Document:

donaldson106380_ex10-1.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 10.1

 

2010
MASTER STOCK INCENTIVE PLAN

OFFICER STOCK OPTION AWARD AGREEMENT

 

This Stock Option Award Agreement (the
“Agreement”) is made as of the date specified in the individual grant summary,
by and between Donaldson Company, Inc., a Delaware corporation (together with
its subsidiaries, “Donaldson”) and the person specified in the individual grant
summary, an employee of Donaldson (“Employee”).

 

Donaldson has adopted the 2010 Master
Stock Incentive Plan (the “Plan”) which permits issuance of stock options for
the purchase of shares of Common Stock of Donaldson.  Donaldson is now granting
this option under the Plan and in consideration of the Employee’s and
Donaldson’s covenants in this Agreement.  

 

1.                  
Grant of Option.  Donaldson grants the Employee the right
and option (the “Option”) to purchase all or any part of an aggregate of the
number of shares specified in the grant summary of Donaldson’s Common Stock,
par value $5.00 per share, at the Option purchase price specified in the grant
summary which shall be 100% of the fair market value of Donaldson’s common
stock on the date the award is granted.  The Option shall be subject to the
terms and conditions in this Agreement and in the Plan.  A copy of the Plan
will be furnished upon request of the Employee.  The date of grant is the date
specified in the individual grant summary.  The Option terminates at the close
of business ten (10) years from the date of grant or at an earlier time period
if specified in this Agreement.

 

2.                  
Vesting of Option
Rights.  The Option may be exercised by the Employee under the
following schedule except as otherwise provided in this Agreement.  The Option
may not be exercised for a period of one (1) year from the date of grant. 
Following that one-year period, the Option vests in equal one-third
increments:  one-third of the shares vest on the one-year anniversary date from
the date of grant; one-third of the shares vest on the two-year anniversary
date from the date of grant; one-third of the shares vest on the three-year
anniversary date from the date of grant.   The Option may be exercised as to
any or all of the shares that are vested.

 

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

 

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

 

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

 

 

 

 

 

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

 

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

 

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

 

5.                  
Forfeiture of Option and Option
Gain Resulting from Certain Activities.

 

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

 

 

 

 

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

 

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

 

6.                  
Acceleration of Exercisability
upon Change in Control.  In the event
of a “Change in Control” of Donaldson, any outstanding Options granted under
this Agreement not previously vested and exercisable shall become fully vested
and exercisable and shall remain exercisable thereafter until they are either
exercised or expire by their terms.  The term “Change in Control” shall have
the following meaning assigned to it in this Agreement.  A “Change in Control”
of Donaldson shall have occurred if (i) any “person” as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (other than Donaldson, any trustee or other fiduciary
holding securities under an employee benefit plan of Donaldson or any
corporation owned, directly or indirectly, by the shareholders of Donaldson in
substantially the same proportions as their ownership of stock of Donaldson),
either is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Donaldson representing
30% or more of the combined voting power of Donaldson’s then outstanding
securities, (ii) during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of
Donaldson (the “Board”), and any new director (other than a director designated
by a person who has entered into an agreement with Donaldson to effect a
transaction described in clause (i), (iii) or (iv) of this subparagraph) whose
election by the Board or nomination for election by Donaldson’s shareholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof, unless the approval of the
election or nomination for election of such new directors was in connection
with an actual or threatened election or proxy contest, (iii) the shareholders
of Donaldson approve a merger or consolidation of Donaldson with any other
corporation, other than (A) a merger or consolidation which would result in the
voting securities of Donaldson outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 80% of the combined voting power
of the voting securities of Donaldson or such surviving entity outstanding
immediately after such merger or consolidation or (B) a merger or consolidation
effected to implement a recapitalization of Donaldson (or similar transaction)
in which no “person” (as hereinabove defined) acquires more than 30% of the
combined voting power of Donaldson’s then outstanding securities or (iv) the
shareholders of Donaldson approve a plan of complete liquidation of Donaldson
or an agreement for the sale or disposition of Donaldson of all or substantially
all of Donaldson’s assets or any transaction having a similar effect.

 

 

 

 

7.                  
Miscellaneous.

 

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

 

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

 

(c)                
The Option may not be transferred,
except by will or the laws of descent and distribution to the extent provided
in subsection 3(b), and during the Employee’s lifetime the Option is
exercisable only by the Employee, provided, however, that notwithstanding the
above, this Option shall be transferable by the Employee to family members and
related estate planning entities designated in a stock transfer form approved
by Donaldson and delivered to Donaldson as provided in Section 4 for written
notice.

 

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

 

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

 

 

 

 

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

 

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

 

(h)                 This Option grant shall be effective only after the Employee agrees to the terms and conditions of this Stock Option Award Agreement.  The Employee shall not disclose either the contents or any of the terms and conditions of the Option to any other person and agrees that Donaldson shall have the right in its sole discretion to immediately terminate the Option without the right to exercise any part thereof in the event of such disclosure by the Employee.

 

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

 

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

 

 

	
DONALDSON COMPANY, INC.

	
      

	
EMPLOYEE

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
SIGNED BY ELECTRONIC SIGNATURE

	
 

	
William M. Cook

	
 

	
 

	
Its:

	
Chairman, President and

Chief Executive Officerdonaldson106380_ex10-2.htm - Generated by SEC Publisher for SEC Filing

 

Exhibit 10.2

 

2010 MASTER STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD

 

AWARD AGREEMENT made this {date}, by and between Donaldson Company, Inc. (“Donaldson”) and ______________, an employee of Donaldson (“Employee”).

 

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

 

1.            Donaldson hereby grants to the Employee             shares of Common Stock for no cash consideration, subject to the following restrictions (“Restricted Stock”):

 

a.            This Award is granted pursuant to the 2010 Master Stock Inventive Plan of Donaldson (“2010 Plan”) and is subject to all of the terms and conditions of such Plan.  The Employee acknowledges receipt of a copy of the 2010 Plan and the Plan Prospectus.

 

b.            Date of grant shall be                      (“Grant Date”).

 

c.            The Restricted Stock may not be sold, assigned, hypothecated or transferred (including without limitation, transfer by gift or donation) until the         anniversary of the Grant Date (“Restriction Period”).

 

d.            Shares subject to the Restricted Stock Award shall be forfeited to Donaldson if, at any time within the Restriction Period, employment of the Employee by Donaldson terminates for any reason (including without limitation termination by Donaldson, with or without cause) other than for reasons of death, normal retirement at or after age 55, or long-term disability.

 

e.            Upon termination of the Employee’s employment within the Restriction Period by reason of death, normal retirement, or long-term disability, the restrictions hereinabove imposed shall lapse for that number of shares obtained by multiplying the Award by a fraction formed from dividing the full number of months of the Employee’s employment since the Grant Date by _____.  The remainder of shares shall be forfeited to Donaldson.

 

f.            Notwithstanding anything herein to the contrary such restrictions shall lapse and all of the shares shall become fully vested in the event of a Change in Control as defined in section 3 below.

 

2.             Execution of the Employee Agreement.  In consideration of the grant of Restricted Stock and other good and valuable consideration associated with the Employee’s employment with Donaldson, the Employee agrees to execute the Employee Agreement attached hereto and labeled as Exhibit A.  The Employee acknowledges and agrees that the grant of Restricted Stock is expressly conditioned upon the Employee’s execution of the Employee Agreement, and the Employee further acknowledges and agrees that the grant of Restricted Stock is adequate consideration for the Employee’s execution of the Employee Agreement and the restrictive covenants contained therein.

 

 

 

 

3.             Vesting
upon Change in Control.  In the event of a “Change in Control” of
Donaldson, the shares subject to the Restricted Stock Award shall immediately
become fully vested and delivered to the Employee.  The term “Change in
Control” shall have the following meaning assigned to it in this Award
Agreement.  A “Change in Control” of Donaldson shall have occurred if (i) any
“person” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) (other than Donaldson,
any trustee or other fiduciary holding securities under an employee benefit plan
of Donaldson or any corporation owned, directly or indirectly, by the
shareholders of Donaldson in substantially the same proportions as their
ownership of stock of Donaldson), either is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Donaldson representing 30% or more of the combined voting power
of Donaldson’s then outstanding securities, (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of Donaldson (the “Board”), and any new director (other
than a director designated by a person who has entered into an agreement with
Donaldson to effect a transaction described in clause (i), (iii) or (iv) of this
subparagraph) whose election by the Board or nomination for election by
Donaldson’s shareholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof,
unless the approval of the election or nomination for election of such new
directors was in connection with an actual or threatened election or proxy
contest, (iii) the shareholders of Donaldson approve a merger or consolidation
of Donaldson with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of Donaldson
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of Donaldson or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of Donaldson (or similar transaction) in which no
“person” (as hereinabove defined) acquires more than 30% of the combined voting
power of Donaldson’s then outstanding securities or (iv) the shareholders of
Donaldson approve a plan of complete liquidation of Donaldson or an agreement
for the sale or disposition of Donaldson of all or substantially all of
Donaldson’s assets or any transaction having a similar effect.

 

4.             The
Employee shall have the right to vote the shares of Restricted Stock and
receive cash dividends on such shares.

 

5.             The
certificate(s) evidencing shares of Restricted Stock shall be held in custody
by Donaldson (attention of Corporate Secretary) until the restrictions have
lapsed.

 

6.             Donaldson
and the Employee recognize that this Agreement in no way restricts the right of
Donaldson to terminate the Employee’s employment at any time.

 

 

 

 

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

 

 

	
DONALDSON COMPANY, INC.

	
      

	
EMPLOYEE

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	
 

	
 

	
William M. Cook

	
 

	
Employee Name

	
Its:

	
Chairman, President and

Chief Executive Officer

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