Document:

Exhibit 10.26 M-02.01.2014

Exhibit 10.26

MACY’S, INC.
CHANGE IN CONTROL PLAN
(Effective November 1, 2009)
(As Revised and Restated January 1, 2014)

1. Purpose of the Plan.

The Macy’s, Inc. Change in Control Plan (the “Plan”) is adopted by Macy’s, Inc. (the “Company”) to assist the Company in recruiting and retaining senior executives and/or key employees and to provide financial assistance and additional protection to certain senior executives and/or key employees of the Company, and its subsidiaries, divisions, or controlled affiliates (individually, a "Participating Employer," and collectively, the "Participating Employers") whose employment is involuntarily terminated by a Participating Employer (or who voluntarily terminates for “good reason”) under certain circumstances in connection with a Change in Control and who are not otherwise excluded as described below.

2. Definitions.  In addition to the words and phrases defined in other sections of the Plan, the following words and phrases shall be defined as follows for purposes of the Plan.

“Board” means the Board of Directors of the Company.

“Cause,” as it relates to the termination of a Participant’s employment, means:

(i) An intentional act of fraud, embezzlement, theft or any other material violation of law in connection with the Participant’s duties or in the course of his employment with a Participating Employer:
(ii) Intentional wrongful damage to material assets of a Participating Employer;
(iii) Intentional wrongful disclosure of material confidential information of a Participating Employer;
(iv) Intentional wrongful engagement in any competitive activity which would constitute a material breach of the duty of loyalty;
(v) Intentional breach of any stated material employment policy of a Participating Employer;
(vi) Intentional neglect of duties and responsibilities; or
(vii) Breach of the nonsolicitation or trade secrets and confidential information provisions set forth in Sections 5 and 6 of this Plan. 

No act, or failure to act, on the part of an Employee shall be deemed "intentional" if it was due primarily to an error in judgment or negligence but shall be deemed “intentional" only if done, or 

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omitted to be done, by the Employee in bad faith or without reasonable belief that his or her action or omission was in or not opposed to the best interest of the Participating Employer.  Failure to meet performance standards or objectives of a Participating Employer shall not, in and of itself, constitute Cause for purposes hereof.  

Notwithstanding the foregoing, the Executive will not be deemed to have been terminated for "Cause" hereunder unless and until there has been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the Board at a meeting of the Board called and held, after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel (if the Executive chooses to have counsel present at such meeting), to be heard before the Board, finding that, in the good faith opinion of the Board, the Executive had committed an act constituting "Cause" as herein defined and specifying the particulars thereof in detail.  Nothing herein will limit the right of the Executive or the Executive's beneficiaries to contest the validity or propriety of any such determination.

“Change in Control” means the occurrence of any of the following events:

(i)  The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Voting Stock”); provided, however, that for purposes of this subsection (i), the following acquisitions will not constitute a Change of Control:  (A) any acquisition of Voting Stock directly from the Company that is approved by a majority of the Incumbent Board (as defined in subsection (ii) below); (B) any acquisition of Voting Stock by any entity in which the Company, directly or indirectly, beneficially owns 50% or more ownership or other equity interest (a “Subsidiary”); (C) any acquisition of Voting Stock by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; or (D) any acquisition of Voting Stock by any Person pursuant to a transaction that complies with clauses (A), (B) and (C) of subsection (iii) below; provided further, that:  (X) if any Person is or becomes the beneficial owner of 30% or more of the Voting Stock as a result of a transaction described in clause (A) of this subsection (i), and such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock, and after obtaining such additional beneficial ownership beneficially owns 30% or more of the Voting Stock, other than in an acquisition of Voting Stock directly from the Company that is approved by a majority of the Incumbent Board or other than as a result of a stock dividend, stock split or similar transaction effected by the Company in which all holders of Voting Stock are treated equally, such subsequent acquisition will be treated as a Change in Control; and (Y) a Change in Control will not be deemed to have occurred if a Person is or becomes the beneficial owner of 30% or more of the Voting Stock as a result of a reduction in the number of shares of Voting Stock outstanding pursuant to a transaction or series of transactions approved by a majority of the Incumbent Board unless and until such Person thereafter becomes the beneficial owner of any additional shares of Voting Stock, and after obtaining such additional beneficial ownership beneficially owns 30% or more of the Voting Stock, other than as a result of a stock 

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dividend, stock split or similar transaction effected by the Company in which all holders of Voting Stock are treated equally; or 

(ii)  Individuals who, on the  Revision Date, constitute the Board of Directors of the Company (as modified by this subsection (ii), the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors of the Company (the “Board”); provided, however, that any individual becoming a director after the  Revision Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board on the  Revision Date, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii)  The consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (each, a “Business Combination”), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions relative to each other as their ownership, immediately prior to such Business Combination, of the Voting Stock, (B) no Person (excluding any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv)  Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

“Competing Business” means

(i)  any of the following named companies, or any other business into which such company is merged, consolidated, or otherwise combined:

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	•
	Abercrombie & Fitch

		
	•
	Bed, Bath & Beyond

		
	•
	Belk’s

		
	•
	Burlington Coat Factory

		
	•
	Bon-Ton Stores

		
	•
	Dillard’s

		
	•
	The Gap

		
	•
	J.C. Penney

		
	•
	Kohl’s

		
	•
	L Brands

		
	•
	Nordstrom

		
	•
	Neiman-Marcus

		
	•
	Ross Stores

		
	•
	Saks

		
	•
	Sears

		
	•
	Target

		
	•
	TJX

		
	•
	Walmart; or

(ii) any retailer that
		
	1.
	had annual revenues for its most recently completed fiscal year of at least $2.5 billion; and

		
	2.
	both (i) offers a category or categories of merchandise (e.g., Fine Jewelry, Cosmetics, Kids, Big Ticket, Housewares, Men’s, Dresses), any of which are offered by a Participating Employer, and (ii) the revenue derived by such other retailer during such retailer’s most recently ended fiscal year from such category or categories of merchandise represent(s), in the aggregate, more than 50% of the Participating Employers' total revenues for the most recently completed fiscal year derived from the same category or categories of merchandise.

“Confidential Information” means any data or information that is material to the Company and not generally known to the public, including, without limitation:  (i) price, cost, and sales data; (ii) the identities and locations of vendors and consultants furnishing materials and services to the Company and the terms of vendor or consultant contracts or arrangements; (iii) lists of, and other information regarding, Customers and suppliers; (iv) financial information that has not been released to the public; (v) future business plans, marketing or licensing strategies, and advertising campaigns; or (vi) information about the Company’s employees and executives, as well as the Company’s talent strategies including but not limited to compensation, retention and recruiting initiatives.

“Effective Date” means the effective date of the Plan set forth in Section 16.

“Executive” means an employee of a Participating Employer who is designated by the Board as being subject to section 16 of the Securities Exchange Act of 1934 (a “Section 16 officer”).  In 

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addition, “Executive” includes any other employee designated as an Executive by the Compensation and Management Development Committee of the Board (the “CMD Committee”), provided that the Committee has not subsequently revoked such designation. 

“Participant” means an Executive who is eligible for participation in the Plan and who has not ceased to be eligible for participation pursuant to Section 4(c).

“Revision Date” means the date the Plan is revised as set forth in Section 16.

“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and also including proposed, temporary or final regulations or any other guidance, promulgated with respect to such Section by the Secretary of the Treasury or the Internal Revenue Service.

“Severance Period” means the period of time commencing on the date of the first occurrence of a Change in Control and continuing until the earlier of (i) the expiration of two years after the first occurrence of a Change in Control, and (ii) the Executive’s death.

3. Administration of the Plan

(a)    The Plan shall be administered by the Company.  The Company, as plan administrator (the “Plan Administrator”), shall have the sole and absolute discretion to interpret where necessary all provisions of the Plan (including, without limitation, by supplying omissions from, correcting deficiencies in, or resolving inconsistencies or ambiguities in, the language of the Plan), to make factual findings with respect to any issue arising under the Plan, to determine the rights and status under the Plan of Participants or other persons, to resolve questions (including factual questions) or disputes arising under the Plan and to make any determinations with respect to the benefits payable under the Plan and the persons entitled thereto as may be necessary for the purposes of the Plan.  Without limiting the generality of the foregoing, the Plan Administrator is hereby granted the authority (i) to determine whether a particular employee is a Participant, and (ii) to determine if a person is entitled to benefits hereunder and, if so, the amount and duration of such benefits.  The Plan Administrator’s determination of the rights of any person hereunder shall be final and binding on all persons, subject only to the claims procedure of the Plan.  
(b)    The Plan Administrator may delegate any of its administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval and payment of benefits, to a named administrator or administrators.
4. Participation

(a)Any Executive who was a Participant on the Revision Date shall remain a Participant.  On or after the Revision date, an Executive shall become a Participant in the Plan on the later of (i) the date the Executive is designated by the Board as a Section 16 officer. or (ii) the date the Executive is designated for participation by the CMD Committee in the case of all other Executives.  Notwithstanding the preceding, any Executive who, as of the date the Executive 

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would otherwise become a Participant in the Plan, is covered by an employment agreement with a Participating Employer that provides for an extension of said agreement upon the occurrence of a Change in Control, shall become a Participant in the Plan upon the expiration of said employment agreement.
(a)    Under no circumstances may a Participant receive severance benefits under more than one severance plan of the Participating Employers.  Unless otherwise provided in the applicable plan, a Participant who is eligible for benefits under more than one plan shall receive benefits under the plan which provides the highest level of benefits.  For purposes of this provision, a severance plan is a plan designed primarily to provide benefits payable in cash upon an employee’s involuntary termination from employment (including for this purpose termination in circumstances comparable to the circumstances described in Section 7(b)) and not a plan that provides either ancillary benefits upon involuntary termination (such as accelerated vesting under an equity program) or retirement benefits.  
(b)    If a Participant ceases to be an Executive prior to a Change in Control, the Participant will no longer be eligible to participate in the Plan.  Such Participant’s participation in the Plan and eligibility for benefits hereunder, shall end on the date that is the first anniversary of the effective date of the Participant’s change in status. 
5.   Nonsolicitation

During the period of the Executive’s employment, and for a period of two years following termination of such employment (such period is referred to as the “No-recruit period”), the Participant will not solicit, either directly or indirectly, any person that he knows or should reasonably know to be an employee of the Company or any of its subsidiaries, divisions, or affiliates (whether such employees are now or hereafter through the No-recruit period so employed or engaged) to terminate their employment with the Company or any of its subsidiaries, divisions, or affiliates.  

6.  Confidential Information

A Participant shall not (either during the period of participation in the Plan or thereafter) without the consent of the Company disclose or provide to anyone, and will not use, modify, copy or adapt (except in the course of performing Participant’s duties for the Company) any of the Company’s Confidential Information.

7.  Termination Following a Change in Control

(a)    A Participant whose employment is terminated during the Severance Period shall be entitled to the benefits described in Section 8 unless the Participant’s termination of employment occurs in connection with one of the following events:

		
	(i)
	The Participant’s voluntary resignation or retirement other than as provided in Section 7(b), below;

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	(ii)
	The Participant’s death prior to the effective date of the Participant’s termination from employment;

		
	(iii)
	The Participant becoming permanently disabled within the meaning of the long-term disability plan of the Company or any other Participating Employer in effect for, or applicable to, the Participant immediately prior to the effective date of the Participant’s termination from employment (whether or not the Participant actually enrolled in such long-term disability plan); 

		
	(iv)
	The Participant’s termination from a Participating Employer in a transaction involving the sale or other disposition of a business of the Company where the Executive continues working for the acquiring entity; or

		
	(v)
	The Participant's termination of employment for Cause.

(b)    If one or more of the following events (regardless of whether any other reason, other than Cause, for termination exists or has occurred, including without limitation the Executive’s acceptance and/or commencement of other employment) occurs during the Severance Period and an event that constitutes Cause has not occurred, the Participant may terminate employment with the Participating Employer during the Severance Period (but after the correction period described below) and become entitled to the benefits provided by Section 8 if the Participant provides notice to the Company (in a manner consistent with a claim for benefits as provided for in Section 10) within 90 days following the occurrence of the event and the Company fails to make correction within 30 days following notice (and such termination shall be considered a termination for “good reason”):

		
	(i)
	A material diminution in the Executive’s base compensation;

		
	(ii)
	A material diminution in the Executive’s authority, duties, or responsibilities;

		
	(iii)
	A material change in the geographic location at which the executive must perform the services;  or

		
	(iv)
	Any other action or inaction that constitutes a material breach by a Participating Employer of an agreement under which the Executive provides services.

(c)    Any termination of the employment of the Participant or the occurrence of an event described in clauses (i) through (iv) of Section 7(b) following the commencement of any discussion with a third person that results in a Change in Control within 60 calendar days after the effective date of such termination or occurrence (which 60 calendar day period is referred to herein as the “Pre-Change in Control Protection Period”) will be deemed to have occurred after a Change in Control for purposes of this Plan.

8. Benefits

(a)    Participants who are eligible for benefits under Section 7 shall be entitled to a severance benefit equal to two times the sum of (i) the Participant's annual base salary rate in effect as of (A) the date of the first event constituting a Change in Control, (B) the date of the Participant’s termination of employment, or (C) if Section 7(c) applies, the date of the occurrence of the event described in Section 7(c), whichever is greater, and (ii) the Participant's average 

7

annual bonus (if any) received for the three full fiscal years of the Company immediately preceding the fiscal year in which the first event constituting a Change in Control occurs. If a Participant is covered by an employment agreement with the Company that provides for severance payments in the event of involuntary termination, the severance benefit shall be reduced by the value of the maximum cumulative severance payments (if any) that could be made to the Participant under said agreement.

(b)    If a Participant who is eligible for benefits under Section 7 does not, for a period of one year following the effective date of the Participant's termination from employment, render personal services to a Competing Business in any manner, including, without limitation, as owner, partner, director, trustee, officer, employee, consultant or advisor thereof, the Participant shall be entitled to an additional noncompetition severance benefit equal to one-half of the amount determined under Section 8(a).

(c)    If a Participant who is entitled to benefits under Section 7 dies following his or her termination from employment, but prior to receipt of the severance payment provided in Sections 8(a) and (b), payment of such severance amounts shall be made to the Participant’s estate. If a Participant dies during the one-year period following the effective date of the Participant’s termination from employment following a Change in Control without having engaged in an activity that precludes payment of the additional noncompetition severance benefits under Section 8(b), his estate shall be entitled to a pro-rata portion of the additional noncompetition severance benefit described in Section 8(b).

(d)    For purposes of determining the additional noncompetition severance benefit under Section 8(b) above, the following assumptions shall be used;
		
	(i)
	The Participant continued to work through the date that is the second anniversary of the effective date of the Participant’s termination from employment;

		
	(ii)
	The Participant received the same base compensation through the date described in (i), above, that the Participant was receiving at the Executive’s termination from employment;

		
	(iii)
	The Participant received a bonus for any fiscal year (or portion thereof) from the Executive’s termination from employment through the date described in (i), above, equal to the actual bonus (if any) that the participant receives for that year (even if paid after the Executive’s termination from employment).

9. Form and Timing of Payment

(a)    All payments shall be made wholly in cash, less applicable withholding.  Where payments are to be made within a fixed number of days following a specified date, the Participant shall not have the right to designate the taxable year of payment.  Each payment under this Plan shall be a separate payment and not one of a series of payments.

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(b)    Severance benefits payable under Sections 8(a) shall be paid in a single lump sum payment, less applicable withholding, in cash within 5 days after the effective date of the Participant’s severance from employment.  The additional noncompetition severance benefit payable under Section 8(b) shall be paid in a single lump sum payment in cash within 5 days after the first anniversary of the effective date of the Participant's severance from employment.

(c)    Severance payments payable to the Participant’s estate under Section 8(c) shall be paid in a single lump sum payment, less applicable withholding, in cash no later than 60 days after the date of the Participant’s death.  The pro-rata additional noncompetition severance benefits payable to the Participant’s estate under Section 8(c) shall be paid in a single lump sum payment in cash no later than 60 days after the date of the Participant’s death.

(d)    Severance benefits under Sections 8(a) that are payable to a Participant because of the Participant’s termination of employment or the occurrence of an event described in clauses (i) through (iv) of Section 7(b) during the Pre-Change in Control Protection Period shall be paid in a single lump sum payment, less applicable withholding, in cash within 5 days after the later of (i) the date on which the Change in Control occurs or (ii) the effective date of the Participant’s severance from employment.  The additional noncompetition severance benefit payable under Section 8(b) to such a Participant shall be paid in a single lump sum payment in cash within 5 days after the first anniversary of the effective date of the Participant's severance from employment.

(e)    Payments made to Participants under the Plan shall not be considered compensation for purposes of the Company’s qualified or nonqualified retirement plans or its group health and welfare benefit plans.

10.  Claims and Appeal Procedure

A Participant will be paid as provided in Sections 7, 8 and 9.  No claim for benefits is necessary.  If a Participant believes that he/she is due benefits that are not paid, he/she may file a claim with the Plan Administrator for those benefits.  If any benefits are denied, either in whole or in part, the Plan Administrator will give the employee notice of the specific reason or reasons for the denial, along with reference to the pertinent plan provisions on which the denial is based.  The plan administrator will also indicate what additional material or information, if any, is required to perfect the claim.

The Plan Administrator will generally provide notice of any decision denying the claim within 90 days after the claim is filed.  If special circumstances require an extension of time to act on the claim, another 90 days will be allowed.  If such an extension is required, the Plan Administrator will notify the employee before the end of the initial 90 day period.  

If a Participant desires to appeal a claim denial because there is disagreement about the reason the claim is denied, the Participant must notify the Plan Administrator in writing within 60 days after the date the claim denial was sent to the Participant.  A request for a review of the claim and for examination of any pertinent documents may be made by the Participant or by anyone 

9

authorized to act on the Participant’s behalf.  The Participant or his/her representative should submit the reasons that he/she believes the claim should not have been denied, as well as any data, questions, or appropriate comments, in writing.

The Plan Administrator will notify the employee of the final decision within sixty (60) days after receipt of a written request for review unless special circumstances require an extension of time for processing, in which case a further sixty (60) days will be allowed.

Any claim for benefits, or appeal of the denial of a claim for benefits, shall be filed with:
Chief Human Resources Officer
Macy’s, Inc.
7 West Seventh Street
Cincinnati, OH   45202

with a copy to:
General Counsel
Macy’s, Inc.
7 West Seventh Street
Cincinnati, OH   45202

11.  Limitation on Payments and Benefits

Notwithstanding anything to the contrary contained in this Plan, if, after taking into account all amounts or benefits to be paid or provided to the Executive under this Plan or other arrangement with any Participating Employer, any amount or benefit to be paid or provided to the Executive would be an “Excess Parachute Payment,” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision thereto, but for the application of this sentence, then the payments and benefits to be so paid or provided under this Plan or other arrangement with a Participating Employer will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payments and benefits to be provided, determined on an after-tax basis (taking into account the Excise Tax, as defined below).  The determination of whether any reduction in such payments or benefits to be provided under this Plan is required pursuant to the preceding sentence will be made at the expense of the Company, if requested by the Executive or the Company, by the Company’s independent accountants.  The fact that the Executive’s right to payments or benefits may be reduced by reason of the limitations contained in this Section 11 will not of itself limit or otherwise affect any other rights of the Executive other than pursuant to this Plan.  In the event that any payment or benefit intended to be provided under this Plan or otherwise is required to be reduced pursuant to this Section 11, the Company will reduce the amount of the Executive’s severance benefit payable pursuant to Section 8(a).  For purposes of this Section 11, “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) by reason of being considered “contingent on a change in ownership or control” of the Company, within the meaning of Section 280G of the Code, or any 

10

successor provision thereto, any similar tax imposed by state or local law, and any interest or penalties with respect to such tax.

12.  Legal Fees and Expenses; Security

It is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement, or defense of the Executive’s rights under this Plan by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder.  Accordingly, if it should appear to the Executive that the Company has failed to comply with any of its obligations under this Plan or in the event that the Company or any other person takes or threatens to take any action to declare this Plan void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive’s choice, at the expense of the Company as hereinafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement, or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, stockholder, or other person affiliated with the Company, in any jurisdiction.  Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship will exist between the Executive and such counsel.  Without regard to whether the Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will pay to the Executive and be solely financially responsible for any and all attorneys’ and related fees and expenses incurred by the Executive in connection with any of the foregoing.  Such payments shall be made no later than December 31 of the year following the year in the which the Executive incurs the expenses, provided that in no event will the amount of expenses eligible for reimbursement in one year affect the amount of expenses to be reimbursed, or in-kind benefits to be provided, in any other taxable year.

13. Miscellaneous Provisions

(a)     An Executive’s rights and interests under the Plan may not be assigned or transferred. 

(b)      The Plan Administrator shall promulgate any rules and regulations it deems necessary in order to carry out the purposes of the Plan or to interpret the provisions of the Plan.  The rules, regulations and interpretations made by the Plan Administrator shall, subject only to the claims procedure of the Plan, be final and binding on all persons.  
(c)    The Participating Employer may withhold from any amounts payable under this Plan all federal, state, city, or other taxes that the Participating Employer is required to withhold pursuant to any law or government regulation or ruling.

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14. Amendments and Termination.

The Company reserves the right, by action taken by the Incumbent Board, at any time and from time to time, in its sole discretion, to modify, amend or terminate this Plan. No amendment or termination may be made or effected (i) if it would cause the Plan to fail to comply with Section 409A or (ii) during the Severance Period without the consent of all Participants in the Plan at the time of the amendment or termination.  

Any such amendment that has the effect of reducing the benefit to which a Participant would be entitled under Section 8 upon a termination following a Change in Control or during the Pre-Change in Control Protection Period, and any termination of the Plan, shall not become effective until 12 months following the date on which the Company adopts such amendment or termination, provided, however, that any amendment or termination which occurs within 12 months before a Change in Control will not become effective until the first day following the end of the Severance Period.  

15. Governing Law; Plan Interpretation

The interpretation, performance, and enforcement of this Plan shall be governed by the laws of the State of Ohio, without giving effect to the principles of conflict of laws thereof. To the extent applicable, it is intended that the compensation arrangements under this Plan be in full compliance with Section 409A.  This Plan shall be construed in a manner to give effect to such intention.  

16. Effective Date of the Plan

The Plan shall be effective as of November 1, 2009.  The Plan is revised and restated effective as of January 1, 2014.

12Exhibit 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

	
  

 
	
  

 

	
  

 	
  

 
	
 Donaldson
 Company, Inc.

 	
 Note Purchase Agreement

 

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 TABLE OF CONTENTS  

 	
  

 	
  

 
	
  

 
	
 SECTION

 	
 HEADING

 	
  

 	
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 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

 	
  

 	
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 SECTION
 3.

 	
  

 	
 CLOSING

 	
  

 	
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 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-

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 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 -

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 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 -

	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 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 -

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
 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 -

	
  

 	
  

 
	
 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: 

	
  

 	
  

 
	
 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 -

	
  

 	
  

 
	
 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 -

	
  

 	
  

 
	
 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, 

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 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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 Company, Inc.

 	
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          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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 Company, Inc.

 	
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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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 Company, Inc.

 	
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 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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 Company, Inc.

 	
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          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. 

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 Company, Inc.

 	
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          (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

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 Company, Inc.

 	
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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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 Company, Inc.

 	
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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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 Company, Inc.

 	
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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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 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  

 

- 16 -

	
  

 	
  

 
	
 Donaldson
 Company, Inc.

 	
 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

 

- 17 -

	
  

 	
  

 
	
 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 

 

- 18 -

	
  

 	
  

 
	
 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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 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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 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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 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 

 

- 22 -

	
  

 	
  

 
	
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 Company, Inc.

 	
 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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 Company, Inc.

 	
 Note Purchase Agreement 

 

	
  

 	
  

 
	
  

 	
 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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 Company, Inc.

 	
 Note Purchase Agreement 

 

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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 Company, Inc.

 	
 Note Purchase Agreement 

 

	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (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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 Company, Inc.

 	
 Note Purchase Agreement 

 

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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 Company, Inc.

 	
 Note Purchase Agreement 

 

	
  

 	
  

 
	
  

 	
 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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 Company, Inc.

 	
 Note Purchase Agreement 

 

	
  

 	
  

 
	
  

 	
 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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 Company, Inc.

 	
 Note Purchase Agreement 

 

	
  

 	
  

 
	
  

 	
 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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 Company, Inc.

 	
 Note Purchase Agreement 

 

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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 Company, Inc.

 	
 Note Purchase Agreement 

 

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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 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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 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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 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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 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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 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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 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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 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

 

	
  

 	
  

 
	
 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

 

	
  

 	
  

 
	
 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

 

	
  

 	
  

 
	
 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

 
	
  

 	
  

 	
  

 

	
  

 	
  

 
	
 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

 

	
  

 	
  

 
	
 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

 

	
  

 	
  

 
	
 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

 

	
  

 	
  

 
	
 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

 

	
  

 	
  

 
	
 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

 

	
  

 	
  

 
	
 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)

 

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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  

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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 

	
  

 	
  

 
	
 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

	
  

 	
  

 
	
 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

	
  

 	
  

 
	
 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

	
  

 	
  

 
	
 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

	
  

 	
  

 
	
 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

	
  

 	
  

 
	
 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

	
  

 	
  

 
	
 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

	
  

 	
  

 
	
 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

 [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)

	
  

 	
  

 
	
 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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