Exhibit 10.1

 

EXECUTION COPY

 

 

DONALDSON COMPANY, INC.

$750,000,000
Senior Notes Issuable In Series

$125,000,000
3.72% Senior Notes, Series 2014-A,
due March 27, 2024

 

 

 

 

 

 

NOTE PURCHASE AGREEMENT

 

 

 

 

 

 

Dated as of March 27, 2014

 

 

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

 

 

SECTION

HEADING

 

PAGE

 

 

 

 

 

 

 

SECTION 1.

 

AUTHORIZATION OF NOTES

 

1

 

 

 

 

 

 

 

Section 1.1.

 

Amount; Establishment of Series

 

1

 

Section 1.2.

 

The Series 2014-A Notes

 

2

 

 

 

 

 

 

SECTION 2.

 

SALE AND PURCHASE OF SERIES 2014-A NOTES

 

3

 

 

 

 

 

 

SECTION 3.

 

CLOSING

 

3

 

 

 

 

 

 

SECTION 4.

 

CONDITIONS TO CLOSING

 

4

 

 

Section 4.1.

 

Representations and Warranties

 

4

 

Section 4.2.

 

Performance; No Default

 

4

 

Section 4.3.

 

Compliance Certificates

 

4

 

Section 4.4.

 

Opinions of Counsel

 

4

 

Section 4.5.

 

Purchase Permitted By Applicable Law, etc.

 

5

 

Section 4.6.

 

Sale of Other Notes

 

5

 

Section 4.7.

 

Payment of Special Counsel Fees

 

5

 

Section 4.8.

 

Private Placement Number

 

5

 

Section 4.9.

 

Changes in Corporate Structure

 

5

 

Section 4.10.

 

Proceedings and Documents

 

5

 

Section 4.11.

 

Subsidiary Guaranty

 

5

 

Section 4.12.

 

Funding Instructions

 

6

 

 

 

 

 

 

SECTION 5.

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

6

 

 

Section 5.1.

 

Organization; Power and Authority

 

6

 

Section 5.2.

 

Authorization, Etc

 

6

 

Section 5.3.

 

Disclosure

 

6

 

Section 5.4.

 

Organization and Ownership of Shares of Subsidiaries; Affiliates

 

7

 

Section 5.5.

 

Financial Statements

 

7

 

Section 5.6.

 

Compliance with Laws, Other Instruments, etc

 

8

 

Section 5.7.

 

Governmental Authorizations, etc

 

8

 

Section 5.8.

 

Litigation; Observance of Agreements, Statutes and Order

 

8

 

Section 5.9.

 

Taxes

 

8

 

Section 5.10.

 

Title to Property; Leases

 

9

 

Section 5.11.

 

Licenses, Permits, etc.

 

9

 

Section 5.12.

 

Compliance with ERISA

 

9

 

Section 5.13.

 

Private Offering by the Company

 

10

 

Section 5.14.

 

Use of Proceeds; Margin Regulations

 

10

 

Section 5.15.

 

Existing Indebtedness; Future Liens

 

10

-i-

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Section 5.16.

 

Foreign Assets Control Regulations, Etc.

 

11

 

Section 5.17.

 

Status under Certain Statutes

 

12

 

Section 5.18.

 

Environmental Matters

 

12

 

Section 5.19.

 

Solvency of Subsidiary Guarantor

 

13

 

 

 

 

 

 

SECTION 6.

 

REPRESENTATIONS OF THE PURCHASERS

 

13

 

 

Section 6.1.

 

Purchase for Investment

 

13

 

Section 6.2.

 

Source of Funds

 

13

 

 

 

 

 

 

SECTION 7.

 

INFORMATION AS TO COMPANY

 

15

 

 

Section 7.1.

 

Financial and Business Information

 

15

 

Section 7.2.

 

Officer’s Certificate

 

18

 

Section 7.3.

 

Inspection

 

18

 

 

 

 

 

 

SECTION 8.

 

PREPAYMENT OF THE NOTES

 

19

 

 

Section 8.1.

 

Required Prepayments

 

19

 

Section 8.2.

 

Optional Prepayments with Make-Whole Amount

 

19

 

Section 8.3.

 

Allocation of Partial Prepayments

 

19

 

Section 8.4.

 

Maturity; Surrender, etc.

 

20

 

Section 8.5.

 

Purchase of Notes

 

20

 

Section 8.6.

 

Make-Whole Amount

 

20

 

Section 8.7.

 

Change in Control

 

22

 

Section 8.8.

 

Payments Due on Non-Business Days

 

23

 

 

 

 

 

 

SECTION 9.

 

AFFIRMATIVE COVENANTS

 

23

 

 

Section 9.1.

 

Compliance with Law

 

23

 

Section 9.2.

 

Insurance

 

23

 

Section 9.3.

 

Maintenance of Properties

 

24

 

Section 9.4.

 

Payment of Taxes and Claims

 

24

 

Section 9.5.

 

Corporate Existence, etc.

 

24

 

 

 

 

 

 

SECTION 10.

 

NEGATIVE COVENANTS

 

24

 

 

Section 10.1.

 

Consolidated Indebtedness; Indebtedness of Restricted Subsidiaries

 

24

 

Section 10.2.

 

Liens

 

25

 

Section 10.3.

 

Sale of Assets

 

26

 

Section 10.4.

 

Mergers, Consolidations, etc.

 

27

 

Section 10.5.

 

Disposition of Stock of Restricted Subsidiaries

 

28

 

Section 10.6.

 

Designation of Unrestricted Subsidiaries

 

28

 

Section 10.7.

 

Terrorism Sanctions Regulations

 

29

 

Section 10.8.

 

Nature of Business

 

29

 

Section 10.9.

 

Transactions with Affiliates

 

29

 

Section 10.10.

Additional Subsidiary Guarantors

 

29

- ii -

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SECTION 11.

 

EVENTS OF DEFAULT

 

30

 

 

 

 

 

 

SECTION 12.

 

REMEDIES ON DEFAULT, ETC.

 

32

 

 

Section 12.1.

 

Acceleration

 

32

 

Section 12.2.

 

Other Remedies

 

33

 

Section 12.3.

 

Rescission

 

33

 

Section 12.4.

 

No Waivers or Election of Remedies, Expenses, etc.

 

33

 

 

 

 

 

 

SECTION 13.

 

REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

 

33

 

 

 

 

 

 

Section 13.1.

 

Registration of Notes

 

33

 

Section 13.2.

 

Transfer and Exchange of Notes

 

34

 

Section 13.3.

 

Replacement of Notes

 

34

 

 

 

 

 

 

SECTION 14.

 

PAYMENTS ON NOTES

 

35

 

 

Section 14.1.

 

Place of Payment

 

35

 

Section 14.2.

 

Home Office Payment

 

35

 

 

 

 

 

 

SECTION 15.

 

EXPENSES, ETC.

 

35

 

 

Section 15.1.

 

Transaction Expenses

 

35

 

Section 15.2.

 

Survival

 

36

 

 

 

 

 

 

SECTION 16.

 

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

 

36

 

 

 

 

 

 

SECTION 17.

 

AMENDMENT AND WAIVER

 

36

 

 

 

 

 

 

Section 17.1.

 

Requirements

 

36

 

Section 17.2.

 

Solicitation of Holders of Notes

 

36

 

Section 17.3.

 

Binding Effect, etc.

 

37

 

Section 17.4.

 

Notes held by Company, etc.

 

37

 

 

 

 

 

 

SECTION 18.

 

NOTICES

 

37

 

 

 

 

 

 

SECTION 19.

 

REPRODUCTION OF DOCUMENTS

 

38

 

 

 

 

 

 

SECTION 20.

 

CONFIDENTIAL INFORMATION

 

38

 

 

 

 

 

 

SECTION 21.

 

SUBSTITUTION OF PURCHASER

 

39

 

 

 

 

 

 

SECTION 22.

 

MISCELLANEOUS

 

40

 

 

 

 

 

 

Section 22.1.

 

Successors and Assigns

 

40

 

Section 22.2.

 

Accounting Terms

 

40

- iii -

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Section 22.3.

 

Severability

 

40

 

Section 22.4.

 

Construction

 

40

 

Section 22.5.

 

Counterparts

 

40

 

Section 22.6.

 

Governing Law

 

40

 

 

 

 

 

 

SECTION 1.

 

DEFINITIONS

 

1

 

 

 

 

 

 

SECTION 2.

 

GUARANTY

 

1

 

 

 

 

 

 

SECTION 3.

 

GUARANTOR’S OBLIGATIONS UNCONDITIONAL

 

2

 

 

 

 

 

 

SECTION 4.

 

FULL RECOURSE OBLIGATIONS

 

4

 

 

 

 

 

 

SECTION 5.

 

WAIVER

 

4

 

 

 

 

 

 

SECTION 6.

 

SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY

 

4

 

 

 

 

 

 

SECTION 7.

 

EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.

 

5

 

 

 

 

 

 

SECTION 8.

 

TERM OF AGREEMENT

 

5

 

 

 

 

 

 

SECTION 10.

 

NOTICES

 

6

 

 

 

 

 

 

SECTION 11.

 

SURVIVAL

 

7

 

 

 

 

 

 

SECTION 12.

 

SUBMISSION TO JURISDICTION

 

7

 

 

 

 

 

 

SECTION 13.

 

MISCELLANEOUS

 

7

 

 

 

 

 

 

SCHEDULE A

—

Information Relating To Purchasers

 

 

 

 

 

 

 

 

SCHEDULE B

—

Defined Terms

 

 

 

 

 

 

 

 

SCHEDULE B-1

—

Existing Investments

 

 

 

 

 

 

 

 

SCHEDULE 5.4

—

Subsidiaries of The Company And Ownership of Subsidiary Stock

 

 

 

 

 

 

 

 

SCHEDULE 5.5

—

Financial Statements

 

 

- iv -

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SCHEDULE 5.15

—

Existing Indebtedness

 

 

 

 

SCHEDULE 10.2

—

Existing Liens

 

 

 

 

EXHIBIT 1.1-A

—

Form of Senior Note

 

 

 

 

EXHIBIT 1.1-B

—

Form of Supplement

 

 

 

 

EXHIBIT 1.1-C

—

Form of Subsidiary Guaranty

 

 

 

 

EXHIBIT 1.2

—

Form of Series 2014-A Senior Note

 

 

 

 

EXHIBIT 4.4(A)

—

Form of Opinion of Counsel For The Company

 

 

 

 

EXHIBIT 4.4(B)

—

Form of Opinion of Special Counsel For The Purchasers

- v -

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Donaldson Company, Inc.

Note Purchase Agreement

DONALDSON COMPANY, INC.
1400 West 94th Street
Minneapolis, Minnesota 55440
(612) 887-3131
Fax: (612) 887 3005

$750,000,000
Senior Notes Issuable In Series

$125,000,000
3.72% Senior Notes, Series 2014-A,
due March 27, 2024

Dated as of March 27, 2014

TO EACH OF THE PURCHASERS LISTED IN
          THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

          DONALDSON COMPANY, INC., a Delaware corporation (the “Company”),
agrees with you as follows:

SECTION 1. AUTHORIZATION OF NOTES.

          Section 1.1. Amount; Establishment of Series. The Company is
contemplating the issue and sale of up to $750,000,000 aggregate principal
amount of its Senior Notes issuable in series (the “Notes”, such term to include
any such Notes issued in substitution therefor pursuant to Section 13 of this
Agreement). The Notes shall be substantially in the form set out in Exhibit
1.1-A, with such changes therefrom, if any, as may be approved by the purchasers
of such Notes, or series thereof, and the Company. Certain capitalized terms
used in this Agreement are defined in Schedule B; references to a “Schedule” or
an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement. The Notes may be issued in one or more series. Each
series of Notes, other than the initial series, shall be issued pursuant to a
supplement to this Agreement (a “Supplement”) in substantially the form of
Exhibit 1.1-B, and shall be subject to the following terms and conditions:

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

          (a) the designation of each series of Notes shall distinguish the
Notes of one series from the Notes of all other series and the designation of
each tranche within a series shall distinguish the Notes of one tranche from the
Notes of all other tranches;

 

 

 

          (b) the Notes of each series shall rank pari passu with the Notes of
all other series and the Company’s other outstanding unsecured Indebtedness that
has not been expressly subordinated to any other Indebtedness of the Company;

 

 

 

          (c) each series of Notes shall be dated the date of issue, bear
interest at such rate or rates, mature on such date or dates, be subject to such
mandatory prepayments on the dates and with the Make-Whole Amounts, if any, as
are provided in the Supplement under which such Notes are issued, and shall have
such additional or different conditions precedent to closing and such additional
or different representations and warranties or other terms and provisions as
shall be specified in such Supplement;

 

 

 

          (d) the Subsidiary Guarantor shall deliver an acknowledgement that the
Subsidiary Guaranty applies to such additional series of Notes and that the
Subsidiary Guaranty continues in full force and effect; and

 

 

 

          (e) except to the extent provided in foregoing clauses (a) through
(d), all of the provisions of this Agreement shall apply to the Notes of each
series.

The Purchasers of the Series 2014-A Notes need not purchase subsequent series of
Notes.

          Section 1.2. The Series 2014-A Notes. (a) The Company has authorized,
as the initial series of Notes hereunder, the issue and sale of $125,000,000
aggregate principal amount of its 3.72% Senior Notes, Series 2014-A, due March
27, 2024 (the “Series 2014-A Notes” (such term to include any such Notes issued
in substitution therefor pursuant to Section 13 of this Agreement)). The Series
2014-A Notes shall be substantially in the form set out in Exhibit 1.2 with such
changes therefrom, if any, as may be approved by you and the Company.

          (b) Additional Interest. If the Debt to EBITDA Ratio at any time
exceeds 3.5 to 1.00, as evidenced by an Officer’s Certificate delivered pursuant
to Section 7.2(a), the interest rate payable on each series of Notes shall be
increased by 0.50% (the “Additional Interest”), commencing on the first day of
the first fiscal quarter following the fiscal quarter in respect of which such
Certificate was delivered and continuing until the Company has provided an
Officer’s Certificate pursuant to Section 7.2(a) demonstrating that, as of the
end of the fiscal quarter in respect of which such Certificate is delivered, the
Debt to EBITDA Ratio is not more than 3.5 to 1.0. Following delivery of an
Officer’s Certificate demonstrating that the Debt to EBITDA Ratio did not exceed
3.5 to 1.0, the additional 0.50% interest shall cease to accrue or be payable
for any fiscal quarter subsequent to the fiscal quarter in respect of which such
Certificate is delivered.

          (c) Subsidiary Guaranties. All of the outstanding Notes will be
guarantied by the Subsidiary Guarantor pursuant to a guaranty substantially in
the form set out in Exhibit 1.1-C (the “Subsidiary Guaranty”).

- 2 -

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Donaldson Company, Inc.

Note Purchase Agreement

          (d) Release of Subsidiary Guaranty. Each holder of a Note agrees to
release and discharge a Subsidiary Guarantor from the Subsidiary Guaranty upon
written request of the Company, provided that (i) such Subsidiary has been, or
concurrently with the release by the holders of Notes, will be released and
discharged as guarantor under and in respect of the Credit Agreement and any
other Indebtedness of the Company; (ii) such release and discharge is not part
of a plan of financing that contemplates such Subsidiary Guarantor guaranteeing
any other Indebtedness of the Company or becoming a borrower under the Credit
Agreement; (iii) no Default or Event of Default exists or will exist immediately
following such release and discharge; (iv) if any fee or other consideration is
paid or given to any holder of Indebtedness in connection with any such release,
other than the repayment of all or a portion of such Indebtedness, each holder
of a Note receives equivalent consideration on a pro rata basis; and (v) at the
time of such written request, the Company delivers to each holder of Notes a
certificate of a Responsible Officer certifying the matters set forth in clauses
(i) through (iv).

SECTION 2. SALE AND PURCHASE OF SERIES 2014-A NOTES.

          Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and each of the other purchasers named in Schedule A
(the “Other Purchasers”), and you and the Other Purchasers will purchase from
the Company, at the Closings provided for in Section 3, Series 2014-A Notes in
the principal amount specified opposite your names in Schedule A at the purchase
price of 100% of the principal amount thereof. Your obligation hereunder and the
obligations of the Other Purchasers are several and not joint obligations and
you shall have no liability to any Person for the performance or non-performance
by any Other Purchaser hereunder.

SECTION 3. CLOSING.

          The sale and purchase of the Series 2014-A Notes to be purchased by
you and the Other Purchasers shall occur at the offices of Chapman and Cutler
LLP, 111 West Monroe Street, Chicago, Illinois 60603 at 9:00 a.m., Chicago time,
at the respective closing (each a “Closing”) set forth in this Section 3. The
Closing of the Series 2014-A Notes shall occur on March 27, 2014. At the
Closing, the Company will deliver to each Purchaser of the Series 2014-A Notes
to be purchased by such Purchaser in the form of a single Series 2014-A Note (or
such greater number of Series 2014-A Notes in denominations of at least $500,000
as you may request) dated the date of the Closing and registered in your name
(or in the name of your nominee), against delivery by you to the Company or its
order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Company to account number 1502-5005-4130 at US Bank - Minneapolis, US Bank
Place, 601 Second Avenue South, Minneapolis, MN 55402, ABA No. 0910-0002-2. If
at the Closing the Company shall fail to tender such Series 2014-A Notes to be
purchased by such Purchaser on the Closing as provided above in this Section 3,
or any of the conditions specified in Section 4 shall not have been fulfilled to
your satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.

- 3 -

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Donaldson Company, Inc.

Note Purchase Agreement

SECTION 4. CONDITIONS TO CLOSING.

          Your obligation to purchase and pay for the Series 2014-A Notes to be
sold to you at the Closing is subject to the fulfillment to your satisfaction,
prior to or at the Closing, of the following conditions:

          Section 4.1. Representations and Warranties. (a) The representations
and warranties of the Company in this Agreement shall be correct when made and
at the time of the Closing.

          (b) The representations and warranties of the Subsidiary Guarantor in
the Subsidiary Guaranty shall be correct when made and at the time of the
Closing.

          Section 4.2. Performance; No Default. The Company and the Subsidiary
Guarantor shall have performed and complied with all agreements and conditions
contained in this Agreement and the Subsidiary Guaranty required to be performed
or complied with by it prior to or at the Closing and after giving effect to the
issue and sale of the Series 2014-A Notes (and the application of the proceeds
thereof as contemplated by Section 5.14) no Default or Event of Default shall
have occurred and be continuing. Neither the Company nor any Subsidiary shall
have entered into any transaction since the date of the Memorandum that would
have been prohibited by Sections 10.1 through 10.8 had such Sections applied
since such date.

          Section 4.3. Compliance Certificates.

          (a) Officer’s Certificate. The Company shall have delivered to you an
Officer’s Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1(a), 4.2 and 4.9 have been fulfilled.

          (b) Secretary’s Certificate. The Company shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Series 2014-A Notes and the Agreement.

          (c) Officer’s Certificate of the Subsidiary Guarantor. The Subsidiary
Guarantor shall have delivered to such Purchaser an Officer’s Certificate, dated
the date of the Closing, certifying that the conditions specified in Sections
4.1(b), 4.2 and 4.9 have been fulfilled.

          (d) Secretary’s Certificate of the Subsidiary Guarantor. The
Subsidiary Guarantor shall have delivered to such Purchaser a certificate, dated
the date of the Closing, certifying as to the resolutions attached thereto and
other corporate proceedings relating to the authorization, execution and
delivery of the Subsidiary Guaranty.

          Section 4.4. Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing (a) from
Dorsey & Whitney LLP, Counsel for the Company, covering the matters set forth in
Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company instructs its counsel to deliver such opinion to you) and (b) from
Chapman and Cutler LLP, your special counsel in connection with such
transactions,

- 4 -

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Donaldson Company, Inc.

Note Purchase Agreement

substantially in the form set forth in Exhibit 4.4(b) and covering such other
matters incident to such transactions as you may reasonably request.

          Section 4.5. Purchase Permitted By Applicable Law, etc. On the date of
the Closing your purchase of Series 2014-A Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation T, U or
X of the Board of Governors of the Federal Reserve System) and (iii) not subject
you to any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer’s Certificate certifying as
to such matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.

          Section 4.6. Sale of Other Notes. Contemporaneously with the Closing
the Company shall sell to the Other Purchasers and the Other Purchasers shall
purchase the Series 2014-A Notes to be purchased by them at the Closing as
specified in Schedule A.

          Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the Closing
the fees, charges and disbursements of your special counsel referred to in
Section 4.4, to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to the Closing.

          Section 4.8. Private Placement Number. A Private Placement Number
issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Series 2014-A Notes.

          Section 4.9. Changes in Corporate Structure. The Company shall not
have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

          Section 4.10. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.

          Section 4.11. Subsidiary Guaranty. The Subsidiary Guaranty shall have
been duly authorized, executed and delivered by each Subsidiary Guarantor, shall
constitute the legal, valid and binding contract and agreement of the Subsidiary
Guarantor and such Purchaser shall have received a true, correct and complete
copy thereof.

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Donaldson Company, Inc.

Note Purchase Agreement

          Section 4.12. Funding Instructions.At least three Business Days prior
to the date of the Closing, each Purchaser shall have received written
instructions signed by a Responsible Officer on letterhead of the Company
confirming the information specified in Section 3 including (i) the name and
address of the transferee bank, (ii) such transferee bank’s ABA number and (iii)
the account name and number into which the purchase price for the Series A Notes
is to be deposited.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company represents and warrants to you that:

          Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it owns or holds under lease, to transact the business it transacts and proposes
to transact, to execute and deliver this Agreement and the Series 2014-A Notes
and to perform the provisions hereof and thereof.

          Section 5.2. Authorization, Etc. This Agreement and the Series 2014-A
Notes have been duly authorized by all necessary corporate action on the part of
the Company, and this Agreement constitutes, and upon execution and delivery
thereof each Series 2014-A Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

          Section 5.3. Disclosure. The Company, through its agent, Wells Fargo
Securities, LLC, has delivered to you and each Other Purchaser a copy of a
Confidential Private Placement Memorandum, dated March 4, 2014 (the
“Memorandum”), relating to the transactions contemplated hereby. The Memorandum,
including the documents incorporated by reference therein, fairly describes, in
all material respects, the general nature of the business and principal
properties of the Company and its Subsidiaries. Except as disclosed in Schedule
5.3, and except for projections, as to which no representation or warranty is
made other than as stated in the next sentence, this Agreement, the Memorandum,
including the documents incorporated by reference therein, the documents,
certificates or other writings delivered to you by or on behalf of the Company
in connection with the transactions contemplated hereby, including the financial
statements listed in Schedule 5.5, taken as a whole, do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. The projections included in the materials delivered to you
by or on behalf of the Company are based on good faith estimates and assumptions
that the Company believes are reasonable. Except as expressly described in
Schedule 5.3, or in one of the documents, certificates or other writings
identified

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Donaldson Company, Inc.

Note Purchase Agreement

therein, or in the financial statements listed in Schedule 5.5, since January
31, 2014, there has been no change in the financial condition, operations,
business or properties of the Company and its Subsidiaries, taken as a whole,
except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the
Company that could reasonably be expected to have a Material Adverse Effect that
has not been set forth herein or in the other documents, certificates and other
writings delivered to you by or on behalf of the Company specifically for use in
connection with the transactions contemplated hereby.

          Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains complete and correct lists (i) of the
Company’s Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary, (ii) to the Company’s knowledge, of the
Company’s Affiliates, other than Subsidiaries, and (iii) of the Company’s
directors and senior officers. Each Subsidiary listed in Schedule 5.4 is a
Restricted Subsidiary.

          (b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien.

          (c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

          (d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement and limitations imposed
by corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
the Company or any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.

          Section 5.5. Financial Statements. The Company has delivered to you
and each Other Purchaser copies of the financial statements of the Company and
its Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present in all
material respects the consolidated financial condition of the Company and its
Subsidiaries as of the respective dates specified in such Schedule and the
consolidated results of their operations and cash flows for the respective
periods so specified and have been prepared in accordance with GAAP consistently
applied throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).

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Donaldson Company, Inc.

Note Purchase Agreement

          Section 5.6. Compliance with Laws, Other Instruments, etc. The
execution, delivery and performance by the Company of this Agreement and the
Series 2014-A Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any Material agreement, or
corporate charter or By-Laws, to which the Company or any Subsidiary is bound or
by which the Company or any Subsidiary or any of their respective properties may
be bound or affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or any
Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.

          Section 5.7. Governmental Authorizations, etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Series 2014-A Notes.

          Section 5.8. Litigation; Observance of Agreements, Statutes and Order.
(a) There are no actions, suits or proceedings pending or, to the knowledge of
the Company, threatened against or affecting the Company or any Subsidiary or
any property of the Company or any Subsidiary in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

          (b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws or the USA
PATRIOT Act or any of the other laws and regulations that are referred to in
Section 5.16) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

          Section 5.9. Taxes. The Company and its Subsidiaries have filed all
tax returns that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all other taxes
and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (i)
the amount of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves in accordance
with GAAP. The Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Company and its Subsidiaries in
respect of Federal, state or other taxes for all fiscal periods are adequate
under GAAP in all material respects. The Federal income tax liabilities of the
Company and its Subsidiaries have been determined by the Internal Revenue
Service and paid for all fiscal years up to and including the fiscal year ended
July 31, 2010.

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Donaldson Company, Inc.

Note Purchase Agreement

          Section 5.10. Title to Property; Leases. The Company and its
Subsidiaries have good and sufficient title to the properties that they own or
purport to own and that individually or in the aggregate are Material, including
all such properties reflected in the most recent audited balance sheet referred
to in Section 5.5 or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all material
respects.

          Section 5.11. Licenses, Permits, etc. (a) The Company and its
Subsidiaries own or possess all licenses, permits, franchises, authorizations,
patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known
Material conflict with the rights of others; and

          (b) to the best knowledge of the Company, no product of the Company
infringes in any Material respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or other right owned by
any other Person.

          Section 5.12. Compliance with ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could, individually or in the aggregate, reasonably be expected to
result in the incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate, in either case pursuant to Title I
or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise
tax provisions under the Code or federal law or section 4068 of ERISA or by the
granting of a security interest in connection with the amendment of a Plan other
than liabilities for benefits accrued in the ordinary course and other
liabilities or Liens as would not be individually or in the aggregate Material.

          (b) The present value of the aggregate benefit liabilities under each
of the Plans that are subject to Title IV of ERISA (other than Multiemployer
Plans), determined as of the end of such Plan’s most recently ended plan year on
the basis of the actuarial assumptions specified for funding purposes in such
Plan’s most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit liabilities
by more than 5% of Adjusted Consolidated Net Worth. The term “benefit
liabilities” has the meaning specified in section 4001 of ERISA and the terms
“current value” and “present value” have the meaning specified in section 3 of
ERISA.

          (c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.

- 9 -

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Donaldson Company, Inc.

Note Purchase Agreement

          (d) The expected postretirement benefit obligation (determined as of
the last day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Accounting Standards Codification Topic
715-60, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries is
not Material or has been disclosed in the most recent audited consolidated
financial statements of the Company and its Subsidiaries.

          (e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.

          Section 5.13. Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Series 2014-A Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any person other
than you, the Other Purchasers and not more than 20 other Institutional
Investors, each of which has been offered the Series 2014-A Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Series 2014-A Notes to the registration requirements of Section 5 of the
Securities Act.

          Section 5.14. Use of Proceeds; Margin Regulations. The Company will
apply the proceeds of the sale of the Series 2014-A Notes to the repayment of
Indebtedness to banks or other general corporate purposes, including share
repurchases. No part of the proceeds from the sale of the Series 2014-A Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), other than repurchases of
stock of the Company that are in compliance with Regulation U, or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock does not constitute more
than 10% of the value of the consolidated assets of the Company and its
Subsidiaries and the Company does not have any present intention that margin
stock will constitute 25% or more of the value of such assets. As used in this
Section, the terms “margin stock” and “purpose of buying or carrying” shall have
the meanings assigned to them in said Regulation U.

          Section 5.15. Existing Indebtedness; Future Liens. (a) Except as
described therein, Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Subsidiaries as of January 31,
2014, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the
Indebtedness of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the Company or such
Subsidiary that is outstanding in an

- 10 -

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Donaldson Company, Inc.

Note Purchase Agreement

aggregate principal amount in excess of $50,000,000 and no event or condition
exists with respect to any Indebtedness of the Company or any Subsidiary that is
outstanding in an aggregate principal amount in excess of $50,000,000 and that
would permit (or that with notice or the lapse of time, or both, would permit)
one or more Persons to cause such Indebtedness to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.

          (b) Neither the Company nor any Subsidiary has agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.2.

          Section 5.16. Foreign Assets Control Regulations, Etc. (a) Neither the
Company nor any Controlled Entity is (i) a Person whose name appears on the list
of Specially Designated Nationals and Blocked Persons published by the Office of
Foreign Assets Control, United States Department of the Treasury (“OFAC”) (an
“OFAC Listed Person”) (ii) an agent, department, or instrumentality of, or is
otherwise beneficially owned by, controlled by or acting on behalf of, directly
or indirectly, (x) any OFAC Listed Person or (y) any Person, entity,
organization, foreign country or regime that is subject to any OFAC Sanctions
Program, or (iii) otherwise blocked, subject to sanctions under or engaged in
any activity in violation of other United States economic sanctions, including
but not limited to, the Trading with the Enemy Act, the International Emergency
Economic Powers Act, the Comprehensive Iran Sanctions, Accountability and
Divestment Act (“CISADA”) or any similar law or regulation with respect to Iran
or any other country, the Sudan Accountability and Divestment Act, any OFAC
Sanctions Program, or any economic sanctions regulations administered and
enforced by the United States or any enabling legislation or executive order
relating to any of the foregoing (collectively, “U.S. Economic Sanctions”) (each
OFAC Listed Person and each other Person, entity, organization and government of
a country described in clause (i), clause (ii) or clause (iii), a “Blocked
Person”). Neither the Company nor any Controlled Entity has been notified that
its name appears or may in the future appear on a state list of Persons that
engage in investment or other commercial activities in Iran or any other country
that is subject to U.S. Economic Sanctions.

          (b) No part of the proceeds from the sale of the Notes hereunder
constitutes or will constitute funds obtained on behalf of any Blocked Person or
will otherwise be used by the Company or any Controlled Entity, directly or
indirectly, (i) in connection with any investment in, or any transactions or
dealings with, any Blocked Person, or (ii) otherwise in violation of U.S.
Economic Sanctions.

          (c) Neither the Company nor any Controlled Entity (i) has been found
in violation of, charged with, or convicted of, money laundering, drug
trafficking, terrorist-related activities or other money laundering predicate
crimes under the Currency and Foreign Transactions Reporting Act of 1970
(otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other
United States law or regulation governing such activities (collectively,
“Anti-Money Laundering Laws”) or any U.S. Economic Sanctions violations, (ii) to
the Company’s actual knowledge after making due inquiry, is under investigation
by any Governmental Authority for possible violation of Anti-Money Laundering
Laws or any U.S. Economic Sanctions violations, (iii) has been assessed civil
penalties under any Anti-Money Laundering Laws or any U.S. Economic Sanctions,
or (iv) has had any of its funds seized or forfeited in an action under any
Anti-Money

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Donaldson Company, Inc.

Note Purchase Agreement

Laundering Laws. The Company has established procedures and controls which it
reasonably believes are adequate (and otherwise comply with applicable law) to
ensure that the Company and each Controlled Entity is and will continue to be in
compliance with all applicable current and future Anti-Money Laundering Laws and
U.S. Economic Sanctions.

          (d) (1) Neither the Company nor any Controlled Entity (i) has been
charged with, or convicted of bribery or any other anti-corruption related
activity under any applicable law or regulation in a U.S. or any non-U.S.
country or jurisdiction, including but not limited to, the U.S. Foreign Corrupt
Practices Act and the U.K. Bribery Act 2010 (collectively, “Anti-Corruption
Laws”), (ii) to the Company’s actual knowledge after making due inquiry, is
under investigation by any U.S. or non-U.S. Governmental Authority for possible
violation of Anti-Corruption Laws, (iii) has been assessed civil or criminal
penalties under any Anti-Corruption Laws or (iv) has been or is the target of
sanctions imposed by the United Nations or the European Union;

          (2) To the Company’s actual knowledge after making due inquiry,
neither the Company nor any Controlled Entity has, within the last five years,
directly or indirectly offered, promised, given, paid or authorized the offer,
promise, giving or payment of anything of value to a Governmental Official or a
commercial counterparty for the purposes of: (i) influencing any act, decision
or failure to act by such Government Official in his or her official capacity or
such commercial counterparty, (ii) inducing a Governmental Official to do or
omit to do any act in violation of the Governmental Official’s lawful duty, or
(iii) inducing a Governmental Official or a commercial counterparty to use his
or her influence with a government or instrumentality to affect any act or
decision of such government or entity; in each case in order to obtain, retain
or direct business or to otherwise secure an improper advantage in violation of
any applicable law or regulation or which would cause any holder to be in
violation of any law or regulation applicable to such holder; and

          (3) No part of the proceeds from the sale of the Notes hereunder will
be used, directly or indirectly, for any improper payments, including bribes, to
any Governmental Official or commercial counterparty in order to obtain, retain
or direct business or obtain any improper advantage. The Company has established
procedures and controls which it reasonably believes are adequate (and otherwise
comply with applicable law) to ensure that the Company and each Controlled
Entity is and will continue to be in compliance with all applicable current and
future Anti-Corruption Laws.

          Section 5.17. Status under Certain Statutes. Neither the Company nor
any Subsidiary is subject to regulation under the Investment Company Act of
1940, as amended, the Public Utility Holding Company Act of 2005, as amended,
the ICC Termination Act, as amended, or the Federal Power Act, as amended.

          Section 5.18. Environmental Matters. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any claim,
and no proceeding has been instituted asserting any claim against the Company or
any of its Subsidiaries or any of their respective real properties now owned,
leased or operated by any of them or other assets nor, to the knowledge of the
Company or any Subsidiary, has any such proceeding been instituted

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Donaldson Company, Inc.

Note Purchase Agreement

against any of their respective real properties formerly owned, for damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing,

 

 

 

          (a) neither the Company nor any Subsidiary has knowledge of any facts
that would give rise to any claim for violation of Environmental Laws or damage
to the environment emanating from, occurring on or in any way related to real
properties now or formerly owned, leased or operated by any of them or to other
assets or their use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;

 

 

 

          (b) neither the Company nor any of its Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned, leased or operated
by any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and

 

 

 

          (c) all buildings on all real properties now owned, leased or operated
by the Company or any of its Subsidiaries are in compliance with applicable
Environmental Laws, except where failure to comply could not reasonably be
expected to result in a Material Adverse Effect.

          Section 5.19. Solvency of Subsidiary Guarantor. After giving effect to
the transactions contemplated herein and after giving due consideration to any
rights of contribution (i) the fair value of the assets of the Subsidiary
Guarantor (both at fair valuation and at present fair saleable value) exceeds
its liabilities, (ii) the Subsidiary Guarantor is able to and expects to be able
to pay its debts as they mature, and (iii) the Subsidiary Guarantor has capital
sufficient to carry on its business as conducted and as proposed to be
conducted.

SECTION 6. REPRESENTATIONS OF THE PURCHASERS.

          Section 6.1. Purchase for Investment. You represent that you are
purchasing the Series 2014-A Notes for your own account or for one or more
separate accounts maintained by you or for the account of one or more pension or
trust funds and not with a view to the distribution thereof, provided that the
disposition of your or their property shall at all times be within your or their
control. You understand that the Series 2014-A Notes have not been registered
under the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, and that the Company is not required to register the Series 2014-A
Notes. Each Purchaser further represents that it is an “accredited investor” (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act acting for its own account (and not for the account of others) or as a
fiduciary or agent for others (which others are also “accredited investors”).

          Section 6.2. Source of Funds. Each Purchaser severally represents that
at least one of the following statements is an accurate representation as to
each source of funds (a “Source”) to be used by it to pay the purchase price of
the Notes to be purchased by it hereunder:

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

          (a) the Source is an “insurance company general account” (as the term
is defined in the United States Department of Labor’s Prohibited Transaction
Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies approved by the
National Association of Insurance Commissioners (the “NAIC Annual Statement”))
for the general account contract(s) held by or on behalf of any employee benefit
plan together with the amount of the reserves and liabilities for the general
account contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTE 95-60)
or by the same employee organization in the general account do not exceed 10% of
the total reserves and liabilities of the general account (exclusive of separate
account liabilities) plus surplus as set forth in the NAIC Annual Statement
filed with its state of domicile; or

 

 

 

          (b) the Source is a separate account that is maintained solely in
connection with its fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust) that
has any interest in such separate account (or to any participant or beneficiary
of such plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account; or

 

 

 

          (c) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1, or (ii) a bank collective investment
fund, within the meaning of PTE 91-38 and, except as it has disclosed to the
Company in writing pursuant to this clause (c), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or

 

 

 

          (d) the Source constitutes assets of an “investment fund” (within the
meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM
Exemption), no employee benefit plan’s assets that are managed by the QPAM in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or
by the same employee organization and managed by such QPAM, represent more than
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM maintains an ownership interest in the
Company that would cause the QPAM and the Company to be “related” within the
meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM
and (ii) the names of any employee benefit plans whose assets in the investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization, represent 10% or more of the assets of such investment
fund, have been disclosed to the Company in writing pursuant to this clause
(d);or

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

          (e) the Source constitutes assets of a “plan(s)” (within the meaning
of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house
asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM
Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are
satisfied, neither the INHAM nor a person controlling or controlled by the INHAM
(applying the definition of “control” in Part IV(d)(3) of the INHAM Exemption)
owns a 10% or more interest in the Company and (i) the identity of such INHAM
and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the
Source have been disclosed to the Company in writing pursuant to this clause
(e); or

 

 

 

          (f) the Source is a governmental plan; or

 

 

 

          (g) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this clause (g);
or

 

 

 

          (h) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental
plan” and “separate account” shall have the respective meanings assigned to such
terms in section 3 of ERISA.

SECTION 7. INFORMATION AS TO COMPANY.

          Section 7.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:

 

 

 

 

          (a) Quarterly Statements — within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of,

 

 

 

 

 

          (i) a consolidated balance sheet of the Company and its Subsidiaries
as at the end of such quarter, and

 

 

 

 

 

          (ii) consolidated statements of income, changes in stockholders’
equity and cash flows of the Company and its Subsidiaries, for such quarter and
(in the case of the second and third quarters) for the portion of the fiscal
year ending with such quarter, setting forth in each case in comparative form
the figures for the corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial condition of the
companies being reported on and their results of operations and cash flows,
subject to changes resulting from year-end adjustments, provided that delivery
within the time period specified above of copies of the Company’s Quarterly
Report on Form 10-Q prepared in compliance

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

 

 

with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);

 

 

 

 

          (b) Annual Statements — within 120 days after the end of each fiscal
year of the Company, duplicate copies of,

 

 

 

 

 

          (i) a consolidated balance sheet of the Company and its Subsidiaries,
as at the end of such year, and

 

 

 

 

 

          (ii) consolidated statements of income, changes in stockholders’
equity and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon (without any qualification or exception as to
the scope of the audit on which such opinion is based) of independent certified
public accountants of recognized national standing, which opinion shall state
that such financial statements present fairly, in all material respects, the
financial condition of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity with GAAP, and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion in
the circumstances, provided that the delivery within the time period specified
above of the Company’s Annual Report on Form 10-K for such fiscal year (together
with the Company’s annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this Section 7.1(b);

 

 

 

 

          (c) Unrestricted Subsidiaries — if, at the time of delivery of any
financial statements pursuant to Section 7.1(a) or (b), Unrestricted
Subsidiaries account for more than 10% of (i) the consolidated total assets of
the Company and its Subsidiaries reflected in the balance sheet included in such
financial statements or (ii) the consolidated revenues of the Company and its
Subsidiaries reflected in the consolidated statement of income included in such
financial statements, an unaudited balance sheet for all Unrestricted
Subsidiaries taken as whole as at the end of the fiscal period included in such
financial statements and the related unaudited statements of income,
stockholders’ equity and cash flows for such Unrestricted Subsidiaries for such
period, together with consolidating statements reflecting all eliminations or
adjustments necessary to reconcile such group financial statements to the
consolidated financial statements of the Company and its Subsidiaries;

 

 

 

 

          (d) SEC and Other Reports — promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by the Company or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration statement (without
Exhibits except as expressly

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Note Purchase Agreement

 

 

 

 

requested by such holder), and each prospectus and all amendments thereto filed
by the Company or any Subsidiary with the Securities and Exchange Commission and
of all press releases and other statements made available generally by the
Company or any Restricted Subsidiary to the public concerning developments that
are Material;

 

 

 

          (e) Notice of Default or Event of Default — promptly, and in any event
within five days after a Responsible Officer obtains actual knowledge of the
existence of any actual or claimed Default or Event of Default or that any
Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;

 

 

 

          (f) ERISA Matters — promptly, and in any event within five days after
a Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:

 

 

 

 

          (i) with respect to any Plan, any reportable event, as defined in
section 4043(c) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or

 

 

 

 

 

          (ii) the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan, or
the receipt by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or

 

 

 

 

 

           (iii) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to have a Material Adverse Effect;

 

 

 

 

          (g) Notices from Governmental Authority — promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;

 

 

 

          (h) Requested Information — with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

Company to perform its obligations hereunder and under the Notes or the ability
of a Subsidiary Guarantor to perform its obligations under a Subsidiary Guaranty
as from time to time may be reasonably requested by any such holder of Notes
that is an Institutional Investor; and

 

 

 

          (i) Supplements to Agreement — in the event an additional series of
Notes is, or is proposed to be, issued under this Agreement, promptly, and in
any event within 10 Business Days after execution and delivery thereof, a true
copy of the Supplement pursuant to which such Notes are to be, or were, issued.

          Section 7.2. Officer’s Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or (b) shall be
accompanied by a certificate of a Senior Financial Officer setting forth:

 

 

 

          (a) Covenant Compliance — the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.1 during the quarterly or annual
period covered by the statements then being furnished. In the event that the
Company or any Subsidiary has made an election to measure any financial
liability using fair value (which election is being disregarded for purposes of
determining compliance with this Agreement pursuant to Section 22.2) as to the
period covered by any such financial statement, such Senior Financial Officer’s
certificate as to such period shall include a reconciliation from GAAP with
respect to such election; and

 

 

 

          (b) Event of Default — a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Restricted Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the certificate
and that such review has not disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or, if any
such condition or event existed or exists (including any such event or condition
resulting from the failure of the Company or any Restricted Subsidiary to comply
with any Environmental Law), specifying the nature and period of existence
thereof and what action the Company shall have taken or proposes to take with
respect thereto.

          Section 7.3. Inspection. The Company will permit the representatives
of each holder of Notes that is an Institutional Investor:

 

 

 

          (a) No Default — if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the Company and its Restricted Subsidiaries with the Company’s
officers, and (with the consent of the Company, which consent will not be
unreasonably withheld) its independent public accountants, and (with the consent
of the Company, which consent will not be unreasonably withheld) to visit the
other offices and properties of the

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

Company and each Restricted Subsidiary, all at such reasonable times and as
often as may be reasonably requested in writing; and

 

 

 

          (b) Default — if a Default or Event of Default then exists, at the
expense of the Company and upon reasonable prior notice to the Company, to visit
the principal executive office of the Company, to discuss the affairs, finances
and accounts of the Company and its Restricted Subsidiaries with the Company’s
officers, and (with the consent of the Company, which consent will not be
unreasonably withheld) its independent public accountants, and (with the consent
of the Company, which consent will not be unreasonably withheld) to visit the
other offices and properties of the Company and each Restricted Subsidiary, all
at such reasonable times and as often as may be reasonably requested in writing.

SECTION 8. PREPAYMENT OF THE NOTES.

          Section 8.1. Required Prepayments. No regularly scheduled prepayments
are due on the Series 2014-A Notes prior to their stated maturity.

          Section 8.2. Optional Prepayments with Make-Whole Amount. The Company
may, at its option, upon notice as provided below, prepay at any time all, or
from time to time any part of, the Notes of any series, including the Series
2014-A Notes, in an amount not less than $2,000,000 in the aggregate in the case
of a partial prepayment, at 100% of the principal amount so prepaid, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes of the series to be
prepaid written notice of each optional prepayment under this Section 8.2 not
less than 30 days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such date, the aggregate principal
amount of the Notes to be prepaid on such date, the principal amount of each
Note held by such holder to be prepaid (determined in accordance with Section
8.3), and the interest to be paid on the prepayment date with respect to such
principal amount being prepaid, and shall be accompanied by a certificate of a
Senior Financial Officer as to the estimated Make-Whole Amount due in connection
with such prepayment (calculated as if the date of such notice were the date of
the prepayment), setting forth the details of such computation. Two Business
Days prior to such prepayment, the Company shall deliver to each holder of Notes
a certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.

          Section 8.3. Allocation of Partial Prepayments. Except to the extent
that any holder or holders have rejected an offer of prepayment pursuant to
Section 8.7, in the case of each partial prepayment of the Notes of a series,
the principal amount of the Notes of such series to be prepaid shall be
allocated among all of the Notes of every tranche of such series at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment. Each such
partial prepayment pursuant to Section 8.2 shall, in respect of the Notes of a
series, be applied first to the payment due on such Notes at final maturity and
thereafter to any required prepayments on such Notes, in inverse order of
maturity. All partial prepayments made pursuant to Section 8.7 shall be applied
only to the Notes held by holders who have elected to participate in such
prepayment.

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Donaldson Company, Inc.

Note Purchase Agreement

          Section 8.4. Maturity; Surrender, etc. In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid or prepaid in full
shall be surrendered to the Company and canceled and shall not be reissued, and
no Note shall be issued in lieu of any prepaid principal amount of any Note.

          Section 8.5. Purchase of Notes. The Company will not, and will not
permit any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to
any provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

          Section 8.6. Make-Whole Amount. The term “Make-Whole Amount” means
with respect to any Series 2014A Note an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Series 2014A Note, minus the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings with respect to the Called Principal of such Series
2014A Note:

 

 

 

          “Called Principal” means, the principal of any Series 2014A Note that
is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

 

 

 

          “Discounted Value” means, with respect to the Called Principal of any
Series 2014A Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective scheduled
due dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor (applied on
the same periodic basis as that on which interest on such Note is payable) equal
to the Reinvestment Yield with respect to such Called Principal.

 

 

 

          “Reinvestment Yield” means, with respect to the Called Principal of
any Note, .50% over the yield to maturity implied by the yield(s) reported as of
10:00 a.m. (New York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on the display designated
as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg
Financial Markets for the most recently issued actively traded on-the-run U.S.
Treasury securities (“Reported”) having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date. If there are
no such U.S. Treasury securities Reported having a maturity equal to such
Remaining Average Life, then such implied yield to maturity will be determined
by

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

(a) converting U.S. Treasury bill quotations to bond equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between the yields Reported for the applicable most recently issued actively
traded on-the-run U.S. Treasury securities with the maturities (1) closest to
and greater than such Remaining Average Life and (2) closest to and less than
such Remaining Average Life. The Reinvestment Yield shall be rounded to the
number of decimal places as appears in the interest rate of the applicable Note.

 

 

 

          If such yields are not Reported or the yields Reported as of such time
are not ascertainable (including by way of interpolation), then “Reinvestment
Yield” means, with respect to the Called Principal of any Note, .50% over the
yield to maturity implied by the U.S. Treasury constant maturity yields
reported, for the latest day for which such yields have been so reported as of
the second Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable
successor publication) for the U.S. Treasury constant maturity having a term
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. If there is no such U.S. Treasury constant maturity having a
term equal to such Remaining Average Life, such implied yield to maturity will
be determined by interpolating linearly between (1) the U.S. Treasury constant
maturity so reported with the term closest to and greater than such Remaining
Average Life and (2) the U.S. Treasury constant maturity so reported with the
term closest to and less than such Remaining Average Life. The Reinvestment
Yield shall be rounded to the number of decimal places as appears in the
interest rate of the applicable Note.

 

 

 

          “Remaining Average Life” means, with respect to any Called Principal,
the number of years obtained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b) the
number of years, computed on the basis of a 360-day year composed of twelve
30-day months and calculated to two decimal places, that will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.

 

 

 

          “Remaining Scheduled Payments” means, all payments of such Called
Principal and interest thereon that would be due after the Settlement Date if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of such Note, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.4 or Section 12.1.

 

 

 

          “Settlement Date” means, the date on which such Called Principal is to
be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

          Section 8.7. Change in Control. (a) Notice of Change in Control. The
Company will, within five Business Days after any Responsible Officer has
knowledge of the occurrence of any Change in Control, give written notice of
such Change in Control to each holder of Notes. Such notice shall contain and
constitute an offer to prepay Notes as described in subparagraph (b) of this
Section 8.7 and shall be accompanied by the certificate described in
subparagraph (e) of this Section 8.7.

 

 

 

          (b) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.7 shall be an offer to prepay, in accordance
with and subject to this Section 8.7, all, but not less than all, the Notes held
by each holder (in this case only, “holder” in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the “Proposed Prepayment
Date”). If such Proposed Prepayment Date is in connection with an offer
contemplated by subparagraph (a) of this Section 8.7, such date shall be not
less than 30 Business Days and not more than 60 Business Days after the date of
such offer (if the Proposed Prepayment Date shall not be specified in such
offer, the Proposed Prepayment Date shall be the first Business Day after the
45th Business Day after the date of such offer).

 

 

 

          (c) Acceptance/Rejection. A holder of Notes may accept or reject the
offer to prepay made pursuant to this Section 8.7 by causing a notice of such
acceptance or rejection to be delivered to the Company not later than 20
Business Days after receipt by such holder of the most recent offer of
prepayment but in any event at least 10 Business Days prior to the Proposed
Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay
made pursuant to this Section 8.7 shall be deemed to constitute a rejection of
such offer by such holder.

 

 

 

          (d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.7 shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to the date of prepayment, but without
Make-Whole Amount or other premium.

 

 

 

          (e) Officer’s Certificate. Each offer to prepay the Notes pursuant to
this Section 8.7 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.7; (iii) the principal amount of each Note offered to be prepaid; (iv)
the interest that would be due on each Note offered to be prepaid, accrued to
the Proposed Prepayment Date; (v) that the conditions of this Section 8.7 have
been fulfilled; and (vi) in reasonable detail, the nature and date of the Change
in Control.

 

 

 

          (f) Certain Definitions. “Change in Control” means an event or series
of events by which: (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the SEC under the Exchange Act), directly or indirectly of Voting Stock of the
Company (or other securities convertible into such Voting Stock) representing
20% or more of the combined voting

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Note Purchase Agreement

 

 

 

power of all Voting Stock of the Company and shall have maintained such
beneficial ownership for 20 consecutive days, or (ii) during any period of 24
consecutive months, commencing before or after the date of this Agreement,
individuals who at the beginning of such 24-month period were directors of the
Company and individuals nominated to be directors of the Company by the
management of the Company (at the beginning of such 24-month period) shall cease
for any reason to constitute a majority of the board of directors of the
Company; or (iii) any Person or two Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of
the power to exercise, directly or indirectly, a controlling influence over the
management or policies of the Company.

 

 

 

          (g) All calculations contemplated in this Section 8.7 involving the
capital stock of any Person shall be made with the assumption that all
convertible Securities of such Person then outstanding and all convertible
Securities issuable upon the exercise of any warrants, options and other rights
outstanding at such time were converted at such time and that all options,
warrants and similar rights to acquire shares of capital stock of such Person
were exercised at such time.

 

 

          Section 8.8. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, (x) subject to clause
(y), any payment of interest on any Note that is due on a date that is not a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; and (y) any payment of principal of or Make-Whole
Amount on any Note (including principal due on the Maturity Date of such Note)
that is due on a date that is not a Business Day shall be made on the next
succeeding Business Day and shall include the additional days elapsed in the
computation of interest payable on such next succeeding Business Day.

SECTION 9. AFFIRMATIVE COVENANTS.

          The Company covenants that so long as any of the Notes are
outstanding:

 

 

          Section 9.1. Compliance with Law. The Company will, and will cause
each Subsidiary to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA Environmental Laws, the USA PATRIOT Act and the other laws and regulations
that are referred to in Section 5.16, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

 

          Section 9.2. Insurance. The Company will, and will cause each
Restricted Subsidiary to, maintain, with financially sound and reputable
insurers, insurance with respect to their respective

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Donaldson Company, Inc.

Note Purchase Agreement

properties and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles, co-insurance
and self-insurance, if adequate reserves are maintained with respect thereto) as
is customary in the case of entities of established reputations engaged in the
same or a similar business and similarly situated.

          Section 9.3. Maintenance of Properties. The Company will and will
cause each Restricted Subsidiary to maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times, provided that
this Section shall not prevent the Company or any Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

          Section 9.4. Payment of Taxes and Claims. The Company will, and will
cause each Subsidiary to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need pay any
such tax or assessment or claim if (i) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes, assessments and
claims in the aggregate could not reasonably be expected to have a Material
Adverse Effect.

          Section 9.5. Corporate Existence, etc. Subject to Section 10.4, the
Company will at all times preserve and keep in full force and effect its
corporate existence. Subject to Sections 10.3 and 10.4, the Company will at all
times preserve and keep in full force and effect the corporate existence of each
Restricted Subsidiary (unless merged into the Company or another Restricted
Subsidiary) and all rights and franchises of the Company and its Restricted
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such corporate
existence, right or franchise could not, individually or in the aggregate, have
a Material Adverse Effect.

SECTION 10. NEGATIVE  COVENANTS.

          The Company covenants that so long as any of the Notes are
outstanding:

          Section 10.1. Consolidated Indebtedness; Indebtedness of Restricted
Subsidiaries. The Company will not permit:

 

 

 

          (a) the Debt to EBITDA Ratio to be greater than 3.5 to 1.0 at any
time; provided that, for any period of not more than four successive fiscal
quarters, such ratio

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

may be greater than 3.5 to 1.0, but in no event greater than 4.0 to 1.0, if the
Company pays the Additional Interest provided for in Section 1.2(b); and

 

 

 

          (b) the Company or any Restricted Subsidiary to incur any Indebtedness
if, after giving effect thereto and to the application of the proceeds
therefrom, Priority Debt outstanding would exceed 20% of Consolidated Total
Capitalization.

 

 

          Section 10.2. Liens. The Company will not, and will not permit any
Restricted Subsidiary to, permit to exist, create, assume or incur, directly or
indirectly, any Lien on its properties or assets, whether now owned or hereafter
acquired (unless, concurrently with the incurrence, assumption or creation of
such Lien, the Company makes, or causes to be made, effective provision whereby
the Notes are equally and ratably secured by a Lien on the same property or
assets), except:

 

 

 

          (a) Liens existing on property or assets of the Company or any
Restricted Subsidiary as of the date of this Agreement that are described in
Schedule 10.2;

 

 

 

          (b) Liens for taxes, assessments or governmental charges not then due
and delinquent or the nonpayment of which is permitted by Section 9.4;

 

 

 

          (c) encumbrances in the nature of leases, subleases, zoning
restrictions, easements, rights of way and similar charges and encumbrances of
record on the use of real property and defects in title arising or incurred in
the ordinary course of business, which, individually and in the aggregate, do
not materially impair the use or value of the property or assets subject
thereto;

 

 

 

          (d) Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords’, carriers’, warehousemen’s,
mechanics’, materialmen’s and other similar liens) and Liens to secure the
performance of bids, tenders, leases or trade contracts, or to secure statutory
obligations (including obligations under workers compensation, unemployment
insurance and other social security legislation), surety or appeal bonds or
other Liens of like general nature incurred in the ordinary course of business
and not in connection with the borrowing of money;

 

 

 

          (e) any attachment or judgment Lien, unless the judgment it secures
has not, within 60 days after the entry thereof, been discharged or execution
thereof stayed pending appeal, or has not been discharged within 60 days after
the expiration of any such stay;

 

 

 

          (f) Liens securing Indebtedness of a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;

 

 

 

          (g) Liens (i) existing on property at the time of its acquisition by
the Company or a Restricted Subsidiary and not created in contemplation thereof,
whether or not the Indebtedness secured by such Lien is assumed by the Company
or a Restricted Subsidiary; or (ii) on property created contemporaneously with
its acquisition or within

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180 days of the acquisition or completion of construction or improvement thereof
to secure or provide for all or a portion of the purchase price or cost of
construction or improvement of such property after the date of Closing; or (iii)
existing on property of a Person at the time such Person is merged or
consolidated with, or becomes a Restricted Subsidiary of (other than Liens of an
Unrestricted Subsidiary that has been designated a Restricted Subsidiary
pursuant to Section 10.6), or substantially all of its assets are acquired by,
the Company or a Restricted Subsidiary and not created in contemplation thereof;
provided that in the case of clauses (i), (ii) and (iii) such Liens do not
extend to additional property of the Company or any Restricted Subsidiary (other
than property that is an improvement to or is acquired for specific use in
connection with the subject property) and, in the case of clause (ii) only, that
the aggregate principal amount of Indebtedness secured by each such Lien does
not exceed the lesser of the fair market value (determined in good faith by the
board of directors of the Company or by one or more officers of the Company to
whom authority to enter into the transaction has been delegated by the board of
directors) or cost of acquisition or construction of the property subject
thereto;

 

 

 

          (h) Liens coincident to asset securitization transactions;

 

 

 

          (i) Liens resulting from extensions, renewals or replacements of Liens
permitted by paragraphs (a), (f), (g) and (h), provided that (i) there is no
increase in the principal amount or decrease in maturity of the Indebtedness
secured thereby at the time of such extension, renewal or replacement, (ii) any
new Lien attaches only to the same property theretofore subject to such earlier
Lien and (iii) immediately after such extension, renewal or replacement no
Default or Event of Default would exist; and

 

 

 

          (j) Additional Liens securing Indebtedness not otherwise permitted by
paragraphs (a) through (i) above, provided that, at the time of creation,
assumption or incurrence thereof and immediately after giving effect thereto and
to the application of the proceeds therefrom, Priority Debt outstanding does not
exceed 20% of Consolidated Total Capitalization; provided, further, that
notwithstanding the foregoing, the Company shall not and shall not permit any of
its Subsidiaries to secure, pursuant to this Section 10.2(j), any Indebtedness
outstanding under or pursuant to any Material Credit Facility unless and until
the Notes (and any guaranty delivered in connection therewith) shall
concurrently be secured equally and ratably with such Indebtedness pursuant to
documentation reasonably acceptable to the Required Holders in substance and in
form, including, without limitation, an intercreditor agreement and opinions of
counsel to the Company and/or such Subsidiary, as the case may be, from counsel
that is reasonably acceptable to the Required Holders.

          Section 10.3. Sale of Assets. Except as permitted by Section 10.4, the
Company will not, and will not permit any Restricted Subsidiary to, sell, lease,
transfer or otherwise dispose of, including by way of merger (collectively a
“Disposition”), any assets, including capital stock of Restricted Subsidiaries,
in one or a series of transactions, to any Person, other than (a) Dispositions
in the ordinary course of business, (b) Dispositions by the Company to a
Restricted Subsidiary or by a Restricted Subsidiary to the Company or another
Restricted

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Subsidiary or (c) other Dispositions not otherwise permitted by this Section
10.3, including the sale of receivables pursuant to asset securitization
transactions, provided that the aggregate net book value of all assets so
disposed of in any fiscal year pursuant to this Section 10.3(c) does not exceed
20% of Consolidated Total Assets as of the end of the immediately preceding
fiscal year. For purposes of this Section 10.3, if the Company designates any
one or more Restricted Subsidiaries as an Unrestricted Subsidiary or
Unrestricted Subsidiaries and the aggregate book value of the assets of all such
Restricted Subsidiaries, at the time of such designation, exceeds 20% of
Consolidated Total Assets (determined as of the most recently ended fiscal
quarter), then the book value of all such assets in excess of such 20% of
Consolidated Total Assets shall be treated as Dispositions for purposes of this
Section 10.3. Notwithstanding the foregoing, the Company may, or may permit any
Restricted Subsidiary to, make a Disposition and the assets subject to such
Disposition shall not be subject to or included in the foregoing limitation and
computation contained in Section 10.3(c) of the preceding sentence to the extent
that (i) such assets were acquired or constructed not more than 180 days prior
to Closing and are leased back by the Company or any Restricted Subsidiary, as
lessee, within 180 days of the acquisition or construction thereof, or (ii) the
net proceeds from such Disposition are within one year of such Disposition (A)
reinvested in productive assets by the Company or a Restricted Subsidiary or (B)
applied to the payment or prepayment of any outstanding Indebtedness of the
Company or any Restricted Subsidiary that is not subordinated to the Notes. Any
prepayment of Notes pursuant to this Section 10.3 shall be in accordance with
Sections 8.2 and 8.3, without regard to the minimum prepayment requirements of
Section 8.2.

          Section 10.4. Mergers, Consolidations, etc. The Company will not, and
will not permit any Restricted Subsidiary to, consolidate with or merge with any
other Person or convey, transfer, sell or lease all or substantially all of its
assets in a single transaction or series of transactions to any Person except
that:

 

 

 

 

          (a) the Company may consolidate or merge with any other Person or
convey, transfer, sell or lease all or substantially all of its assets in a
single transaction or series of transactions to any Person, provided that:

 

 

 

 

 

          (i) the successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer, sale or lease all or
substantially all of the assets of the Company as an entirety, as the case may
be, shall be a solvent corporation organized and existing under the laws of the
United States or any State thereof (including the District of Columbia), and, if
the Company is not such corporation, such corporation (x) shall have executed
and delivered to each holder of any Notes its assumption of the due and punctual
performance and observance of each covenant and condition of this Agreement and
the Notes and (y) shall have caused to be delivered to each holder of any Notes
(A) an opinion of independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply with the
terms hereof and (B) an acknowledgment from each Subsidiary Guarantor that such
Subsidiary Guaranty continues in full force and effect;

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          (ii) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer, sale or lease
all or substantially all of the assets of the Company as an entirety, as the
case may be, could incur immediately thereafter $1.00 of additional Priority
Debt;

 

 

 

 

 

          (iii) immediately before and after giving effect to such transaction,
no Default or Event of Default shall exist; and

 

 

 

 

          (b) Any Restricted Subsidiary may (x) merge into the Company (provided
that the Company is the surviving corporation) or another Restricted Subsidiary
or (y) sell, transfer or lease all or any part of its assets to the Company or
another Restricted Subsidiary, or (z) merge or consolidate with, or sell,
transfer or lease all or substantially all of its assets to, any Person in a
transaction that is permitted by Section 10.3 or, as a result of which, such
Person becomes an Restricted Subsidiary; provided in each instance set forth in
clauses (x) through (z) that, immediately before and after giving effect
thereto, there shall exist no Default or Event of Default.

          Section 10.5. Disposition of Stock of Restricted Subsidiaries. The
Company (i) will not permit any Restricted Subsidiary to issue its capital
stock, or any warrants, rights or options to purchase, or securities convertible
into or exchangeable for, such capital stock, to any Person other than the
Company or another Restricted Subsidiary (other than directors’ qualifying
shares, shares satisfying local ownership requirements or shares for any similar
statutory purposes), and (ii) will not, and will not permit any Restricted
Subsidiary to, sell, transfer or otherwise dispose of any shares of capital
stock of a Restricted Subsidiary (other than directors’ qualifying shares,
shares satisfying local ownership requirements or shares for any similar
statutory purposes) if such sale would be prohibited by Section 10.3. If a
Restricted Subsidiary at any time ceases to be such as a result of a sale or
issuance of its capital stock or as a result of its redesignation as an
Unrestricted Subsidiary, any Liens on property of the Company or any other
Restricted Subsidiary securing Indebtedness owed to such Restricted Subsidiary,
which is not contemporaneously repaid, together with such Indebtedness, shall be
deemed to have been incurred by the Company or such other Restricted Subsidiary,
as the case may be, at the time such Restricted Subsidiary ceases to be a
Restricted Subsidiary.

          Section 10.6. Designation of Unrestricted Subsidiaries. The Company
may designate any Restricted Subsidiary as an Unrestricted Subsidiary and any
Unrestricted Subsidiary as a Restricted Subsidiary; provided that, (a) if such
Subsidiary initially is a Restricted Subsidiary, then such Restricted Subsidiary
may be subsequently designated as an Unrestricted Subsidiary and such
Unrestricted Subsidiary may be subsequently designated as a Restricted
Subsidiary, but no further changes in designation may be made, (b) if such
Subsidiary initially is an Unrestricted Subsidiary, then such Unrestricted
Subsidiary may be subsequently designated as a Restricted Subsidiary and such
Restricted Subsidiary may be subsequently designated as an Unrestricted
Subsidiary, but no further changes in designation may be made, (c) immediately
before and after designation of a Restricted Subsidiary as an Unrestricted
Subsidiary there exists no Default or Event of Default and (d) after designation
of a Restricted Subsidiary as an Unrestricted Subsidiary, the Company could
incur an additional $1.00 of Priority Debt. The Company shall

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promptly, and in any event within 10 days following such a change, notify each
holders of any change in the designation of any Subsidiary pursuant to this
Section 10.6.

          Section 10.7. Terrorism Sanctions Regulations. The Company will not
and will not permit any Controlled Entity (a) to become (including by virtue of
being owned or controlled by a Blocked Person), own or control a Blocked Person
or any Person that is the target of sanctions imposed by the United Nations or
by the European Union, or (b) directly or indirectly to have any investment in
or engage in any dealing or transaction (including, without limitation, any
investment, dealing or transaction involving the proceeds of the Notes) with any
Person if such investment, dealing or transaction (i) would cause any holder to
be in violation of any law or regulation applicable to such holder, or (ii) is
prohibited by or subject to sanctions under any U.S. Economic Sanctions, or (c)
to engage, nor shall any Affiliate of either engage, in any activity that could
subject such Person or any holder to sanctions under CISADA or any similar law
or regulation with respect to Iran or any other country that is subject to U.S.
Economic Sanctions.

          Section 10.8. Nature of Business. The Company will not, and will not
permit any Restricted Subsidiary to, engage in any business if, as a result, the
general nature of the business in which the Company and its Restricted
Subsidiaries, taken as a whole, would then be engaged would be substantially
changed from the general nature of the business in which the Company and its
Restricted Subsidiaries, taken as a whole, are engaged on the date of this
Agreement as described in the Memorandum.

          Section 10.9. Transactions with Affiliates. The Company will not and
will not permit any Restricted Subsidiary to enter into directly or indirectly
any Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the Company
or another Restricted Subsidiary), except upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtainable
in a comparable arm’s-length transaction with a Person not an Affiliate.

          Section 10.10. Additional Subsidiary Guarantors. (a) The Company will
cause any Subsidiary that is organized under the laws of any state or other
jurisdiction of the United States and that (whether or not required by the terms
of the Credit Agreement) is to guarantee, or otherwise become obligated with
respect to Indebtedness in respect of the Credit Agreement or the 2007 Note
Purchase Agreement, to enter into the Subsidiary Guaranty concurrently therewith
and as a part thereof to deliver to each of holder of the Notes:

 

 

 

          (i) a copy of an executed Joinder to the Subsidiary Guaranty;

 

 

 

          (ii) a certificate signed by a Responsible Officer of the Company or
of such Subsidiary confirming the accuracy of the representations and warranties
in paragraphs (a) through (g) of the Joinder to the Subsidiary Guaranty, with
respect to such Subsidiary and the Subsidiary Guaranty as it relates to such
Subsidiary, as applicable; and

 

 

 

          (iii) an opinion of counsel (who may be counsel for the Company)
reasonably satisfactory to the Required Holders addressed to each holder of the
Notes to the effect

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that the Subsidiary Guaranty of such Subsidiary has been duly authorized,
executed and delivered and that the Subsidiary Guaranty constitutes the legal,
valid and binding contract and agreement of such Subsidiary enforceable against
such Subsidiary in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles.

SECTION 11. EVENTS OF DEFAULT.

          An “Event of Default” shall exist if any of the following conditions
or events shall occur and be continuing:

 

 

 

          (a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or

 

 

 

          (b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or

 

 

 

          (c) the Company defaults in the performance of or compliance with any
term contained in Section 7.1(e) or Sections 10.1 through 10.9; or

 

 

 

          (d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b) and
(c) of this Section 11) and such default is not remedied within 30 days after
the earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from any
holder of a Note; or

 

 

 

          (e) any representation or warranty made in writing by or on behalf of
the Company or any Subsidiary Guarantor or by any officer of the Company or any
Subsidiary Guarantor in this Agreement or in the Subsidiary Guaranty or in any
writing furnished in connection with the transactions contemplated hereby proves
to have been false or incorrect in any material respect on the date as of which
made; or

 

 

 

          (f) (i) the Company or any Restricted Subsidiary is in default (as
principal or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is outstanding
in an aggregate principal amount in excess of 5% of Adjusted Consolidated Net
Worth (as of the end of the most recently completed fiscal period of the
Company) beyond any period of grace provided with respect thereto, or (ii) the
Company or any Restricted Subsidiary is in default in the performance of or
compliance with any term of any evidence of any Indebtedness that is outstanding
in an aggregate principal amount in excess of 5% of Adjusted Consolidated Net
Worth (as of the end of the most recently completed fiscal period of the
Company) or of any mortgage, indenture or other agreement relating thereto or
any other condition exists, and as a consequence of such default or condition
such Indebtedness has become, or has been declared, due and payable before its
stated maturity or before its regularly

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scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the giving of notice of
optional redemption, the passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity interests), the Company or
any Restricted Subsidiary has become obligated to purchase or repay Indebtedness
before its regular maturity or before its regularly scheduled dates of payment
in an aggregate outstanding principal amount in excess of 5% of Adjusted
Consolidated Net Worth (as of the end of the most recently completed fiscal
period of the Company); or

 

 

 

          (g) the Company or any Significant Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of authorizing any of the foregoing; or

 

 

 

          (h) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or any Significant
Subsidiary, a custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any Significant
Subsidiary, or any such petition shall be filed against the Company or any
Significant Subsidiary and such petition shall not be dismissed within 60 days;
or

 

 

 

          (i) a final judgment or judgments for the payment of money aggregating
in excess of 5% of Adjusted Consolidated Net Worth (as of the end of the most
recently completed fiscal period of the Company) are rendered against one or
more of the Company and its Significant Subsidiaries, which judgments are not,
within 60 days after entry thereof, bonded, discharged or stayed pending appeal,
or are not discharged within 60 days after the expiration of such stay; or

 

 

 

          (j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under Section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA Section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined
in accordance

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with Title IV of ERISA, shall exceed 5% of Adjusted Consolidated Net Worth (as
of the end of the most recently completed fiscal period of the Company), (iv)
the Company or any ERISA Affiliate shall have incurred or is reasonably expected
to incur any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans, (v) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi)
the Company or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect; or

 

 

 

          (k) any Subsidiary Guarantor defaults in the performance of or
compliance with any term contained in the Subsidiary Guaranty or the Subsidiary
Guaranty ceases to be in full force and effect, except as provided in Section
1.2(d) hereof, or is declared to be null and void in whole or in material part
by a court or other governmental or regulatory authority having jurisdiction or
the validity or enforceability thereof shall be contested by the Company or any
Subsidiary Guarantor or any of them renounces any of the same or denies that it
has any or further liability thereunder.

          As used in Section 11(j), the terms “employee benefit plan” and
“employee welfare benefit plan” shall have the respective meanings assigned to
such terms in Section 3 of ERISA.

SECTION 12. REMEDIES ON DEFAULT, ETC.

     Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in paragraph (g) or (h) of Section 11 (other than an Event of
Default described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.

          (b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 50% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.

          (c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to the Company, declare all the Notes held by
it or them to be immediately due and payable.

          Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without

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presentment, demand, protest or further notice, all of which are hereby waived.
The Company acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company (except as herein specifically provided for) and that the
provision for payment of a Make-Whole Amount by the Company in the event that
the Notes are prepaid or are accelerated as a result of an Event of Default, is
intended to provide compensation for the deprivation of such right under such
circumstances.

          Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.

          Section 12.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of more than 50% in principal amount of the Notes then outstanding, by
written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Notes,
all principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section
12.3 will extend to or affect any subsequent Event of Default or Default or
impair any right consequent thereon.

          Section 12.4. No Waivers or Election of Remedies, Expenses, etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements.

SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

          Section 13.1. Registration of Notes. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for

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registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an
Institutional Investor, promptly upon request therefor, a complete and correct
copy of the names and addresses of all registered holders of Notes.

          Section 13.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or his attorney duly authorized
in writing and accompanied by the address for notices of each transferee of such
Note or part thereof), the Company shall execute and deliver, at the Company’s
expense (except as provided below), one or more new Notes (as requested by the
holder thereof) of the same series in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Note.
Each such new Note shall be payable to such Person as such holder may request
and shall be substantially in the form of Note established for such series. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations set forth in Sections 6.1(to
the extent such representation is required for such transfer) and 6.2.

          Section 13.3. Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and

 

 

 

          (a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or another Institutional Investor holder of a Note
with a minimum net worth of at least $250,000,000, such Person’s own unsecured
agreement of indemnity shall be deemed to be satisfactory), or

 

 

 

          (b) in the case of mutilation, upon surrender and cancellation
thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note of the same series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.

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Donaldson Company, Inc.

Note Purchase Agreement

SECTION 14. PAYMENTS ON NOTES.

          Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in New York, New York at the principal office of Wells
Fargo Bank, N.A. in such jurisdiction. The Company may at any time, by notice to
each holder of a Note, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Company in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

          Section 14.2. Home Office Payment. So long as you or your nominee
shall be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below your name in
Schedule A, or by such other method or at such other address as you shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, you
shall surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by you or your nominee you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.

SECTION 15. EXPENSES, ETC.

          Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all costs and expenses
(including reasonable attorneys’ fees of one special counsel for you and the
Other Purchasers collectively and, if reasonably required, local or other
counsel) incurred by you and each Other Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement, the Notes or the Subsidiary
Guaranty (whether or not such amendment, waiver or consent becomes effective),
including: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this
Agreement, the Notes or the Subsidiary Guaranty or in responding to any subpoena
or other legal process or informal investigative demand issued in connection
with this Agreement, the Notes or the Subsidiary Guaranty, or by reason of being
a holder of any Note, (b) the costs and expenses, including financial advisors’
fees, incurred in connection with the insolvency or bankruptcy of the Company or
any Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes and the Subsidiary Guaranty
and (c) the costs and expenses incurred in connection with the initial filing of
this Agreement and all related documents and financial information with the SVO,
provided that such

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Donaldson Company, Inc.

Note Purchase Agreement

costs and expenses under this clause (c) shall not exceed $3,500. The Company
will pay, and will save you and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and finders
(other than those retained by you).

     Section 15.2. Survival. The obligations of the Company under this Section
15 will survive the payment or transfer of any Note, the enforcement, amendment
or waiver of any provision of this Agreement or the Notes, and the termination
of this Agreement.

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT

          All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.

SECTION 17. AMENDMENT AND WAIVER.

     Section 17.1. Requirements. This Agreement and the Notes may be amended,
and the observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.

     Section 17.2. Solicitation of Holders of Notes.

          (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to

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Donaldson Company, Inc.

Note Purchase Agreement

each holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the requisite
holders of Notes.

          (b) Payment. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.

     Section 17.3. Binding Effect, etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term “this Agreement” or “the Agreement” and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.

     Section 17.4. Notes held by Company, etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement or the Notes, or
have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

SECTION 18. NOTICES.

          All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

          (i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A, or at such other address as you or it
shall have specified to the Company in writing,

          (ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in writing, or

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Donaldson Company, Inc.

Note Purchase Agreement

          (iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of the Chief Financial Officer, or at such
other address as the Company shall have specified to the holder of each Note in
writing.
Notices under this Section 18 will be deemed given only when actually received.

SECTION 19. REPRODUCTION OF DOCUMENTS.

          This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

SECTION 20. CONFIDENTIAL INFORMATION.

          For the purposes of this Section 20, “Confidential Information” means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified in writing when received by you as being
confidential or nonpublic information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or a Person known to you to be under an obligation
of confidentiality to the Company, or (d) constitutes financial statements
delivered to you under Section 7.1 that are otherwise publicly available. You
will maintain the confidentiality of such Confidential Information in accordance
with procedures adopted by you in good faith to protect confidential information
of third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20 (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed

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Donaldson Company, Inc.

Note Purchase Agreement

in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (v) any Person from which you offer to
purchase any security of the Company (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (vi) any federal or state regulatory authority having
supervisory jurisdiction over you, (vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally recognized rating
agency that requires access to information about your investment portfolio or
(viii) any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal process, (y)
in connection with any litigation to which you are a party or (z) if an Event of
Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your Notes,
this Agreement or the Subsidiary Guaranty. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.

          In the event that as a condition to receiving access to information
relating to the Company or its Subsidiaries in connection with the transactions
contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder
of a Note is required to agree to a confidentiality undertaking (whether through
IntraLinks, another secure website, a secure virtual workspace or otherwise)
which is different from this Section 20, this Section 20 shall not be amended
thereby and, as between such Purchaser or such holder and the Company, this
Section 20 shall supersede any such other confidentiality undertaking.

SECTION 21. SUBSTITUTION OF PURCHASER

          You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word “you” is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word “you” is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.

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Donaldson Company, Inc.

Note Purchase Agreement

SECTION 22. MISCELLANEOUS.

     Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

     Section 22.2. Accounting Terms. All accounting terms used herein which are
not expressly defined in this Agreement have the meanings respectively given to
them in accordance with GAAP. Except as otherwise specifically provided herein,
(i) all computations made pursuant to this Agreement shall be made in accordance
with GAAP, and (ii) all financial statements shall be prepared in accordance
with GAAP. For purposes of determining compliance with this Agreement
(including, without limitation, Section 9, Section 10 and the definition of
“Indebtedness”), any election by the Company to measure any financial liability
using fair value (as permitted by Financial Accounting Standards Board
Accounting Standards Codification Topic No. 825-10-25 – Fair Value Option,
International Accounting Standard 39 – Financial Instruments: Recognition and
Measurement or any similar accounting standard) shall be disregarded and such
determination shall be made as if such election had not been made.

     Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

     Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

     Section 22.5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

     Section 22.6. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.

*   *   *   *   *

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Donaldson Company, Inc.

Note Purchase Agreement

          If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.

 

 

 

 

Very truly yours,

 

 

 

 

DONALDSON COMPANY, INC.

 

 

 

 

By: 

/s/ James F. Shaw

 

 

Name: James F. Shaw

 

 

Title: Vice President & Chief Financial

 

 

Officer

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

 

 

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

 

By: 

Babson Capital Management LLC as

 

 

Investment Adviser

 

 

 

 

By: 

/s/ Thomas P. Shea

 

 

Name: Thomas P. Shea

 

 

Title: Managing Director

 

 

 

 

 

 

 

BANNER LIFE INSURANCE COMPANY

 

By: 

Babson Capital Management LLC as

 

 

Investment Adviser

 

 

 

 

By: 

/s/ Thomas P. Shea

 

 

Name: Thomas P. Shea

 

 

Title: Managing Director

 

 

 

 

 

 

 

MASSMUTUAL ASIA LIMITED

 

By: 

Babson Capital Management LLC as

 

 

Investment Adviser

 

 

 

 

By: 

/s/ Thomas P. Shea

 

 

Name: Thomas P. Shea

 

 

Title: Managing Director

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

 

 

ING LIFE INSURANCE AND ANNUITY COMPANY

 

ING USA ANNUITY AND LIFE INSURANCE COMPANY

 

SECURITY LIFE OF DENVER INSURANCE COMPANY

 

RELIASTAR LIFE INSURANCE COMPANY

 

 

 

 

By: 

ING Investment Management LLC, as

 

 

Agent

 

 

 

 

By: 

/s/ Fitzhugh Wickham

 

 

Name: Fitzhugh Wickham

 

 

Title: Vice President

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

 

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

 

 

 

 

By: 

/s/ Randal W. Ralph

 

 

Name: Randal W. Ralph

 

 

Its Authorized Representative

 

 

 

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

 

 

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

 

 

 

 

By: 

Cigna Investments, Inc. (authorized agent)

 

 

 

 

By: 

/s/ Robert W. Eccles

 

 

Name: Robert W. Eccles

 

 

Title: Senior Managing Director

 

 

 

 

LIFE INSURANCE COMPANY OF NORTH AMERICA

 

 

 

 

By: 

Cigna Investments, Inc. (authorized agent)

 

 

 

 

By: 

/s/ Robert W. Eccles

 

 

Name: Robert W. Eccles

 

 

Title: Senior Managing Director

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

 

 

JACKSON NATIONAL LIFE INSURANCE COMPANY

 

 

 

 

By: 

PPM America, Inc., as attorney in fact, on

 

 

behalf of Jackson National Life Insurance Company

 

 

 

 

By: 

/s/ Luke S. Stifflear

 

 

Name: Luke S. Stifflear

 

 

Title: Sr. Managing Director

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

 

 

MODERN WOODMEN OF AMERICA

 

 

 

 

By: 

/s/ Michael E. Dau

 

 

Name: Michael E. Dau

 

 

Title: Treasurer & Investment Manager

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

 

 

AMERICAN UNITED LIFE INSURANCE COMPANY

 

 

 

 

By: 

/s/ David M. Weisenburger

 

 

Name: David M. Weisenburger

 

 

Title: V.P., Fixed Income Securities

 

 

 

 

THE STATE LIFE INSURANCE COMPANY

 

 

 

 

By: 

American United Life Insurance Company

 

Its:

Agent

 

 

 

 

By: 

/s/ David M. Weisenburger

 

 

Name: David M. Weisenburger

 

 

Title: V.P., Fixed Income Securities

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

The foregoing is agreed

 

 

to as of the date thereof.

 

 

 

 

UNITED OF OMAHA LIFE INSURANCE COMPANY

 

 

 

 

By: 

/s/ Justin P. Kavan

 

 

Name: Justin P. Kavan

 

 

Title: Vice President

 

 

 

 

COMPANION LIFE INSURANCE COMPANY

 

 

 

 

By: 

/s/ Justin P. Kavan

 

 

Name: Justin P. Kavan

 

 

Title: Vice President

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Donaldson Company, Inc.

Note Purchase Agreement

DEFINED TERMS

          As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

          “2007 Note Purchase Agreement” means that certain Note Purchase
Agreement dated as of June 1, 2007, as such Note Purchase Agreement may be
hereafter amended, modified, restated, supplemented, refinanced, increased or
reduced from time to time, and any successor note agreement or similar
facilities.

          “Additional Interest” is defined in Section 1.2(b).

          “Adjusted Consolidated Net Worth” means, as of any date, consolidated
stockholders’ equity of the Company and its Restricted Subsidiaries on such
date, determined in accordance with GAAP, less the amount by which outstanding
Restricted Investments on such date exceed 10% of the consolidated stockholders’
equity of the Company and its Restricted Subsidiaries, determined in accordance
with GAAP.

          “Affiliate” means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any Person of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, “Control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an “Affiliate”
is a reference to an Affiliate of the Company.

          “Anti-Corruption Laws” is defined in Section 5.16(d)(1).

          “Anti-Money Laundering Laws” is defined in Section 5.16(c).

          “Blocked Person” is defined in Section 5.16(a).

          “Business Day” means (a) for the purposes of Section 8.6 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York,
New York are required or authorized to be closed, and (b) for the purposes of
any other provision of this Agreement, any day other than a Saturday, a Sunday
or a day on which commercial banks in New York, New York or Minneapolis,
Minnesota are required or authorized to be closed.

 

SCHEDULE B
(to Note Purchase Agreement)

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Donaldson Company, Inc.

Note Purchase Agreement

          “Capital Lease” means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

          “Change in Control” is defined in Section 8.7.

          “CISADA” means the Comprehensive Iran Sanctions, Accountability and
Divestment Act.

          “Closing” is defined in Section 3.

          “Code” means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.

          “Company” means Donaldson Company, Inc., a Delaware corporation.

          “Confidential Information” is defined in Section 20.

          “Consolidated Indebtedness” means, as of any date, outstanding
Indebtedness of the Company and its Restricted Subsidiaries as of such date
determined on a consolidated basis in accordance with GAAP.

          “Consolidated Interest Charges” means, for any period, for the Company
and its Restricted Subsidiaries on a consolidated basis, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses of
the Company and its Restricted Subsidiaries in connection with borrowed money
(including capitalized interest) or the deferred purchase price of assets, in
each case to the extent treated as interest in accordance with GAAP, and (b) the
portion of rent expense of the Company and its Restricted Subsidiaries with
respect to such period under capital leases that is treated as interest in
accordance with GAAP.

          “Consolidated Net Income” shall mean, for any period, the consolidated
net income (or loss) of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.

          “Consolidated Total Assets” means, as of any date, the assets and
properties of the Company and its Restricted Subsidiaries as of such date
determined on a consolidated basis in accordance with GAAP.

          “Consolidated Total Capitalization” means, as of any date, the sum of
Consolidated Indebtedness and Adjusted Consolidated Net Worth as of such date.

          “Controlled Entity” means (i) any of the Subsidiaries of the Company
and any of their or the Company’s respective Controlled Affiliates and (ii) if
the Company has a parent company, such parent company and its Controlled
Affiliates. As used in this definition, “Control” means the possession, directly
or indirectly, of the power to direct or cause the direction of the

B-2

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Donaldson Company, Inc.

Note Purchase Agreement

management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

          “Credit Agreement” means the Credit Agreement dated as of December 7,
2012 among the Company, various subsidiaries of the Company, Wells Fargo Bank,
National Association, as Administrative Agent and L/C Issuer, and U.S. Bank
National Association, as Syndication Agent and the other Lenders party thereto,
as such agreement may be hereafter amended, modified, restated, supplemented,
refinanced, increased or reduced from time to time, and any successor credit
agreement or similar facilities.

          “Debt to EBITDA Ratio” means, as of any date, the ratio of
Consolidated Indebtedness (as of the date of determination) to EBITDA (for the
Company’s then most recently completed four fiscal quarters).

          “Default” means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

          “Default Rate” means that rate of interest that is the greater of
(i) 2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
by Wells Fargo Bank, N.A. in New York, New York as its “base” or “prime” rate.

          “Domestic Restricted Subsidiary” means any Restricted Subsidiary
organized under the laws of the United States or any State thereof (including
the District of Columbia), substantially all of whose assets and business are
located or transacted in the United States.

          “EBITDA” means, for any period, for the Company and its Restricted
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus, to the extent deducted in calculating such Consolidated
Net Income, (i) Consolidated Interest Charges, (ii) provisions for federal,
state, local and foreign income taxes payable by the Company and its Restricted
Subsidiaries, (iii) depreciation and amortization expense, (iv) non-cash stock
compensation expenses of the Company and its Restricted Subsidiaries incurred in
such period and (v) other non-cash charges, minus, to the extent included in
calculating such Consolidated Net Income, all non-cash gains. For any period
during which (a) a Restricted Subsidiary or business is acquired or (b) a
Restricted Subsidiary or business is disposed of, Consolidated EBITDA shall be
calculated on a pro forma basis as if such Restricted Subsidiary or business, as
the case may be, had been acquired (and any related Indebtedness incurred) or
sold (and any related Indebtedness repaid), as the case may be, on the first day
of such period.

          “Environmental Laws” means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

B-3

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Donaldson Company, Inc.

Note Purchase Agreement

          “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

          “ERISA Affiliate” means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.

          “Event of Default” is defined in Section 11.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “GAAP” means generally accepted accounting principles as in effect
from time to time in the United States of America.

          “Governmental Authority” means

 

 

 

 

 

 

          (a) the government of

 

 

 

 

 

 

 

          (i) the United States of America or any State or other political
subdivision thereof, or

 

 

 

 

 

 

 

          (ii) any jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which otherwise has jurisdiction over any
properties of the Company or any Subsidiary, or

 

 

 

 

 

 

          (b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.

          “Governmental Official” means any governmental official or employee,
employee of any government-owned or government-controlled entity, political
party, any official of a political party, candidate for political office,
official of any public international organization or anyone else acting in an
official capacity.

          “Guaranty” means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection and representations and warranties made in connection with
the securitization of assets) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:

 

 

 

 

          (a) to purchase such indebtedness or obligation or any property
constituting security therefor;

 

 

 

 

          (b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet

B-4

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

 

condition or any income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of such indebtedness
or obligation;

 

 

 

 

          (c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or

 

 

 

 

          (d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.

          In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.

          “Hazardous Material” means any and all pollutants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, prohibited or penalized by any applicable Environmental
Law (including, without limitation, asbestos, urea formaldehyde foam insulation
and polychlorinated biphenyls).

          “holder” means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.

          “Indebtedness” with respect to any Person means, at any time, without
duplication,

 

 

 

 

          (a) its liabilities for borrowed money;

 

 

 

 

          (b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable and other accrued
liabilities arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property);

 

 

 

 

          (c) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases;

 

 

 

 

          (d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities); and

 

 

 

 

          (e) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (d) hereof.

          Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (e) to the extent such
Person remains legally liable in respect

B-5

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Donaldson Company, Inc.

Note Purchase Agreement

thereof notwithstanding that any such obligation is deemed to be extinguished
under GAAP. Indebtedness of the Company or a Restricted Subsidiary shall not
include Indebtedness of the Company to a Restricted Subsidiary or Indebtedness
of a Restricted Subsidiary to the Company or to another Restricted Subsidiary.

          “INHAM Exemption” is defined in Section 6.2(e).

          “Institutional Investor” means (a) any original purchaser of a Note
and (b) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company, or
any other similar financial institution or entity, regardless of legal form.

          “Investments” means all investments made, in cash or by delivery of
property, directly or indirectly, by any Person, in any other Person, whether by
acquisition of shares of capital stock, indebtedness or other obligations or
securities or by loan, advance, capital contribution or otherwise.

          “Lien” means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

          “Make-Whole Amount” is defined in Section 8.6.

          “Material” means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Restricted Subsidiaries taken as a whole.

          “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement and the Notes, or
(c) the ability of any Subsidiary Guarantor to perform its obligations under the
Subsidiary Guaranty, or (d) the validity or enforceability of this Agreement,
the Notes or the Subsidiary Guaranty.

          “Material Credit Facility” means, as to the Company and its
Subsidiaries,

 

 

 

 

          (a) the Credit Agreement, including any renewals, extensions,
amendments, supplements, restatements, replacements or refinancing thereof; and

 

 

 

 

          (b) any other agreement(s) creating or evidencing indebtedness for
borrowed money entered into on or after the date of Closing by the Company or
any Subsidiary, or in respect of which the Company or any Subsidiary is an
obligor or otherwise provides a guarantee or other credit support (“Credit
Facility”), in a principal amount outstanding or available for borrowing equal
to or greater than $100,000,000 (or the equivalent of such amount in the
relevant currency of payment, determined as of the date of the closing of

B-6

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

such facility based on the exchange rate of such other currency); and if no
Credit Facility or Credit Facilities equal or exceed such amounts, then the
largest Credit Facility shall be deemed to be a Material Credit Facility.

          “Maturity Date” is defined in the first paragraph of each Note.

          “Memorandum” is defined in Section 5.3.

          “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as
such term is defined in section 4001(a)(3) of ERISA).

          “NAIC Annual Statement” is defined in Section 6.2(a).

          “Notes” is defined in Section 1.1.

          “OFAC” is defined in Section 5.16(a).

          “OFAC Listed Person” is defined in Section 5.16(a).

          “OFAC Sanctions Program” means any economic or trade sanction that
OFAC is responsible for administering and enforcing. A list of OFAC Sanctions
Programs may be found at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

          “Officer’s Certificate” means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.

          “Other Purchasers” is defined in Section 2.

          “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

          “Person” means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

          “Plan” means an “employee benefit plan” (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.

          “Priority Debt” means, as of any date, the sum (without duplication)
of (a) unsecured Indebtedness of the Company’s Restricted Subsidiaries on such
date (other than (i) Indebtedness owed to the Company or a Restricted
Subsidiary, (ii) Indebtedness of a Person outstanding at the time such Person is
merged or consolidated with, or becomes, a Restricted Subsidiary (other than
Indebtedness of an Unrestricted Subsidiary that has been designated as a
Restricted Subsidiary

B-7

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Donaldson Company, Inc.

Note Purchase Agreement

pursuant to Section 10.6) and (iii) Guaranties by a Subsidiary Guarantor of the
Notes and Guaranties of Indebtedness of the Company by any Restricted Subsidiary
that has also guaranteed the Notes (including, without limitation, Guaranties by
any Restricted Subsidiary of Indebtedness of the Company under the Credit
Agreement)) and (b) Indebtedness of the Company and its Restricted Subsidiaries
secured by Liens other than those permitted by Sections 10.2(a) through 10.2(i)
on such date.

          “property” or “properties” means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.

          “Purchaser” means each purchaser listed in Schedule A.

          “QPAM Exemption” is defined in Section 6.2(d).

          “Related Fund” means, with respect to any holder of any Note, any fund
or entity that (i) invests in Securities or bank loans, and (ii) is advised or
managed by such holder, the same investment advisor as such holder or by an
affiliate of such holder or such investment advisor.

          “Required Holders” means, at any time, the holders of at least a
majority in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).

          “Responsible Officer” means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.

          “Restricted Investments” means all Investments of the Company and its
Restricted Subsidiaries, other than:

 

 

 

          (a) property or assets to be used or consumed in the ordinary course
of business;

 

 

 

          (b) assets arising from the sale of goods or services in the ordinary
course of business;

 

 

 

          (c) Investments in Restricted Subsidiaries or in any Person which, as
a result thereof, becomes a Restricted Subsidiary;

 

 

 

          (d) Investments existing as of the date of this Agreement that are
listed in the attached Schedule B-1;

 

 

 

          (e) Investments in treasury stock;

 

 

 

          (f) Investments in:

B-8

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

          (i) obligations, maturing within one year from the date of
acquisition, of or fully guaranteed by (A) the United States of America or an
agency thereof or (B) Canada or a province thereof;

 

 

 

          (ii) tax-exempt securities, having an effective maturity within one
year from the date of acquisition, which are rated in one of the top two rating
classifications by at least one nationally recognized rating agency;

 

 

 

          (iii) certificates of deposit or banker’s acceptances maturing within
one year from the date of acquisition issued by Wells Fargo Bank, N.A. or other
commercial banks whose long-term unsecured debt obligations (or the long-term
unsecured debt obligations of the bank holding company owning all of the capital
stock of such bank) are rated in one of the top three rating classifications by
at least one nationally recognized rating agency;

 

 

 

          (iv) commercial paper maturing within 270 days from the date of
issuance that, at the time of acquisition, is rated in one of the top two rating
classifications by at least one nationally recognized rating agency;

 

 

 

          (v) repurchase agreements, having a term of not more than 90 days and
fully collateralized with obligations of the type described in clause (i), with
a bank satisfying the requirements of clause (iii) or a broker-dealer registered
as such under the Exchange Act whose long-term unsecured debt obligations are
rated in one of the top three rating classifications by at least one nationally
recognized rating agency; and

 

 

 

          (vi) cash or cash equivalents and money market instrument programs
that are properly classified as current assets in accordance with GAAP.

          For purposes of this Agreement, an Investment shall be valued at the
lesser of (i) cost and (ii) the value at which such Investment is shown on the
books of the Company and its Restricted Subsidiaries in accordance with GAAP.

          “Restricted Subsidiary” means any Subsidiary (a) of which at least a
majority of the voting securities are owned by the Company and/or one or more
Wholly-Owned Restricted Subsidiaries and of which the Company has management
control and (b) which the Company has not designated an Unrestricted Subsidiary.

          “Securities Act” means the Securities Act of 1933, as amended from
time to time.

          “Senior Financial Officer” means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.

          “Series 2014-A Notes” is defined in Section 1.2.

B-9

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Donaldson Company, Inc.

Note Purchase Agreement

          “Significant Subsidiary” means, as of the date of determination, (a)
any Subsidiary Guarantor and (b) any other Restricted Subsidiary the assets or
revenues of which account for more than 10% of the Consolidated Total Assets of
the Company and its Restricted Subsidiaries at the end of the most recently
ended fiscal period or more than 10% of the consolidated revenues of the Company
and its Restricted Subsidiaries for the most recently completed four fiscal
quarters.

          “Source” is defined in Section 6.2

          “Subsidiary” means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
“Subsidiary” is a reference to a Subsidiary of the Company.

          “Subsidiary Guaranty” is defined in Section 1.2(c).

          “Subsidiary Guarantor” means Donaldson Capital, Inc. and any other
Subsidiary that becomes a Subsidiary Guarantor in accordance with Section 10.9.

          “Supplement” is defined in Section 1.1.

          “this Agreement” or “the Agreement” is defined in Section 17.3.

          “Unrestricted Subsidiary” means any Subsidiary of the Company that the
Company has designated an Unrestricted Subsidiary by notice in writing given to
the holders of the Notes.

          “USA PATRIOT Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT Act) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

          “U.S. Economic Sanctions” is defined in Section 5.16(a).

          “Voting Stock” means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even if the right so
to vote has been suspended by the happening of such a contingency.

B-10

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Donaldson Company, Inc.

Note Purchase Agreement

          “Wholly-Owned Subsidiary” means, at any time, any Subsidiary 100% of
all of the equity interests (except directors’ qualifying shares) and voting
interests of which are owned by any one or more of the Company and the Company’s
other Wholly-Owned Subsidiaries at such time.

B-11

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Donaldson Company, Inc.

Note Purchase Agreement

EXISTING INVESTMENTS

 

 

 

 

 

Investment in Advanced Filtration Systems Inc.

 

$

9,461,000

 

 

 

 

 

 

Investment in PT Panata Jaya Mandiri

 

$

5,941,626

 

 

 

 

 

 

Investment in Rashed al-Rashed & Sons-Donaldson Ltd.

 

$

2,796,370

 

 

 

 

 

 

Investment in Applied Membrane Technology Inc.

 

$

225,094

 

 

 

 

 

 

SCHEDULE B-1
(to Note Purchase Agreement)

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

SUBSIDIARIES AND OWNERSHIP
OF SUBSIDIARY STOCK

          (i) Company Subsidiaries

* Unless otherwise note, all listed subsidiaries are owned 100% by Donaldson
Company Inc., or a Subsidiary of Donaldson Company Inc. Indentations indicate
level of ownership.

 

 

 

 

Donaldson Capital, Inc. (U.S.A.)

ASHC, Inc. (U.S.A.)

 

Prestadora de Servicios Aguascalientes, S. de R.L. de C.V. (Mexico)

Aerospace Filtration Systems, Inc. (U.S.A.)

Donaldson do Brasil Equipamentos Industriais Ltda (Brazil)

Donaldson, S.A. de C.V. (Mexico)

Donaldson Chile, Ltd. (Chile)

Donaldson Canada, Inc. (Canada)

Donaldson Filtration (Thailand) Ltd. (Thailand)

Donaldson Filtration (Philippines) Inc. (Philippines)

Donaldson India Filter Systems Pvt. Ltd. (India)

DLX Capital S.a.r.l. (Luxembourg)

Donaldson Overseas Holding S.a.r.l. (Luxembourg)

 

Donaldson Filtration Systems (Pty) Ltd. (South Africa)

 

Nippon Donaldson Ltd. (Japan)

 

Donaldson Filtration (Malaysia) Sdn. Bhd. (Malaysia)

 

Donaldson Korea Co., Ltd. (South Korea)

 

Donaldson Australasia Pty. Ltd. (Australia)

 

Donaldson Filtration (Asia Pacific) Pte. Ltd. (Singapore)

 

P.T. Donaldson Filtration Indonesia (Indonesia)

 

Donaldson Luxembourg S.a.r.l (Luxembourg)

 

 

Donaldson Ibèrica Soluciones en Filtración, S.L. (Spain)

 

 

Donaldson Schweiz GmbH (Switzerland)

 

 

Donaldson Polska Sp. z.o.o. (Poland)

 

 

Donaldson Filtre Sistemleri Ticaret Limited Sirketi (Turkey)

 

 

Donaldson Filtration Österreich, GmbH (Austria)

 

 

Donaldson Europe, b.v.b.a. (Belgium)

 

 

 

Donaldson Belgie, b.v.b.a. (Belgium)

 

 

Donaldson Filtration Deutschland GmbH (Germany)

 

 

 

Donaldson Filtration Magyarorszag Kft. (Hungary)

 

 

Donaldson Filtration Slovensko s.r.o. (Slovakia)

 

 

Donaldson Filtration Norway a.s. (Norway)

 

 

Donaldson Italia s.r.l. (Italy)

 

 

Donaldson Nederland B.V. (Netherlands)

 

 

Donaldson Scandinavia a.p.s. (Denmark)

 

 

Donaldson Filtration CR - Konzern s.r.o. (Czech Republic)

 

 

Donaldson Industrial CR - Konzern s.r.o. (Czech Republic)

SCHEDULE 5.4
(to Note Purchase Agreement)

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

 

 

 

 

Donaldson Czech Republic s.r.o. (Czech Republic)

 

 

Donaldson France, s.a.s. (France)

 

 

 

Ultrafilter s.a.s. (France)

 

 

 

Donaldson, s.a.s. (France)

 

 

 

Le Bozec Filtration et Systèmes, s.a.s. (France)

 

 

Donaldson UK Holding Ltd. (United Kingdom)

 

 

 

Donaldson Filtration (GB) Ltd. (United Kingdom)

 

 

 

Donaldson Filter Components Ltd. (United Kingdom)

 

 

Donaldson Taiwan Ltd. (Taiwan)

 

 

Donaldson Far East Ltd. (China)

 

 

 

Donaldson (China) Holding Co., Ltd. (China)

 

 

 

 

Donaldson (China) Trading Co., Ltd. (China)

 

 

 

Donaldson (Wuxi) Filters Co., Ltd. (China)

 

 

 

Donaldson (Xuzhou) Filters Co. Ltd. (China)

 

 

 

Donaldson (Thailand) Ltd. (Thailand)

          (ii) Company Affiliates

 

Advanced Filtration Systems Inc. (U.S.A.) – 50%

P.T. Panata Jaya Mandiri (Indonesia) – 30%

Rashed Al-Rashed & Sons - Donaldson Company Ltd. (Saudi Arabia) – 49%

          (iii) Company Directors and Senior Officers

DIRECTORS:

 

F. Guillaume Bastiaens, Retired Vice Chairman, Cargill, Inc.

Andrew J. Cecere, Vice Chairman and CFO, U.S. Bancorp

William M. Cook, Chairman, President and CEO, Donaldson Company, Inc.

Janet M. Dolan, President, Act 3 Enterprises, LLC

Michael J. Hoffman, Chairman, President and CEO, The Toro Company

Paul David Miller, Retired Chairman and CEO, Alliant Techsystems, Inc.

Jeffrey Noddle, Retired Executive Chairman, SuperValu Inc.

William D. Oberton, CEO, Fastenal Company

James J. Owens, President and CEO, H.B. Fuller Company

Ajita G. Rajendra, President and CEO, A.O. Smith Corporation

John P. Wiehoff, Chairman and CEO, C.H. Robinson Worldwide, Inc.

OFFICERS:

 

William M. Cook, Chairman, President and Chief Executive Officer

Charles J. McMurray, Senior Vice President, Chief Administrative Officer

Tod E. Carpenter, Senior Vice President, Engine Products

Jay L. Ward, Senior Vice President, Industrial Products

Franklin G. Cardenas, Vice President, Global Engine Aftermarket

Timothy Grafe, Vice President, Strategic Planning and Business Development

5.4-2

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Donaldson Company, Inc.

Note Purchase Agreement

 

Peggy Herrmann, Vice President, Disk Drive and Microelectronics

Dennis Jandik, Vice President, Asia Pacific Operations

Sandra N. Joppa, Vice President, Human Resources

Joseph E. Lehman, Vice President, Global Operations

Norman C. Linnell, Vice President, General Counsel and Secretary

Roger J. Miller, Vice President, Global Engine Products OEM Sales

Mary Lynne Perushek, Vice President and Chief Information Officer

Sheila C. Peyraud, Vice President and Chief Technology Officer

Thomas R. Scalf, Vice President, Global Industrial Air Filtration

James F. Shaw, Vice President and Chief Financial Officer

Jeffrey Spethmann, Vice President, Exhaust and Emissions

Wim Vermeersch, Vice President, Europe and Middle East

Eugene X. Wu, Vice President, Asia Pacific

5.4-3

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

FINANCIAL STATEMENTS

The following financial statements have been provided:

 

 

 

Form 10-K (Fiscal 2013)

 

Form 10-Q (Fiscal 2014 Q1 and Q2)

SCHEDULE 5.5
(to Note Purchase Agreement)

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

LITIGATION

          The Company records provisions with respect to identified claims or
lawsuits when it is probable that a liability has been incurred and the amount
of the loss can be reasonably estimated. Claims and lawsuits are reviewed
quarterly and provisions are taken or adjusted to reflect the status of a
particular matter. The Company believes the recorded reserves in its condensed
consolidated financial statements are adequate in light of the probable and
estimable outcomes. The recorded liabilities were not material to the Company’s
financial position, results of operations, or liquidity, and the Company does
not believe that any of the currently identified claims or litigation will
materially affect its financial position, results of operations, or liquidity.

SCHEDULE 5.8
(to Note Purchase Agreement)

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

EXISTING INDEBTEDNESS

Amounts in $ Millions:

 

 

 

 

 

 

 

 

Short-term debt:

 

 

 

 

 

 

 

Multi-currency revolving facility

 

$

90.0

 

 

 

 

Uncommitted credit facilities

 

$

15.1

 

$

105.1

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt:

 

 

 

 

 

 

 

2.019% Guaranteed senior notes due May 18, 2014

 

$

16.2

 

 

 

 

Aggregated current capital leases and other

 

$

1.6

 

$

17.8

 

 

 

 

 

 

 

 

 

Long-term debt:

 

 

 

 

 

 

 

5.48% Unsecured senior notes due June 1, 2017

 

 

 

 

$

50.0

 

5.48% Unsecured senior notes due September 28, 2017

 

$

25.0

 

 

 

 

5.48% Unsecured senior notes due November 30, 2017

 

$

25.0

 

 

 

 

Aggregated long-term capital leases and other

 

$

3.2

 

$

103.2

 

 

 

 

 

 

 

 

 

 

 

 

 

$

226.1

 

SCHEDULE 5.15
(to Note Purchase Agreement)

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

EXISTING LIENS

 

 

 

 

 

Various capitalized leases in the U.S.

 

$

3,332,260

 

 

 

 

 

 

Various capitalized leases in Japan

 

$

15,384

 

SCHEDULE 10.2
(to Note Purchase Agreement)

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

[FORM OF NOTE]

DONALDSON COMPANY, INC.

[____]% SENIOR NOTE DUE [__________, ____]

 

 

No. [_____]

[Date]

$[_______]

PPN[______________]

          FOR VALUE RECEIVED, the undersigned, DONALDSON COMPANY, INC. (herein
called the “Company”), a corporation organized and existing under the laws of
the State of Delaware, promises to pay to [__________], or registered assigns,
the principal sum of $[____________] on [_________], [_________] (the “Maturity
Date”), with interest (computed on the basis of a 360-day year of twelve 30‑day
months) (a) on the unpaid balance hereof at the rate of [____]% per annum (plus
Additional Interest, if any, pursuant to Section 1.2(b) of the below defined
Note Purchase Agreement) from the date hereof, payable semiannually, on [______]
[____] and [______][____] in each year, commencing with the [______] [____] or
[______] [____] next succeeding the date hereof and on the Maturity Date, until
the principal hereof shall have become due and payable, and (b) to the extent
permitted by law (x) on any overdue payment of interest and (y) during the
continuance of an Event of Default, on such unpaid balance and on any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) [_____]% or (ii) 2% over the rate of interest
publicly announced by Wells Fargo Bank, N.A. from time to time in New York, New
York as its “base” or “prime” rate.

          Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Wells Fargo Bank, N.A. in New York, New York
or at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.

          This Note is one of a series of Senior Notes (herein called the
“Notes”) issued pursuant to a Note Purchase Agreement dated as of _____, 2014
[and a Supplement thereto dated as of [_________ ], [________]](as from time to
time further amended and supplemented, the “Note Purchase Agreement”), between
the Company and the respective Purchasers named therein, and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Sections 6.1(to the extent such representation is
required for such transfer) and 6.2 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement. The
Notes have not been registered under the Securities Act of 1933, as amended.

EXHIBIT 1.1-A
(to Note Purchase Agreement)

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

          This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder’s attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

          [The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreement.] This Note is
[also] subject to optional prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement but not
otherwise.

          If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

          This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

 

 

 

 

 

DONALDSON COMPANY, INC.

 

 

 

By:  

 

 

 

Title:  

 

EXHIBIT 1.1-A-2

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

[FORM OF SUPPLEMENT]

SUPPLEMENT TO NOTE PURCHASE AGREEMENT

          THIS SUPPLEMENT is entered into as of [               ],
[               ] (this “Supplement”) between Donaldson Company, Inc., a
Delaware corporation (the “Company”), and the Purchasers listed in the attached
Schedule A (the “Purchasers”).

RECITALS

          A. The Company has entered into a Note Purchase Agreement dated as of
_____, 2014 with the purchasers listed in Schedule A thereto [and one or more
supplements or amendments thereto] (as heretofore amended and supplemented, the
“Note Purchase Agreement”); and

          B. The Company desires to issue and sell, and the Purchasers desire to
purchase, an additional series of Notes (as defined in the Note Purchase
Agreement) pursuant to the Note Purchase Agreement and in accordance with the
terms set forth below;

          NOW, THEREFORE, the Company and the Purchasers agree as follows:

 

 

 

          1. Authorization of the New Series of Notes. The Company has
authorized the issue and sale of $[               ] aggregate principal amount
of Notes to be designated as its [     ]% Senior Notes, Series [          ], due
[          ], [          ] (the “Series [     ] Notes”, such term to include any
such Notes issued in substitution therefor pursuant to Section 13 of the Note
Purchase Agreement). The Series [     ] Notes shall be substantially in the form
set out in Exhibit 1, with such changes therefrom, if any, as may be approved by
you and the Company.

 

 

 

          2. Sale and Purchase of Series [     ] Notes. Subject to the terms and
conditions of this Supplement and the Note Purchase Agreement, the Company will
issue and sell to each of the Purchasers, and the Purchasers will purchase from
the Company, at the Closing provided for in Section 3, Series [     ] Notes in
the principal amount specified opposite their respective names in Schedule A at
the purchase price of 100% of the principal amount thereof. The obligations of
the Purchasers hereunder are several and not joint obligations and no Purchaser
shall have any liability to any Person for the performance or non-performance by
any other Purchaser hereunder.

 

 

 

          3. Closing. The sale and purchase of the Series [     ] Notes to be
purchased by the Purchasers shall occur at the offices of Chapman and Cutler
LLP, 111 West Monroe Street, Chicago, Illinois 60603 at 9:00 a.m., Chicago time,
at a closing (the “Closing”) on [          ], [          ] or on such other
Business Day thereafter on or prior to [          ], [          ] as may be
agreed upon by the Company and the Purchasers. At the Closing the Company will
deliver to each Purchaser the Series [     ] Notes to be purchased by it in the
form of a single Note (or such greater number of Series [     ] Notes in
denominations of at least $500,000 as such Purchaser may request) dated the date
of

EXHIBIT 1.1-B
(to Note Purchase Agreement)

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

the Closing and registered in its name (or in the name of its nominee), against
delivery by such Purchaser to the Company or its order of immediately available
funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
[__________] at [_________________] Bank, [Insert Bank address, ABA number for
wire transfers, and any other relevant wire transfer information]. If at the
Closing the Company shall fail to tender such Series [     ] Notes to a
Purchaser as provided above in this Section 3, or any of the conditions
specified in Section 4 of the Note Purchase Agreement, as modified or expanded
by Section 4 hereof, shall not have been fulfilled to such Purchaser’s
satisfaction, such Purchaser shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights it may have
by reason of such failure or such nonfulfillment.

 

 

 

          4. Conditions to Closing. Each Purchasers obligation to purchase and
pay for the Series [     ] Notes to be sold to it at the Closing is subject to
the fulfillment to its satisfaction, prior to or at the Closing, of the
conditions set forth in Section 4 of the Note Purchase Agreement, as hereafter
modified, and to the following additional conditions:

[Set forth any modifications and additional conditions.]

 

 

 

          5. Representations and Warranties of the Company. The Company
represents and warrants to the Purchasers that each of the representations and
warranties contained in Section 5 of the Note Purchase Agreement is true and
correct as of the date hereof (i) except that all references to “Purchaser” and
“you” therein shall be deemed to refer to the Purchasers hereunder, all
references to “this Agreement” shall be deemed to refer to the Note Purchase
Agreement as supplemented by this Supplement, all references to “Notes” therein
shall be deemed to include the Series [__] Notes, and (ii) except for changes to
such representations and warranties or the Schedules referred to therein, which
changes are set forth in the attached Schedule 5.

 

 

 

          6. Representations of the Purchasers. Each Purchaser confirms to the
Company that the representations set forth in Section 6 of the Note Purchase
Agreement are true and correct as to such Purchaser.

EXHIBIT 1.1-B-2

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

          7. Mandatory Prepayment of the Series [     ] Notes. [The
Series [     ] Notes are not subject to mandatory prepayment by the Company.]
[On [          ], [     ] and on each [          ] thereafter to and including
[          ], [     ] the Company will prepay $[          ] principal amount (or
such lesser principal amount as shall then be outstanding) of the Series [     ]
Notes at par and without payment of the Make-Whole Amount or any premium.]

 

 

 

          8. Applicability of Note Purchase Agreement. Except as otherwise
expressly provided herein (and expressly permitted by the Note Purchase
Agreement), all of the provisions of the Note Purchase Agreement are
incorporated by reference herein and shall apply to the Series [     ] Notes as
if expressly set forth in this Supplement.

EXHIBIT 1.1-B-3

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

          IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Supplement to be executed and delivered as of the date set forth above.

 

 

 

 

 

DONALDSON COMPANY, INC.

 

 

 

By:  

 

 

 

Title:  

 

[ADD PURCHASER SIGNATURE BLOCKS]

EXHIBIT 1.1-B-4

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

SCHEDULE A
TO SUPPLEMENT

INFORMATION RELATING TO PURCHASERS

 

 

NAME AND ADDRESS OF PURCHASER

PRINCIPAL AMOUNT OF SERIES
[    ] NOTES TO BE PURCHASED

 

 

[NAME OF PURCHASER]

$__________          

 

 

(1)

All payments by wire transfer of immediately available funds to:

 

 

 

with sufficient information to identify the source and application of such
funds.

 

 

(2)

All notices of payments and written confirmations of such wire transfers:

 

 

(3)

All other communications:

EXHIBIT 1.1-B-5

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

SCHEDULE 5
TO SUPPLEMENT

EXCEPTIONS TO REPRESENTATIONS
AND WARRANTIES

EXHIBIT 1.1-B-6

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

EXHIBIT 1 TO
SUPPLEMENT

[FORM OF SERIES [    ] NOTE]

EXHIBIT 1.1-B-7

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

SUBSIDIARY GUARANTY

          THIS GUARANTY (this “Guaranty”) dated as of March 27, 2014 is made by
the undersigned (each, a “Guarantor”), in favor of the holders from time to time
of the Notes hereinafter referred to and their respective successors and assigns
(collectively, the “Holders” and each individually, a “Holder”).

WITNESSETH:

          WHEREAS, Donaldson Company, Inc. (the “Company”) entered into a Note
Purchase Agreement dated as of March 27, 2014 (the Note Purchase Agreement as it
may hereafter be amended, supplemented, restated or otherwise modified from time
to time in accordance with its terms, the “Note Purchase Agreement”);

          WHEREAS, the Note Purchase Agreement provides for the issuance by the
Company of up to $750,000,000 aggregate principal amount of Notes (as defined in
the Note Purchase Agreement), of which the Company concurrently with the
delivery by the Guarantors of this Guaranty, is issuing $125,000,000 aggregate
principal amount of Series 2014‑A Notes;

          WHEREAS, the Company owns, directly or indirectly, all of the issued
and outstanding capital stock or partnership interests of each Guarantor and, by
virtue of such ownership and otherwise, each Guarantor will derive substantial
benefits from the purchase by the Holders of the Company’s Notes;

          WHEREAS, it is a condition precedent to the obligation of the Holders
to purchase the Notes that each Guarantor shall have executed and delivered this
Guaranty to the Holders; and

          WHEREAS, each Guarantor desires to execute and deliver this Guaranty
to satisfy the conditions described in the preceding paragraph;

          NOW, THEREFORE, in consideration of the premises and other benefits to
each Guarantor, and of the purchase of the Company’s Notes by the Holders, and
for other good and valuable consideration, the receipt and sufficiency of which
are acknowledged, each Guarantor makes this Guaranty as follows:

 

 

SECTION 1. DEFINITIONS.

          Any capitalized terms not otherwise herein defined shall have the
meanings attributed to them in the Note Purchase Agreement.

 

 

SECTION 2. GUARANTY.

          Each Guarantor, jointly and severally with each other Guarantor,
unconditionally and irrevocably guarantees to the Holders the due, prompt and
complete payment by the Company of

EXHIBIT 1.1-C
(to Note Purchase Agreement)

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

the principal of, Make-Whole Amount, if any, and interest on, and each other
amount due under, the Notes or the Note Purchase Agreement, when and as the same
shall become due and payable (whether at stated maturity or by required or
optional prepayment or by declaration or otherwise) in accordance with the terms
of the Notes and the Note Purchase Agreement (the Notes and the Note Purchase
Agreement being sometimes hereinafter collectively referred to as the “Note
Documents” and the amounts payable by the Company under the Note Documents, and
all other monetary obligations of the Company thereunder (including reasonable
attorneys’ fees and expenses), being sometimes collectively hereinafter referred
to as the “Obligations”). This Guaranty is a guaranty of payment and not just of
collectibility and is in no way conditioned or contingent upon any attempt to
collect from the Company or upon any other event, contingency or circumstance
whatsoever. If for any reason whatsoever the Company shall fail or be unable
duly, punctually and fully to pay such amounts as and when the same shall become
due and payable, each Guarantor, without demand, presentment, protest or notice
of any kind, will forthwith pay or cause to be paid such amounts to the Holders
under the terms of such Note Documents, in lawful money of the United States, at
the place specified in the Note Purchase Agreement, or perform or comply with
the same or cause the same to be performed or complied with, together with
interest (to the extent provided for under such Note Documents) on any amount
due and owing from the Company. Each Guarantor, promptly after demand, will pay
to the Holders the reasonable costs and expenses of collecting such amounts or
otherwise enforcing this Guaranty, including, without limitation, the reasonable
fees and expenses of counsel. Notwithstanding the foregoing, the right of
recovery against each Guarantor under this Guaranty is limited to the extent it
is judicially determined with respect to any Guarantor that entering into this
Guaranty would violate Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law, in which case such Guarantor shall be
liable under this Guaranty only for amounts aggregating up to the largest amount
that would not render such Guarantor’s obligations hereunder subject to
avoidance under Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law.

 

 

SECTION 3. GUARANTOR’S OBLIGATIONS UNCONDITIONAL.

          The obligations of each Guarantor under this Guaranty shall be
primary, absolute and unconditional obligations of each Guarantor, shall not be
subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense based upon any claim
each Guarantor or any other person may have against the Company or any other
person, and to the full extent permitted by applicable law shall remain in full
force and effect without regard to, and shall not be released, discharged or in
any way affected by, any circumstance or condition whatsoever (whether or not
each Guarantor or the Company shall have any knowledge or notice thereof),
including:

 

 

 

          (a) any termination, amendment or modification of or deletion from or
addition or supplement to or other change in any of the Note Documents or any
other instrument or agreement applicable to any of the parties to any of the
Note Documents;

 

 

 

          (b) any furnishing or acceptance of any security, or any release of
any security, for the Obligations, or the failure of any security or the failure
of any person to perfect any interest in any collateral;

EXHIBIT 1.1-C-2

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

          (c) any failure, omission or delay on the part of the Company to
conform or comply with any term of any of the Note Documents or any other
instrument or agreement referred to in paragraph (a) above, including, without
limitation, failure to give notice to any Guarantor of the occurrence of a
“Default” or an “Event of Default” under any Note Document;

 

 

 

          (d) any waiver of the payment, performance or observance of any of the
obligations, conditions, covenants or agreements contained in any Note Document,
or any other waiver, consent, extension, indulgence, compromise, settlement,
release or other action or inaction under or in respect of any of the Note
Documents or any other instrument or agreement referred to in paragraph (a)
above or any obligation or liability of the Company, or any exercise or
non-exercise of any right, remedy, power or privilege under or in respect of any
such instrument or agreement or any such obligation or liability;

 

 

 

          (e) any failure, omission or delay on the part of any of the Holders
to enforce, assert or exercise any right, power or remedy conferred on such
Holder in this Guaranty, or any such failure, omission or delay on the part of
such Holder in connection with any Note Document, or any other action on the
part of such Holder;

 

 

 

          (f) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshaling of assets and liabilities or similar proceedings with
respect to the Company, any Guarantor or to any other person or any of their
respective properties or creditors, or any action taken by any trustee or
receiver or by any court in any such proceeding;

 

 

 

          (g) any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of any of the
Note Documents or any other agreement or instrument referred to in paragraph (a)
above or any term hereof;

 

 

 

          (h) any merger or consolidation of the Company or any Guarantor into
or with any other corporation, or any sale, lease or transfer of any of the
assets of the Company or any Guarantor to any other person;

 

 

 

          (i) any change in the ownership of any shares of capital stock of the
Company or any change in the corporate relationship between the Company and any
Guarantor, or any termination of such relationship;

 

 

 

          (j) any release or discharge, by operation of law, of any other
Guarantor from the performance or observance of any obligation, covenant or
agreement contained in this Guaranty; or

 

 

 

          (k) any other occurrence, circumstance, happening or event whatsoever,
whether similar or dissimilar to the foregoing, whether foreseen or unforeseen,
and any other circumstance which might otherwise constitute a legal or equitable
defense or

EXHIBIT 1.1-C-3

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

discharge of the liabilities of a guarantor or surety or which might otherwise
limit recourse against any Guarantor.

 

 

SECTION 4. FULL RECOURSE OBLIGATIONS.

          The obligations of each Guarantor set forth herein constitute the full
recourse obligations of such Guarantor enforceable against it to the full extent
of all its assets and properties.

 

 

SECTION 5. WAIVER.

          Each Guarantor unconditionally waives, to the extent permitted by
applicable law, (a) notice of any of the matters referred to in Section 3,
(b) notice to such Guarantor of the incurrence of any of the Obligations, notice
to such Guarantor or the Company of any breach or default by such Company with
respect to any of the Obligations or any other notice that may be required, by
statute, rule of law or otherwise, to preserve any rights of the Holders against
such Guarantor, (c) presentment to or demand of payment from the Company or the
Guarantor with respect to any amount due under any Note Document or protest for
nonpayment or dishonor, (d) any right to the enforcement, assertion or exercise
by any of the Holders of any right, power, privilege or remedy conferred in the
Note Purchase Agreement or any other Note Document or otherwise, (e) any
requirement of diligence on the part of any of the Holders, (f) any requirement
to exhaust any remedies or to mitigate the damages resulting from any default
under any Note Document, (g) any notice of any sale, transfer or other
disposition by any of the Holders of any right, title to or interest in the Note
Purchase Agreement or in any other Note Document and (h) any other circumstance
whatsoever which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety or which might otherwise limit
recourse against such Guarantor.

 

 

SECTION 6. SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY.

          Until one year and one day after all Obligations have been paid in
full, each Guarantor agrees not to take any action pursuant to any rights which
may have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the United States Bankruptcy Code, as
amended, including Section 509 thereof, under common law or otherwise) of any of
the Holders against the Company or against any collateral security or guaranty
or right of offset held by the Holders for the payment of the Obligations. Until
one year and one day after all Obligations have been paid in full, each
Guarantor agrees not to take any action pursuant to any contractual, common law,
statutory or other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against the Company which may have
arisen in connection with this Guaranty. So long as the Obligations remain, if
any amount shall be paid by or on behalf of the Company to any Guarantor on
account of any of the rights waived in this paragraph, such amount shall be held
by such Guarantor in trust, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the Holders
(duly endorsed by such Guarantor to the Holders, if required), to be applied
against the Obligations, whether matured or unmatured, in such order as the
Holders may determine.

EXHIBIT 1.1-C-4

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

The provisions of this paragraph shall survive the term of this Guaranty and the
payment in full of the Obligations.

 

 

SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC.

          This Guaranty shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the sums due to any of the Holders pursuant to the terms of the Note
Purchase Agreement or any other Note Document is rescinded or must otherwise be
restored or returned by such Holder upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company or any other person,
or upon or as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or other person or
any substantial part of its property, or otherwise, all as though such payment
had not been made. If an event permitting the acceleration of the maturity of
the principal amount of the Notes shall at any time have occurred and be
continuing, and such acceleration shall at such time be prevented by reason of
the pendency against the Company or any other person of a case or proceeding
under a bankruptcy or insolvency law, each Guarantor agrees that, for purposes
of this Guaranty and its obligations hereunder, the maturity of the principal
amount of the Notes and all other Obligations shall be deemed to have been
accelerated with the same effect as if any Holder had accelerated the same in
accordance with the terms of the Note Purchase Agreement or other applicable
Note Document, and such Guarantor shall forthwith pay such principal amount,
Make-Whole Amount, if any, and interest thereon and any other amounts guaranteed
hereunder without further notice or demand.

 

 

SECTION 8. TERM OF AGREEMENT.

          This Guaranty and all guaranties, covenants and agreements of each
Guarantor contained herein shall continue in full force and effect and shall not
be discharged until the earlier to occur of (i) such time as all of the
Obligations shall be paid and performed in full and all of the agreements of
such Guarantor hereunder shall be duly paid and performed in full and (ii) such
Guarantor is released by the Holders pursuant to Section 1(c) of the Second
Supplement.

 

 

SECTION 9. REPRESENTATIONS AND WARRANTIES.

          Each Guarantor represents and warrants to each Holder that:

 

 

 

          (a) such Guarantor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the power
and authority to own or hold under lease the properties it purports to own or
hold under lease and to transact the business it transacts and proposes to
transact;

 

 

 

          (b) such Guarantor has the power and authority to execute and deliver
this Guaranty and to perform the provisions hereof, and this Guaranty has been
duly authorized by all necessary action on the part of such Guarantor;

EXHIBIT 1.1-C-5

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

          (c) this Guaranty constitutes the legal, valid and binding obligation
of such Guarantor enforceable against such Guarantor in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);

 

 

 

          (d) the execution, delivery and performance of this Guaranty will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of such Guarantor
under, any agreement, or corporate charter or by-laws to which such Guarantor is
bound or by which such Guarantor or any of its properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to such Subsidiary Guarantor or
(iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to such Guarantor;

 

 

 

          (e) no consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance by such Guarantor of this Guaranty;

 

 

 

          (f) there are no actions, suits or proceedings pending or, to the
knowledge of such Guarantor, threatened against or affecting such Guarantor, or
any property of such Guarantor, in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;

 

 

 

          (g) after giving effect to the transactions contemplated in the Note
Purchase Agreement and after giving due consideration to any rights of
contribution (i) the fair value of the assets of such Guarantor (both at fair
valuation and at present fair saleable value) exceeds its liabilities, (ii) such
Guarantor is able to and expects to be able to pay its debts as they mature, and
(iii) such Guarantor has capital sufficient to carry on its business as
conducted and as proposed to be conducted.

 

 

SECTION 10. NOTICES.

          All notices and communications provided for hereunder shall be in
writing and sent by telecopy if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery service (charges
prepaid), or by registered or certified mail with return receipt requested
(postage prepaid), or by a recognized overnight delivery service (with charges
prepaid) (a) if to the Company or any Holder at the address set forth in the
Note Purchase Agreement or (b) if to a Guarantor, in care of the Company at the
Company’s address set forth in the Note Purchase Agreement, or in each case at
such other address as the Company, any Holder or such Guarantor shall from time
to time designate in writing to the other parties. Any notice so addressed shall
be deemed to be given when actually received.

EXHIBIT 1.1-C-6

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

SECTION 11. SURVIVAL.

          All warranties, representations and covenants made by each Guarantor
herein or in any certificate or other instrument delivered by it or on its
behalf hereunder shall be considered to have been relied upon by the Holders and
shall survive the execution and delivery of this Guaranty, regardless of any
investigation made by any of the Holders. All statements in any such certificate
or other instrument shall constitute warranties and representations by such
Guarantor hereunder.

 

 

SECTION 12. SUBMISSION TO JURISDICTION.

          Each Guarantor irrevocably submits to the jurisdiction of the courts
of the State of New York and of the courts of the United States of America
having jurisdiction in the State of New York for the purpose of any legal action
or proceeding in any such court with respect to, or arising out of, this
Guaranty, the Note Purchase Agreement or the Notes. Each Guarantor consents to
process being served in any suit, action or proceeding by mailing a copy thereof
by registered or certified mail, postage prepaid, return receipt requested. Each
Guarantor agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by law, be taken and
held to be valid personal service upon and personal delivery to such Guarantor.

 

 

SECTION 13. MISCELLANEOUS.

          Any provision of this Guaranty which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, each Guarantor
hereby waives any provision of law that renders any provisions hereof prohibited
or unenforceable in any respect. The terms of this Guaranty shall be binding
upon, and inure to the benefit of, each Guarantor and the Holders and their
respective successors and assigns. No term or provision of this Guaranty may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by each Guarantor and the Required Holders. The section and
paragraph headings in this Guaranty are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof,
and all references herein to numbered sections, unless otherwise indicated, are
to sections in this Guaranty. This Guaranty shall in all respects be governed
by, and construed in accordance with, the laws of the State of New York,
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

EXHIBIT 1.1-C-7

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Donaldson Company, Inc.

Note Purchase Agreement

          IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed as of the day and year first above written.

 

 

 

 

 

DONALDSON CAPITAL, INC.

 

Name:

 

 

Title:

 

EXHIBIT 1.1-C-8

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Donaldson Company, Inc.

Note Purchase Agreement

FORM OF JOINDER TO SUBSIDIARY GUARANTY

          The undersigned (the “Guarantor”), joins in the Subsidiary Guaranty
dated as of March 27, 2014from the Guarantors named therein in favor of the
Holders, as defined therein, and agrees to be bound by all of the terms thereof
and represents and warrants to the Holders that:

 

 

 

          (a) such Guarantor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the power
and authority to own or hold under lease the properties it purports to own or
hold under lease and to transact the business it transacts and proposes to
transact;

 

 

 

          (b) such Guarantor has the power and authority to execute and deliver
this Guaranty and to perform the provisions hereof, and this Guaranty has been
duly authorized by all necessary action on the part of such Guarantor;

 

 

 

          (c) this Guaranty constitutes the legal, valid and binding obligation
of such Guarantor enforceable against such Guarantor in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);

 

 

 

          (d) the execution, delivery and performance of this Guaranty will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of such Guarantor
under, any agreement, or corporate charter or by-laws to which such Guarantor is
bound or by which such Guarantor or any of its properties may be bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to such Subsidiary Guarantor or
(iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to such Guarantor;

 

 

 

          (e) no consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance by such Guarantor of this Guaranty;

 

 

 

          (f) there are no actions, suits or proceedings pending or, to the
knowledge of such Guarantor, threatened against or affecting such Guarantor, or
any property of such Guarantor, in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect;

 

 

 

          (g) after giving effect to the transactions contemplated by the giving
of this Joinder and giving due consideration to any rights of contribution
(i) the fair value of the assets of such Guarantor (both at fair valuation and
at present fair saleable value) exceeds

EXHIBIT 1.1-C-9

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

its liabilities, (ii) such Guarantor is able to and expects to be able to pay
its debts as they mature, and (iii) such Guarantor has capital sufficient to
carry on its business as conducted and as proposed to be conducted.

          Capitalized Terms used but not defined herein have the meanings
ascribed in the Subsidiary Guaranty.

EXHIBIT 1.1-C-10

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Donaldson Company, Inc.

Note Purchase Agreement

          IN WITNESS WHEREOF, the undersigned has caused this Joinder to
Subsidiary Guaranty to be duly executed as of __________, ____.

 

 

 

 

 

[Name of Guarantor]

 

 

 

By:  

 

 

 

Name:  

 

 

 

Title:

 

EXHIBIT 1.1-C-11

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[FORM OF SERIES 2014-A SENIOR NOTE]

DONALDSON COMPANY, INC.

3.72% Senior Note, Series 2014-A
Due March 27, 2024

 

 

No. [_____]

[Date]

$[_______]

PPN[______________]

          FOR VALUE RECEIVED, the undersigned, DONALDSON COMPANY, INC. (herein
called the “Company”), a corporation organized and existing under the laws of
the State of Delaware, promises to pay to [_______________], or registered
assigns, the principal sum of $[          ] on March 27, 2024 (the “Maturity
Date”), with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance hereof at the rate of 3.72% per annum (subject
to increase pursuant to Section 1.2(b) of the below defined Note Purchase
Agreement) from the date hereof, payable semiannually, on March 27 and
September 27 in each year, commencing with the March 27 or September 27 next
succeeding the date hereof and on the Maturity Date, until the principal hereof
shall have become due and payable, and (b) to the extent permitted by law (x) on
any overdue payment of interest and (y) during the continuance of an Event of
Default, on such unpaid balance and on any overdue payment of any Make‑Whole
Amount (as defined in the Note Purchase Agreement referred to below), payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i) 5.72%
or (ii) 2% over the rate of interest publicly announced by Wells Fargo Bank,
N.A. from time to time in New York, New York as its “base” or “prime” rate.

          Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Wells Fargo Bank, N.A. in New York, New York
or at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.

          This Note is one of a series of Notes (herein called the “Notes”)
issued pursuant to a Note Purchase Agreement, dated as of March 27, 2014 as from
time to time amended and supplemented, the “Note Purchase Agreement”), between
the Company and the respective Purchasers named therein, and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representations set forth in Sections 6.1(to the extent such representation is
required for such transfer) and 6.2 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement. The
Notes have not been registered under the Securities Act of 1933, as amended.

          This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written

EXHIBIT 1.2
(to Note Purchase Agreement)

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

 

 

Donaldson Company, Inc.

Note Purchase Agreement

instrument of transfer duly executed, by the registered holder hereof or such
holder’s attorney duly authorized in writing, a new Note for a like principal
amount will be issued to, and registered in the name of, the transferee. Prior
to due presentment for registration of transfer, the Company may treat the
person in whose name this Note is registered as the owner hereof for the purpose
of receiving payment and for all other purposes, and the Company will not be
affected by any notice to the contrary.

          This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement but not otherwise.

          If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

          This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

 

 

 

 

 

DONALDSON COMPANY, INC.

 

 

 

By:  

 

 

 

Title:  

 

Exhibit 1.2-2

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

FORM OF OPINION OF COUNSEL
TO THE COMPANY

          The opinion of Dorsey & Whitney LLP, counsel for the Company, shall be
to the effect that:

 

 

 

          1. The Company and the Subsidiary Guarantor is a corporation duly
incorporated, validly existing in good standing under the laws of its
jurisdiction of formation, and has all requisite corporate power and authority
to own and operate its properties, to carry on its business as now conducted and
to enter into and perform the Note Purchase Agreement or the Subsidiary
Guaranty, as applicable.

 

 

 

          2. The Note Purchase Agreement and the Notes have been duly authorized
by proper corporate action on the part of the Company, have been duly executed
and delivered by an authorized officer of the Company, and constitute the legal,
valid and binding agreements of the Company, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law.

 

 

 

          3. The Subsidiary Guaranty has been duly authorized by proper
corporate action on the part of each of the Subsidiary Guarantor, has been duly
executed and delivered by an authorized officer of each of the Subsidiary
Guarantor, and constitutes the legal, valid and binding agreement of each of the
Subsidiary Guarantor, enforceable in accordance with its terms, except to the
extent that enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.

 

 

 

          4. Assuming the representations of the Purchasers in Section 6 of the
Agreement are correct, the offering, sale and delivery of the Notes do not
require the registration of the Notes under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.

 

 

 

          5. No authorization, approval or consent of, and no designation,
filing, declaration, registration and/or qualification with, any United States
federal or Minnesota state Governmental Authority is necessary or required in
connection with the execution, delivery and performance by the Company of the
Note Purchase Agreement or the offering, issuance and sale by the Company of the
Notes or in connection with the execution, delivery and performance by the
Subsidiary Guarantor of the Subsidiary Guaranty (except for state securities
laws other than New York and Minnesota).

 

 

 

          6. The issuance and sale of the Notes by the Company, the performance
of the terms and conditions of the Notes and the Note Purchase Agreement and the

EXHIBIT 4.4(a)
(to Note Purchase Agreement)

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Donaldson Company, Inc.

Note Purchase Agreement

 

 

 

execution and delivery of the Note Purchase Agreement and the execution,
delivery and performance by the Subsidiary Guarantor of the Subsidiary Guaranty
do not conflict with, or result in any breach or violation of any of the
provisions of, or constitute a default under, or result in the creation or
imposition of any Lien on, the property of the Company or any Subsidiary
pursuant to the provisions of (i) the Certificate of Incorporation or By-laws of
the Company or such Subsidiary Guarantor, (ii) any loan agreement known to such
counsel to which the Company or any Subsidiary is a party or by which any of
them or their property is bound, pursuant to which Indebtedness in an amount in
excess of $5,000,000 is outstanding, (iii) any other documents flied as Exhibits
to SEC reports to which the Company or any Subsidiary is a party or by which any
of them or their property is bound, (iv) any United States federal or Minnesota
state law (including usury laws) or regulation applicable to the Company, or (v)
to the knowledge of such counsel, any order, writ, injunction or decree of any
court or Governmental Authority applicable to the Company.

 

 

 

          7. Except as disclosed in Schedule 5.8 to the Note Purchase Agreement,
to the knowledge of such counsel, there are no actions, suits or proceedings
pending or overtly threatened against, or affecting the Company or any
Subsidiary, at law or in equity or before or by any Governmental Authority,
which are required to be disclosed in an SEC report.

 

 

 

          8. Neither the Company nor any Subsidiary is an “investment company”
or an “affiliated person” thereof, as such terms are defined in the Investment
Company Act of 1940, as amended.

 

 

 

          9. The issuance of the Notes and the intended use of the proceeds of
the sale of the Notes do not violate or conflict with Regulation T, U or X of
the Board of Governors of the Federal Reserve System.

          The opinion of Dorsey & Whitney LLP shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company.

Exhibit 4.4(a)-2

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

FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS

          The opinion of Chapman and Cutler LLP, special counsel to the
Purchasers, shall be to the effect that:

 

 

 

          1. The Company is a corporation organized and validly existing in good
standing under the laws of the State of Delaware, with all requisite corporate
power and authority, in the case of the Company, to enter into the Agreement and
to issue and sell the Notes.

 

 

 

          2. The Agreement and the Notes have been duly authorized by proper
corporate action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Company, and constitute the legal,
valid and binding agreements of the Company, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law.

 

 

 

          3. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes do not require the registration of the
Notes under the Securities Act of 1933, as amended, nor the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.

 

 

 

          4. The issuance and sale of the Notes and compliance with the terms
and provisions of the Notes and the Agreement will not conflict with or result
in any breach of any of the provisions of the Certificate of Incorporation or
By-Laws of the Company.

 

 

 

          5. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any governmental body, Federal or
state, is necessary in connection with the execution and delivery of the Note
Purchase Agreement or the Notes.

          The opinion of Chapman and Cutler LLP also shall state that the
opinion of Dorsey & Whitney, delivered to you pursuant to the Agreement, is
satisfactory in form and scope to Chapman and Cutler LLP, and, in its opinion,
the Purchasers and it are justified in relying thereon and shall cover such
other matters relating to the sale of the Notes as the Purchasers may reasonably
request.

EXHIBIT 4.4(b)
(to Note Purchase Agreement)

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