amount of
          Registered                  Registered            Per Share(2)         Offering Price       Registration Fee
------------------------------------------------------------------------------------------------------------------------
Class A Common Stock
($.10 Par Value)                   850,000 Shares(1)          $15.1875             $12,909,375             $3,810
========================================================================================================================
(1)      Represents the number of shares of Common Stock authorized for issuance
         under the Donnelly  Corporation  1998  Employee  Stock Option Plan (the
         "Plan").  This Registration  Statement also covers such  indeterminable
         additional number of shares as may be issuable under the Plan by reason
         of adjustments in the number of shares covered  thereby as described in
         the Prospectus.
(2)      For the purpose of computing the registration fee only, the price shown
         is based upon the price of $15.1875 per share,  the average of the high
         and low sales  prices for the Common Stock of Donnelly  Corporation  on
         the New York Stock  Exchange on November 20, 1998, in  accordance  with
         Rule 457(h).

Pursuant  to  Rule  416(a)  of the  General  Rules  and  Regulations  under  the
Securities Act of 1933, this Registration  Statement shall cover such additional
securities as may be offered or issued to prevent dilution  resulting from stock
splits, stock dividends or similar transactions.
INFORMATION REQUIRED IN REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference

     The Company's  Annual Report on Form 10-K for the year ended June 27, 1998,
which has been filed by the Company with the Commission  (File No.  1-9716),  is
incorporated  herein  by  reference.  All  other  reports  filed by the  Company
pursuant to Section  13(a) or 15(d) of the  Securities  Exchange Act of 1934, as
amended  (the  "Exchange  Act") since the end of the fiscal year  covered by the
foregoing Annual Report on Form 10-K are incorporated  herein by reference.  All
other reports or documents filed by the Company  pursuant to the requirements of
Sections 13(a),  13(c), 14 and 15(d) of the Exchange Act, subsequent to the date
of this  Registration  Statement and prior to the termination of the offering of
the securities  offered hereby shall be deemed to be  incorporated  by reference
herein  and to be a part  hereof  from the date of  filing  of such  reports  or
documents.  Any  statements  contained  in a  document  incorporated  herein  by
reference  shall be deemed to be modified  or  superseded  for  purposes of this
Prospectus  to  the  extent  that  a  statement   contained  herein  or  in  any
subsequently  filed  document  which also is  incorporated  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.

     The  consolidated   financial   statements  of  Donnelly   Corporation  and
subsidiaries as of June 27, 1998 and June 28, 1997, and for each of the years in
the  three-year  period  ended June 27,  1998,  have been  incorporated  in this
Registration   Statement  by  reference  in  reliance  upon  the  report,   also
incorporated in this  Registration  Statement by reference,  of BDO Seidman LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.

     The  description  of the  Company's  Class A  Common  Stock,  the  class of
securities offered pursuant to this Registration  Statement, is contained in the
Company's  Registration  Statement  filed pursuant to Section 12 of the Exchange
Act,  and  is  incorporated  herein  by  reference,   including  any  subsequent
amendments or reports filed for the purpose of updating that description.

Item 4.  Description of Securities

     The class of securities to be offered is registered under Section 12 of the
Exchange Act.

Item 5.  Interests of Named Experts and Counsel

     Not applicable.

Item 6.  Indemnification of Directors and Officers

     The Articles of Incorporation of the Company provide that its directors and
officers are to be indemnified as of right to the fullest extent permitted under
the Michigan  Business  Corporation  Act  ("MBCA").  Under the MBCA,  directors,
officers,  employees or agents are entitled to indemnification  against expenses
(including  attorneys' fees) whenever they successfully defend legal proceedings
brought  against them by reason of the fact that they hold such a position  with
the corporation.  In addition,  with respect to actions not brought by or in the
right  of the  corporation,  indemnification  is  permitted  under  the MBCA for
expenses (including attorneys' fees), judgments, fines, penalties and reasonable
settlement if it is determined that the person seeking  indemnification acted in
a good  faith  and in a manner  he or she  reasonably  believed  to be in or not
opposed to the best interests of the corporation or its  shareholders  and, with
respect to criminal  proceedings,  he or she had no reasonable  cause to believe
that his or her conduct was unlawful.  With respect to actions  brought by or in
the right of the  corporation,  indemnification  is permitted under the MBCA for
expenses  (including  attorneys'  fees)  and  reasonable  settlements,  if it is
determined that the person seeking  indemnification acted in good faith and in a
manner  he or she  reasonably  believed  to be in or  not  opposed  to the  best
interests of the corporation or its shareholders;  provided,  indemnification is
not permitted if the person is found liable

                                       S-1
to the corporation  unless the court in which the action or suit was brought has
determined  that  indemnification  is  fair  and  reasonable  in view of all the
circumstances of the case.

     The MBCA  specifically  provides  that it is not the  exclusive  source  of
indemnity.   As  a  result,  the  Company  adopted  individual   indemnification
agreements  with its  directors.  Approved by the  Company's  shareholders,  the
indemnification agreements provide a contractually enforceable right, upon which
written notice, for prompt  indemnification,  except that indemnification is not
required  where:  (i)  indemnification  is provided  under an insurance  policy,
except for amounts in excess of insurance coverage;  (ii) a director is entitled
to  indemnification  by reason of having given notice of any circumstance  which
might  give rise to a claim  under any policy of  insurance,  the terms of which
have expired  prior to the  effective  date of the  indemnity  agreement;  (iii)
indemnification  is provided by the Company  outside of the agreement;  (iv) the
claim for indemnity is based upon or attributable to any transaction  involving:
intentional  misconduct  or a knowing  violation  of law, a violation of Section
551(1) or any  successor  provision  of the  MBCA,  or from  which the  director
derived an improper  personal  benefit;  (v) the claim  involved a violation  of
Section 16(b) of the Securities  Exchange Act of 1934 and amendments thereto, or
similar  provisions  of state law;  or (vi)  indemnification  by the  Company is
otherwise  prohibited  by  applicable  law. In the case of a derivative or other
action by or in the  right of the  Company  where a  director  is found  liable,
indemnity is predicted on the determination that indemnification is nevertheless
appropriate,  by:  majority  vote of a  committee  of two or more  disinterested
directors  appointed by the Board of Directors;  independent  legal counsel in a
written  opinion;  or the court in which the claim is  litigated,  whichever the
indemnitee chooses. The protection provided by the indemnification agreements is
broader than that under the MBCA, where indemnification in such circumstances is
available  only where  specifically  authorized  by the court where the claim is
litigated.

     In addition to the available  indemnification,  the  Company's  Articles of
Incorporation,  as amended,  limit the personal  liability of the members of its
Board of Directors for monetary damages with respect to claims by the Company or
its shareholders resulting from certain negligent acts or omissions.

Item 7.  Exemption from Registration Claimed

     Not applicable.

Item 8.  Exhibits

     Reference is made to the Exhibit Index which appears on page S-5.

Item 9.  Undertakings

     The undersigned registrant hereby undertakes:

          (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;

               (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,  represents a  fundamental  change in the  information  set
          forth in the registration statement;

               (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 (1)(i) and
          (1) (ii) 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

                                       S-2
paragraphs is contained in periodic  reports  filed by the  registrant
          pursuant to Section 13 or Section 15 (d) of Securities Exchange Act of
          1934 that are incorporated by reference in the registration statement.

          (2) That,  for the  purpose of  determining  any  liability  under the
     Securities Act of 1933, 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.

     The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  section  15(d)  of  the
Securities  Exchange  Act of 1934)  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 bonafide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted  to  directors,  officers  and  controlling
persons of the registrant pursuant to the foregoing  provisions  otherwise,  the
registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is,  therefore,  unenforceable.  In the  event a claim  for  indemnification
against such  liabilities  (other than the payment by the registrant of expenses
incurred  or  paid by a  director,  officer  or 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 Act and will be governed by the final adjudication of
such issue.

                                       S-3
SIGNATURES

     Pursuant to the  requirements  of the  Securities  Act of 1933, the Company
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  Holland,  State  of  Michigan,  on the 16th day of
October, 1998.

                                      DONNELLY CORPORATION

                                      By   /s/ J. Dwane Baumgardner  
                                           J. Dwane Baumgardner, President and
                                           Chief Executive Officer

                                POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS,  that each person whose  signature  appears
below constitutes and appoints J. Dwane Baumgardner and Maryam Komejan, and each
of them, his or her true and lawful  attorney-in-fact and agent, with full power
of substitution  and  resubstitution,  for him and in his or her name, place and
stead,  in any and all  capacities,  to sign any and all  amendments  (including
post-effective  amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any other regulatory authority,  granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing  required and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person,  hereby  ratifying and  confirming  all that said  attorney-in-fact  and
agent, or his or her  substitute,  may lawfully do or cause to be done by virtue
hereof.

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Registration  Statement  has been  signed  below on  October  16,  1998,  by the
following persons in the capacities indicated.

/s/ John A. Borden                            /s/ B. Patrick Donnelly, III
John A. Borden, Director                      B. Patrick Donnelly, III, Director

/s/ R. Eugene Goodson                         /s/ Joan E. Donnelly      
R. Eugene Goodson, Director                   Joan E. Donnelly, Director

/s/ Donald R. Uhlmann                         /s/ Thomas E. Leonard       
Donald R. Uhlmann, Director                   Thomas E. Leonard, Director

/s/ J. Dwane Baumgardner                      /s/ Gerald T. McNeive, Jr.      
J. Dwane Baumgardner, Director                Gerald T. McNeive, Jr., Director

/s/ Arnold F. Brookstone                      /s/ Scott E. Reed           
Arnold F. Brookstone, Director                Scott E. Reed, Senior Vice
                                              President and Chief Financial
                                              Officer

/s/ Rudolph B. Pruden                         /s/ Ronald L. Winowiecki   
Rudolph B. Pruden, Director                   Ronald L. Winowiecki, Corporate
                                              Controller and Chief Accounting
                                              Officer

::ODMA\PCDOCS\GRR\212671\1
                                       S-4
EXHIBIT INDEX

     The following exhibits are filed as a part of the Registration Statement:

Exhibit 4          Donnelly Corporation 1998 Employee Stock Option Plan

Exhibit 5          Opinion of Varnum, Riddering, Schmidt & Howlett LLP

Exhibit 23(a)      Consent of BDO Seidman LLP

Exhibit 23(b)      Consent of Varnum, Riddering, Schmidt & Howlett LLP (included
                   in Exhibit 5)

Exhibit 24         Power of Attorney - included on page S-4 hereof

                                       S-5
EXHIBIT 4

                              DONNELLY CORPORATION

                         1998 EMPLOYEE STOCK OPTION PLAN
TABLE OF CONTENTS

                                                                            Page

ARTICLE 1
         ESTABLISHMENT AND PURPOSE OF THE PLAN.................................1
         1.1      Establishment of the Plan....................................1
         1.2      Purpose of the Plan..........................................1
         1.3      Term of Plan.................................................1

ARTICLE 2
         DEFINITIONS...........................................................1

ARTICLE 3
         ADMINISTRATION........................................................3
         3.1      The Committee................................................3
         3.2      Committee Authority..........................................3

ARTICLE 4
         COMMON STOCK SUBJECT TO THE PLAN......................................4

ARTICLE 5
         ELIGIBILITY...........................................................5

ARTICLE 6
         STOCK OPTIONS.........................................................5
         6.1      Options......................................................5
         6.2      Grants.......................................................5
         6.3      Incentive Stock Options......................................5
         6.4      Terms of Options.............................................5

ARTICLE 7
         TERMINATION OR AMENDMENT OF THE PLAN..................................8

ARTICLE 8
         UNFUNDED PLAN.........................................................8

ARTICLE 9
         ADJUSTMENT PROVISIONS.................................................8
         9.1      Antidilution.................................................8
         9.2      Change in Control............................................8
         9.3      Adjustments by Committee.....................................9

                                       -i-
ARTICLE 10
         GENERAL PROVISIONS....................................................9
         10.1     Legend.......................................................9
         10.2     No Right to Employment......................................10
         10.3     Withholding of Taxes........................................10
         10.4     No Assignment of Benefits...................................10
         10.5     Governing Law...............................................10
         10.6     Application of Funds........................................10
         10.7     Rights as a Shareholder.....................................10
         10.8     Laws of Foreign Jurisdictions...............................10

ARTICLE 11
         SHAREHOLDER APPROVAL.................................................11

                                      -ii-
DONNELLY CORPORATION
                         1998 EMPLOYEE STOCK OPTION PLAN

                                    ARTICLE 1
                      ESTABLISHMENT AND PURPOSE OF THE PLAN

     1.1 Establishment of the Plan. Donnelly Corporation, a Michigan corporation
(the  "Company"),  hereby  establishes  a stock  option  plan to be known as the
"Donnelly  Corporation  1998 Employee  Stock Option Plan" (the  "Plan"),  as set
forth in this  document.  The Plan permits the granting of stock  options to key
employees of the Company and its subsidiaries.

     1.2  Purpose  of the  Plan.  The  purpose  of the  Plan is to  promote  the
long-term success of the Company for the benefit of the Company's  shareholders,
through  stock-based  compensation,  by aligning the  personal  interests of the
Company's  key  employees  with  those  of its  shareholders.  The  Plan is also
designed to allow key employees to participate in the Company's  future, as well
as to  enable  the  Company  to  attract,  retain  and  reward  such  employees.
Compensation  related to Awards under the Plan is generally  intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Code").

     1.3 Term of Plan.  No Awards  shall be granted  pursuant  to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date.

                                    ARTICLE 2
                                   DEFINITIONS

     For purposes of this Plan, the following  terms shall have the meanings set
forth below:

     2.1 Act means the Securities Exchange Act of 1934.

     2.2 Award means any award under this Plan of any Options.

     2.3 Award  Agreement  means an agreement  evidencing  the grant of an Award
under this Plan.  Awards under the Plan shall be  evidenced by Award  Agreements
that set forth the  details,  conditions  and  limitations  for each  Award,  as
established by the Committee and shall be subject to the terms and conditions of
the Plan.

     2.4 Award Date  means the date that an Award is made,  as  specified  in an
Award Agreement.

     2.5 Board means the Board of Directors of the Company.

     2.6 Change in Control is defined in Article 9.

     2.7 Code means the Internal Revenue Code of 1986, as amended.
2.8 Committee means the Committee,  as specified in Article 3, appointed by
the Board to  administer  the Plan,  no members of which  shall be  eligible  to
receive an Award pursuant to the Plan.

     2.9 Common Stock means the Class A Common Stock, $0.10 par value per share,
of the Company.

     2.10 Disability  means permanent and total  disability as determined  under
the rules and guidelines established by the Committee for purposes of the Plan.

     2.11 Effective Date means January 1, 1999.

     2.12 Employee means a salaried employee  (including  officers and directors
who are also employees) of the Company or a Subsidiary.

     2.13 Fair  Market  Value If the shares are  listed on a  established  stock
exchange or  exchanges,  Fair Market  Value per share shall be the closing  sale
price on such  exchange or  exchanges  on the day of grant or, if no sale of the
shares shall be made on any stock  exchange on that day, the next  preceding day
on which  there was a sale of  shares.  If the  shares  are not listed on such a
stock  exchange  or  exchanges,  the Fair  Market  Value per share  shall be the
closing sale price as reported by the National  Association of Securities Dealer
Automated  Quotation  System  ("NASDAQ") on the day of grant or, if there are no
sales reported by the NASDAQ on that date, the next preceding day on which there
was a sale reported by NASDAQ.

     2.14  Incentive  Stock Option or ISO means an option to purchase  shares of
Common Stock granted under Article 6, which is designated as an Incentive  Stock
Option and is intended to meet the requirements of Section 422 of the Code.

     2.15 Nonemployee  Director has the meaning set forth in Rule 16b-3(b)(3)(i)
or any successor definition adopted by the Securities and Exchange Commission.

     2.16  Nonqualified  Stock Option or NQSO means an option to purchase shares
of Common  Stock,  granted  under  Article  6, which is not an  Incentive  Stock
Option.

     2.17 Option means an Incentive Stock Option or a Nonqualified Stock Option.

     2.18 Option  Price means the price at which a share of Common  Stock may be
purchased  by a  Participant  pursuant  to  an  Option,  as  determined  by  the
Committee.

     2.19 Participant means an Employee of the Company or a Subsidiary who holds
an outstanding Award granted under the Plan.

                                       -2-
2.20 Permitted Transferee means (i) a spouse, a child, or a grandchild of a
Participant (each an "Immediate Family Member"),  (ii) a trust for the exclusive
benefit of a Participant and/or one or more Immediate Family Members, or (iii) a
partnership or limited  liability company whose only partners or members are the
Participant and/or one or more Immediate Family Members.

     2.21 Retirement  (including Normal, Early and Disability  Retirement) means
the termination of a  Participant's  employment with the Company or a Subsidiary
with eligibility for normal,  early or disability  retirement benefits under the
terms of the  Company's  pension  plan,  as amended and in effect at the time of
such termination of employment.

     2.22 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Act, as amended from time to time, or any successor rule.

     2.23  Subsidiary  means any corporation in which the Company owns directly,
or indirectly  through  subsidiaries,  at least fifty percent (50%) of the total
combined voting power of all classes of stock,  or any other entity  (including,
but  not  limited  to,  limited  liability  companies,  partnerships  and  joint
ventures) in which the Company owns at least fifty percent (50%) of the combined
equity thereof.

     2.24 Termination Date means January 1, 2004.

     2.25  Termination of Employment  means the  termination of a  Participant's
employment  with the  Company  or a  Subsidiary.  A  Participant  employed  by a
Subsidiary  shall also be deemed to incur a  Termination  of  Employment  if the
Subsidiary  ceases to be a Subsidiary and the  Participant  does not immediately
thereafter become an Employee of the Company or another Subsidiary.

                                    ARTICLE 3
                                 ADMINISTRATION

     3.1 The Committee. The Plan shall be administered by a committee designated
by the Board  consisting  of not less  than  three  (3)  directors  who shall be
appointed  from  time to time by the  Board,  each of whom  shall  qualify  as a
Nonemployee Director.

     3.2   Committee   Authority.   Subject  to  the   Company's   Articles   of
Incorporation,  Bylaws and the provisions of this Plan, the Committee shall have
full  authority to grant Awards to key Employees of the Company or a Subsidiary.
Awards may be granted singly, in combination, or in tandem. The authority of the
Committee shall include the following:

          (a) To select the key Employees of the Company or a Subsidiary to whom
     Awards may be granted under the Plan;

          (b) To determine  whether and to what extent Options are to be granted
     under the Plan;

                                       -3-
(c) To determine the number of shares of Common Stock to be covered by
     each Award;

          (d) To  determine  the terms and  conditions  of any Award  Agreement,
     including, but not limited to, the Option Price, any vesting restriction or
     limitation, any vesting schedule or acceleration thereof, or any forfeiture
     restrictions or waiver  thereof,  regarding any Award and the shares Common
     Stock  relating  thereto,  based on such  factors  as the  Committee  shall
     determine in its sole discretion;

          (e) To determine whether,  to what extent and under what circumstances
     grants of Awards  are to operate on a tandem  basis  and/or in  conjunction
     with or apart  from  other cash  compensation  arrangement  made by Company
     other than under the terms of this Plan;

          (f) To determine under what  circumstances  an Award may be settled in
     cash, Common Stock, or a combination thereof; and

          (g) To determine to what extent and under what circumstances shares of
     Common  Stock and other  amounts  payable with respect to an Award shall be
     deferred.

     The  Committee  shall have the  authority  to adopt,  alter and repeal such
administrative  rules,  guidelines and practices governing the Plan as it shall,
from time to time, deem advisable,  to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award  Agreement) and to
otherwise supervise the administration of the Plan. However, the Committee shall
take no action which will impair any Award previously  granted under the Plan or
cause  the Plan or the  Award  not to meet the  requirements  of Rule  16b-3.  A
majority of the Committee shall constitute a quorum,  and the acts of a majority
of a quorum at any  meeting,  or acts  reduced  to or  approved  in writing by a
majority  of the  members  of the  Committee,  shall  be the  valid  acts of the
Committee.   The  interpretation  and  construction  by  the  Committee  of  any
provisions  of the Plan or any Award  granted  under the Plan shall be final and
binding upon the Company, the Board and Participants, including their respective
heirs,  executors and assigns.  No member of the Board or the Committee shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or an Award granted hereunder.

                                    ARTICLE 4
                        COMMON STOCK SUBJECT TO THE PLAN

     Subject to  adjustment  as provided in Section 9.1,  the maximum  aggregate
number of shares of Common  Stock which may be issued  under this Plan shall not
exceed 850,000 shares,  which may be either authorized and unissued Common Stock
or issued Common Stock reacquired by the Company ("Plan Shares"). Determinations
as to the number of Plan Shares that remain  available  for  issuance  under the
Plan shall be made in accordance with such rules and procedures as the Committee
shall  determine  from  time  to  time,  which  shall  be  consistent  with  the
requirements of Rule 16b-3 and such interpretations thereof. If an Award expires
unexercised or is forfeited, cancelled, terminated or settled in cash in lieu of
Common Stock, the shares of Common Stock that

                                       -4-
were  theretofore  subject (or  potentially  subject) to such Award may again be
made subject to an Award Agreement.

                                    ARTICLE 5
                                   ELIGIBILITY

     The  persons  eligible  to  receive  Awards  under  the Plan  shall be such
Employees as the Committee selects from time to time. In making such selections,
the Committee  shall  consider  such factors as the Committee in its  discretion
shall deem  relevant.  When  granting  Awards,  the  Committee  may consider the
recommendation(s)  of the Company and its officers.  Participants  may hold more
than one Award,  but only on the terms and subject to the restrictions set forth
in the Plan and their respective Award Agreements.

                                    ARTICLE 6
                                  STOCK OPTIONS

     6.1  Options.  Each  Option  granted  under  this  Plan  shall be either an
Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NQSO").

     6.2  Grants.  The  Committee  shall  have  the  authority  to  grant to any
Participant one or more Incentive Stock Options,  Nonqualified Stock Options, or
both types of  Options.  To the extent  that any Option  does not  qualify as an
Incentive Stock Option (whether  because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.

     6.3  Incentive  Stock  Options.  Anything  in  the  Plan  to  the  contrary
notwithstanding,  no term of this Plan relating to Incentive Stock Options shall
be  interpreted,  amended or  altered,  nor shall any  discretion  or  authority
granted  under the Plan be so  exercised,  so as to  disqualify  the Plan  under
Section 422 of the Code, or, without the consent of the  Participants  affected,
to disqualify  any  Incentive  Stock Option under such Section 422. An Incentive
Stock  Option shall not be granted to an  individual  who, on the date of grant,
owns stock  possessing  more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company.  The aggregate  Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987,  that are exercisable for the first time by
a Participant  during any calendar  year shall not exceed the dollar  limitation
imposed by the Code. Incentive Stock Options may be granted only to employees of
the Company and Subsidiaries which fit the definition of subsidiary  corporation
in Section 424(f) of the Code.

     6.4 Terms of Options.  Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Committee shall, from time to time approve,
which  Agreement  shall  comply with and be subject to the  following  terms and
conditions:

                                       -5-
(a)  Option  Price.  The  Option  Price  per  share  of  Common  Stock
     purchasable  under an Option shall be  determined  by the  Committee at the
     time of grant but shall be not less than one hundred  percent (100%) of the
     Fair Market Value of the Common Stock at the Award Date.

          (b)  Option  Term.  The  term of each  Option  shall  be  fixed by the
     Committee,  but no Option  shall be  exercisable  more than ten (10)  years
     after the date the Option is granted.

          (c) Exercisability. Except as provided in Section 9.2, no Option shall
     be exercisable either in whole or in part prior to the first anniversary of
     the Award Date. Thereafter,  an Option shall be exercisable at such time or
     times and subject to such terms and  conditions  as shall be  determined by
     the  Committee  and set  forth in the  Award  Agreement.  If the  Committee
     provides that any Option is exercisable only in installments, the Committee
     may at any time waive such installment exercise provisions,  in whole or in
     part, based on such factors as the Committee may determine.

          (d) Method of Exercise.  Subject to whatever  installment exercise and
     waiting period provisions apply under subsection (c) above,  Options may be
     exercised in whole or in part at any time during the term of the Option, by
     giving written  notice of exercise to the Company  specifying the number of
     shares to be purchased. Such notice shall be accompanied by payment in full
     of  the  purchase   price  in  such  form  as  the  Committee  may  accept.
     Notwithstanding  the  foregoing,  an Option shall not be  exercisable  with
     respect to less than 100 shares of Common Stock unless the remaining shares
     covered  by an  Option  are fewer  than 100  shares.  If and to the  extent
     determined  by the  Committee  in its sole  discretion  at or after  grant,
     payment  in full or in part may also be made in the  form of  Common  Stock
     owned  for at least  six  months  by the  Participant  (and for  which  the
     Participant has good title free and clear of any liens and encumbrances) or
     by reduction in the number of shares  issuable upon such exercise based, in
     each case, on the Fair Market Value of the Common Stock on the last trading
     date preceding  payment as determined by the Committee . No shares of stock
     shall be issued until payment has been made. A Participant  shall generally
     have the rights to dividends or other rights of a shareholder  with respect
     to shares  subject to the Option when the optionee has given written notice
     of  exercise,  has  paid  for such  shares  as  provided  herein,  and,  if
     requested,  has given the  representation  described in Section 10.1 of the
     Plan.

          (e) Nontransferability of Options. No Option may be sold, transferred,
     pledged,  assigned,  or otherwise alienated or hypothecated,  other than by
     will or by the laws of  descent  and  distribution,  provided,  however,  a
     Nonqualified Stock Option may be transferred,  without consideration,  to a
     Permitted  Transferee if the  Participant  satisfies such conditions to the
     transfer as may be required by the Committee.  A Permitted Transferee shall
     succeed to all rights and benefits (except any right to further transfer of
     the Option) and be subject to all obligations and limitations applicable to
     the original  Participant.  However,  such rights and benefits  (except any
     right to further  transfer of the Option),  and obligations and limitations
     shall be  determined as if the original  Participant  continued to hold the
     Option,

                                       -6-
whereby  provisions of this Plan dealing with  termination  of  employment,
     retirement,  disability or death of a Participant will continue to refer to
     the original Participant  regardless of whether a Nonqualified Stock Option
     has been transferred to a Permitted  Transferee.  The Company shall have no
     obligation  to  notify  a  Permitted   Transferee  of  the  termination  of
     employment, retirement, disability, or death of a Participant. Further, all
     Options shall be exercisable,  during the Participant's  lifetime,  only by
     such  Participant,  or, in the case of a  Nonqualified  Stock Option,  by a
     Participant or a Permitted Transferee,  as the case may be. The designation
     of a person  entitled to exercise an Option after a person's death will not
     be deemed a transfer.

          (f)  Termination  of  Employment  for Reasons  other than  Retirement,
     Disability,  or Death.  Upon Termination of Employment for any reason other
     than  Retirement or on account of Disability or death,  each Option held by
     the  Participant  shall, to the extent rights to purchase shares under such
     Option have accrued at the date of such Termination of Employment and shall
     not have been fully exercised, be exercisable,  in whole or in part, at any
     time  within  a  period  of  three  (3)  months  following  Termination  of
     Employment,  subject,  however,  to  prior  expiration  of the term of such
     Options and any other limitations on the exercise of such Options in effect
     at the date of exercise.

          (g)  Termination  of Employment  for  Retirement or  Disability.  Upon
     Termination  of  Employment by reason of  Retirement  or  Disability,  each
     Option held by such  Participant  shall,  to the extent  rights to purchase
     shares  under the Option  have  accrued at the date of such  Retirement  or
     Disability and shall not have been fully exercised,  remain  exercisable in
     whole or in part, for a period of two (2) years following such  Termination
     of Employment, subject, however, to prior expiration according to its terms
     and other  limitations  imposed by the Plan. If the Participant  dies after
     such  Retirement  or  Disability,   the  Participant's   Options  shall  be
     exercisable in accordance with Section 6.4(h) below.

          (h)  Termination  of  Employment  for  Death.   Upon   Termination  of
     Employment due to death, each Option held by such Participant shall, to the
     extent rights to purchase shares under the Options have accrued at the date
     of death and shall not have been fully exercised, be exercisable,  in whole
     or in part, by the personal  representative of the Participant's  estate or
     by any person or persons who shall have  acquired the Option  directly from
     the  Participant  by  bequest  or  inheritance  only  under  the  following
     circumstances and during the following periods: (i) if the Participant dies
     while  employed by the Company or a Subsidiary,  at any time within two (2)
     years after his or her death,  or (ii) if the  Participant  dies during the
     extended exercise period following  Termination of Employment  specified in
     Section  6.4(g),  at any time within the longer of such extended  period or
     one (1) year  after  death,  subject,  however,  in any case,  to the prior
     expiration  of the  term of the  Option  and any  other  limitation  on the
     exercise of such Option in effect at the date of exercise.

          (i)  Termination of Options.  Any Option that is not exercised  within
     whichever of the exercise periods specified in Sections 6.4(f),  (g) or (h)
     is applicable shall terminate upon expiration of such exercise period.

                                       -7-
(j) Purchase and Settlement Provisions.  The Committee may at any time
     offer to purchase  an Option  previously  granted,  based on such terms and
     conditions  as  the  Committee  shall  establish  and  communicate  to  the
     Participant at the time that such offer is made.

                                    ARTICLE 7
                      TERMINATION OR AMENDMENT OF THE PLAN

     The Board may at any time amend,  discontinue or terminate this Plan or any
part  thereof  (including  any  amendment  deemed  necessary  to ensure that the
Company  may  comply  with any  applicable  regulatory  requirement);  provided,
however,  that,  unless  otherwise  required by law, the rights of a Participant
with  respect  to Awards  granted  prior to such  amendment,  discontinuance  or
termination,  may not be impaired  without the consent of such  Participant and,
provided  further,  without  the  approval  of the  Company's  shareholders,  no
amendment may be made which would (i) increase the aggregate number of shares of
Common  Stock that may be issued under this Plan (except by operation of Section
9.1);  (ii) change the definition of Employees  eligible to receive Awards under
this  Plan;  (iii)  decrease  the  option  price of any  Option to less than one
hundred  percent  (100%)  of the Fair  Market  Value on the date of grant for an
Option;  (iv) extend the maximum option period under Section 6.4(b) of the Plan;
or (v) cause the Plan not to comply with either  Rule  16b-3,  or any  successor
rule under the Act, or Section  162(m) of the Code.  The Committee may amend the
terms of any Award theretofore  granted,  prospectively or  retroactively,  but,
subject to Section 9.2, no such amendment or other action by the Committee shall
impair the rights of any Participant without the Participant's  consent.  Awards
may not be granted under the Plan after the Termination Date, but Awards granted
prior to such date  shall  remain in effect or become  exercisable  pursuant  to
their respective terms and the terms of this Plan.

                                    ARTICLE 8
                                  UNFUNDED PLAN

     This Plan is intended to constitute  an  "unfunded"  plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company,  nothing  contained  herein shall give any such  Participant any
rights that are greater than those of a general creditor of the Company.

                                    ARTICLE 9
                              ADJUSTMENT PROVISIONS

     9.1  Antidilution.  Subject  to the  provisions  of this  Article 9, if the
outstanding shares of Common Stock are increased,  decreased, or exchanged for a
different number or kind of shares or other securities,  or if additional shares
or new or different  shares or other  securities are distributed with respect to
such shares of Common Stock or other securities,  through merger, consolidation,
sale of all or substantially  all of the assets of the Company,  reorganization,
recapitalization,  reclassification,  stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may

                                       -8-
be made in (i) the  maximum  number and kind of shares  provided in Article 4 of
the Plan, (ii) the number and kind of shares or other securities  subject to the
then outstanding Awards, and (iii) the price for each share or other unit of any
other securities subject to the then outstanding Awards.

     9.2 Change in Control.  Notwithstanding Section 9.1, upon the occurrence of
a Change in Control,  all Awards then  outstanding  under the Plan will be fully
vested and exercisable and all restrictions will immediately  cease,  unless, in
the case of a  transaction  described in clause  (iii) or (iv) in the  following
definition of Change in Control,  provisions  are made in  connection  with such
transaction  for  the  continuance  of the  Plan  and the  assumption  of or the
substitution  for such Awards with new Awards  covering the stock of a successor
employer  corporation,  or a parent  or  subsidiary  thereof,  with  appropriate
adjustments  as to the  number and kind of shares  and  prices.  As used in this
Plan,  "Change in  Control"  shall mean a change in control of the  Company of a
nature  that  would be  required  to be  reported  in  response  to Item 6(e) of
Schedule 14A of Regulation  14A  promulgated  under the Act;  provided that, for
purposes of this Plan, a Change in Control  shall be deemed to have occurred if:
(i) any Person (other than the Company) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act),  directly or indirectly,  of securities of
the Company  which  represent  20% or more of the  combined  voting power of the
Company's  then  outstanding  securities;  (ii)  during  any  period  of two (2)
consecutive  years,  individuals who at the beginning of such period  constitute
the Board cease for any reason to constitute at least a majority thereof, unless
the election, or the nomination for election, by the Company's shareholders,  of
each new  director  is approved  by a vote of at least  two-thirds  (2/3) of the
directors then still in office who were directors at the beginning of the period
but excluding  any  individual  whose  initial  assumption of office occurs as a
result of either an actual or threatened  election contest (as such term is used
in Rule 14a-11 of Regulation 14A  promulgated  under the Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board;  (iii) there is consummated  any con solidation or merger of the
Company in which the Company is not the  continuing or surviving  corporation or
pursuant to which shares of Common Stock are converted into cash,  securities or
other  property,  other  than a merger of the  Company  in which the  holders of
Common  Stock  immediately  prior to the  merger  have  the  same  proportionate
ownership of common stock of the  surviving  corporation  immediately  after the
merger;  (iv) there is consummated any consolidation or merger of the Company in
which the  Company  is the  continuing  or  surviving  corporation  in which the
holders  of Common  Stock  immediately  prior to the  merger do not own at least
fifty percent (50%), or such greater percentage as shall be set in any agreement
with  any  Participant,  or  more  of the  stock  of the  surviving  corporation
immediately after the merger; (v) there is consummated any sale, lease, exchange
or other transfer (in one  transaction or a series of related  transactions)  of
all,  or  substantially  all,  of  the  assets  of  the  Company;  or  (vi)  the
shareholders  of the Company approve any plan or proposal for the liquidation or
dissolution of the Company.

     9.3 Adjustments by Committee.  Any  adjustments  pursuant to this Article 9
will be made by the Committee,  whose  determination as to what adjustments will
be made and the  extent  thereof  will be final,  binding,  and  conclusive.  No
fractional  interest  will be  issued  under  the  Plan on  account  of any such
adjustments. Only cash payments will be made in lieu of fractional shares.

                                       -9-
ARTICLE 10
                               GENERAL PROVISIONS

     10.1  Legend.  The  Committee  may require  each person  purchasing  shares
pursuant to an Award under the Plan to  represent  to and agree with the Company
in writing  that the  Participant  is  acquiring  the  shares  without a view to
distribution  thereof.  In  addition to any legend  required  by this Plan,  the
certificates  for such shares may include any legend which the  Committee  deems
appropriate to reflect any restrictions on transfer.

     All  certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules,  regulations  and other  requirements of the
Securities and Exchange  Commission,  any stock exchange upon which the Stock is
then listed,  any applicable Federal or state securities law, and any applicable
corporate  law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

     10.2 No Right to  Employment.  Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other Employee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall there be a
limitation in any way on the right of the Company or any  Subsidiary by which an
Employee is employed to terminate his or her employment at any time.

     10.3  Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require,  prior to
the  issuance or  delivery  of any shares of Common  Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.  Unless  otherwise  prohibited by the Committee,
each  Participant may satisfy any such  withholding tax obligation by any of the
following means or by a combination of such means: (a) tendering a cash payment;
(b)  authorizing the Company to withhold from the shares  otherwise  issuable to
the  Participant  a number of shares  having a Fair Market  Value as of the "Tax
Date",  less than or equal to the amount of the withholding  tax obligation;  or
(c)  delivering  to the Company  unencumbered  shares  owned by the  Participant
having a Fair Market Value, as of the Tax Date, less than or equal to the amount
of the  withholding  tax  obligation.  The "Tax Date" shall be the date that the
amount of tax to be withheld is determined.

     10.4 No Assignment of Benefits.  No Option,  Award or other benefit payable
under this Plan  shall,  except as  otherwise  specifically  provided by law, be
subject in any manner to anticipation,  alienation,  attachment, sale, transfer,
assignment,  pledge,  encumbrance  or charge,  and any  attempt  to  anticipate,
alienate,  attach, sell, transfer,  assign, pledge, encumber or charge, any such
benefits  shall be void,  and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person  who  shall be  entitled  to such  benefit,  nor shall it be  subject  to
attachment or legal process for or against such person.

     10.5  Governing  Law. This Plan and actions  taken in  connection  herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Michigan.

                                      -10-
10.6  Application of Funds.  The proceeds  received by the Company from the
sale of shares of Common Stock  pursuant to Awards  granted under this Plan will
be used for general corporate purposes.

     10.7  Rights as a  Shareholder.  Except as  otherwise  provided in an Award
Agreement,  a Participant  shall have no rights as a shareholder  of the Company
until he or she becomes the holder of record of Common Stock.

     10.8  Laws of  Foreign  Jurisdictions.  Without  amending  this  Plan,  the
Committee  may grant or amend Awards to Employees  who are foreign  nationals or
employed  outside  the  United  States or both,  on such  terms  and  conditions
different  from those  specified  in this Plan as may,  in the  judgment  of the
Committee,  be  necessary  to comply with foreign law or practice and to further
the purposes of this Plan.

                                   ARTICLE 11
                              SHAREHOLDER APPROVAL

     The Plan shall be  effective on the  Effective  Date and shall be submitted
for  approval  by the  shareholders  of the  Company  at the  Annual  Meeting of
Shareholders  in 1998. If the  shareholders do not approve the Plan, it, and any
action taken under the Plan, shall be void and of no effect.

::ODMA\PCDOCS\GRR\212671\1
                                      -11-
EXHIBIT 5

                                November 23, 1998

Donnelly Corporation
49 West Third Street
Holland, Michigan 49423-2813

         Re:      Registration Statement on Form S-8 Relating to the
                  Donnelly Corporation 1998 Employee Stock Option Plan

Gentlemen:

     With respect to the Registration  Statement on Form S-8 (the  "Registration
Statement"),   filed  by  Donnelly  Corporation,  a  Michigan  corporation  (the
"Company"),  with the  Securities  and  Exchange  Commission  for the purpose of
registering under the Securities Act of 1933, as amended,  850,000 shares of the
Company's Class A common stock, par value $0.10 per share, for issuance pursuant
to the Company's 1998 Employee Stock Option Plan (the "Plan"),  we have examined
such documents and questions of law we consider necessary or appropriate for the
purpose of giving this opinion.  On the basis of such evaluation,  we advise you
that in our opinion the 850,000  shares covered by the  Registration  Statement,
upon the exercise of stock options,  at the prices described in the Registration
Statement,  but not less than the par value  thereof,  and upon delivery of such
shares and payment  therefor in accordance with the terms stated in the Plan and
the  Registration  Statement,  will be duly and legally  authorized,  issued and
outstanding and will be fully paid and nonassessable.

     We hereby  consent  to the  filing of this  opinion  as an  exhibit  to the
Registration  Statement. In giving this consent, we do not thereby admit that we
are within the category of persons whose consent is required  under Section 7 of
the  Securities Act of 1933, as amended,  or under the rules and  regulations of
the Securities and Exchange Commission relating thereto.

                                   Sincerely,

                     VARNUM, RIDDERING, SCHMIDT & HOWLETTLLP

                  /s/ Varnum, Riddering, Schmidt & Howlett LLP

::ODMA\PCDOCS\GRR\212671\1
                                      -12-
EXHIBIT 23(a)

Consent of Independent Certified Public Accountants

Donnelly Corporation
Holland, Michigan

We  hereby  consent  to the  incorporation  by  reference  in this  Registration
Statement of Donnelly  Corporation  for its 1998 Employee  Stock Option Plan, of
our  reports  dated  August  6,  1998,  relating  to the  combined  consolidated
financial  statements  and  schedules of Donnelly  Corporation  appearing in the
Company's Annual Report on Form 10-K for the year ended June 27, 1998.

We  also  consent  to  the  reference  to us as  experts  in  this  Registration
Statement.

                                   /s/ BDO Seidman, LLP

Grand Rapids, Michigan
November 25, 1998