Registration No. 333-______

 

As filed with the Securities and Exchange Commission on November 19, 2010

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-8

REGISTRATION STATEMENT UNDER THE

SECURITIES ACT OF 1933

 

DONALDSON COMPANY, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

41-0222640

(State or other jurisdiction

 

(I.R.S. Employer

of incorporation or organization)

 

Identification No.)

 

 

 

1400 West 94th Street

Minneapolis, Minnesota 55431

(Address of principal executive offices,

including zip code)

 

DONALDSON COMPANY, INC. 2010 MASTER STOCK INCENTIVE PLAN

(Full title of the plan)

 

Norman C. Linnell

Vice President, General Counsel and Secretary

Donaldson Company, Inc.

1400 West 94th Street

Minneapolis, Minnesota 55431

(952) 887-3131

(Name, address and telephone number,

including area code, of agent for service)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer   x

Accelerated filer   o

 

 

Non-accelerated filer   o

Smaller reporting company   o

(Do not check if a smaller reporting company)

 


CALCULATION OF REGISTRATION FEE

 

 

 

 

 

 

 

Title of securities to be registered

Amount
to be registered(1)

Proposed maximum
offering price per share(2)

Proposed maximum
aggregate offering price(2)

Amount of
registration fee

 

Common Stock, $5.00 par value per share (3)

4,600,000 shares

$49.91

$229,586,000

$16,370


 

 

(1)

Represents shares of common stock of Donaldson Company, Inc. issuable under the Donaldson Company, Inc. 2010 Master Stock Incentive Plan. Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement also covers any additional shares of Donaldson Company, Inc. common stock that may be granted under the Plan to prevent dilution resulting from stock splits, stock dividends or similar transactions.

 

 

(2)

Estimated solely for the purpose of calculating the registration fee in accordance with Rules 457(h)(1) and (c) under the Securities Act of 1933, as amended, based on the average of the high and low sales prices of Donaldson Company, Inc. common stock as reported on the New York Stock Exchange on November 16, 2010.

 

 

(3)

Includes corresponding rights to acquire shares of Donaldson Company, Inc. preferred stock pursuant to the Preferred Stock Amended and Restated Rights Agreement between Donaldson Company, Inc. and Wells Fargo Bank, N.A., dated as of January 27, 2006, or any successor rights agreement of Donaldson Company, Inc.


PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

 

 

Item 3.

Incorporation of Documents by Reference.

          The following documents, which have been filed with the Securities and Exchange Commission (the “SEC”) by Donaldson Company, Inc. (“we,” “us,” “our” or “Donaldson”), are incorporated by reference in this registration statement:

 

 

(a)

Our Annual Report on Form 10-K for the year ended July 31, 2010; and

 

 

(b)

The description of our common stock and preferred stock purchase rights contained in any registration statement or report filed by us under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any amendment or report filed for the purpose of updating such description.

          All documents filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date hereof, and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the respective dates of the filing of such documents.

 

 

Item 4.

Description of Securities.

 

 

          Not applicable.

 

 

Item 5.

Interests of Named Experts and Counsel.

 

 

          Not applicable.

 

 

Item 6.

Indemnification of Directors and Officers.

          Section 145 of the Delaware General Corporation Law (“DGCL”), as amended, provides that, under certain circumstances, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at its request in such capacity in another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful.

          The Fourteenth Article of our Restated Certificate of Incorporation provides that no director will be personally liable to Donaldson or its stockholders for monetary damage for breach of fiduciary duty as a director, except for liability (1) for any breach of the director’s duty of loyalty to Donaldson or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under the DGCL provision making directors personally liable for unlawful payment of dividends or unlawful stock repurchases or redemptions, or (4) for any transaction from which the director derived an improper personal benefit.

          Bylaw 26 of our Amended and Restated Bylaws provides that our officers and directors will be indemnified and held harmless by Donaldson to the fullest extent permitted under the DGCL.

II-1

          We maintain directors’ and officers’ liability insurance which covers certain liabilities and expenses of our officers and directors and covers Donaldson for reimbursement of payments to directors and officers in respect of such liabilities and expenses.

 

 

Item 7.

Exemption from Registration Claimed.

 

 

          Not applicable.

 

 

Item 8.

Exhibits.


 

 

4.1

Restated Certificate of Incorporation of Donaldson Company, Inc. (incorporated by reference to Exhibit 3-A to Donaldson Company, Inc.’s Annual Report on Form 10-K for the year ended July 31, 2010).

 

 

4.2

Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of Donaldson Company, Inc., dated as of March 3, 2006 (incorporated by reference to Exhibit 3-B to Donaldson Company, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2006).

 

 

4.3

Amended and Restated Bylaws of Donaldson Company, Inc. (as of January 30, 2009) (incorporated by reference to Exhibit 3-C to Donaldson Company, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009).

 

 

4.4

Preferred Stock Amended and Restated Rights Agreement between Donaldson Company, Inc. and Wells Fargo Bank, N.A., as Rights Agent, dated as of January 27, 2006 (incorporated by reference to Exhibit 4.1 to Donaldson Company, Inc.’s Current Report on Form 8-K filed on February 1, 2006).

 

 

4.5

Donaldson Company, Inc. 2010 Master Stock Incentive Plan (effective November 19, 2010).

 

 

5.1

Opinion of Dorsey & Whitney LLP.

 

 

23.1

Consent of Dorsey & Whitney LLP (included in Exhibit 5.1).

 

 

23.2

Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP.

 

 

24.1

Power of Attorney.

II-2

 

 

Item 9.

Undertakings.


 

 

 

 

 

 

(a)

The undersigned registrant hereby undertakes:

 

 

 

 

          (1)          To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

 

 

 

 

 

 

              (i)           To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);

 

 

 

 

 

              (ii)          To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

 

 

 

 

               (iii)        To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 

 

 

 

provided , however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement.

 

 

 

          (2)          That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

 

 

 

 

 

          (3)          To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

 

          (b)     The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

          (c)     Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on November 19, 2010.

 

 

 

 

DONALDSON COMPANY, INC.

 

 

 

 

By:

/s/ William M. Cook

 

 

William M. Cook

 

 

Chief Executive Officer

          Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on November 19, 2010.

 

 

 

Signature

 

Title

 

 

 

/s/ William M. Cook

 

President, Chief Executive Officer and Chairman

William M. Cook

 

(principal executive officer)

 

 

 

/s/ Thomas R. VerHage

 

Vice President and Chief Financial Officer

Thomas R. VerHage

 

(principal financial officer)

 

 

 

/s/ James F. Shaw

 

Controller

James F. Shaw

 

(principal accounting officer)

 

 

 

*

 

Director

F. Guillaume Bastiaens

 

 

 

 

 

*

 

Director

Janet M. Dolan

 

 

 

 

 

*

 

Director

Jack W. Eugster

 

 

 

 

 

*

 

Director

John F. Grundhofer

 

 

 

 

 

*

 

Director

Michael J. Hoffman

 

 

 

 

 

*

 

Director

Paul David Miller

 

 

II-4

 

 

 

*

 

Director

Jeffrey Noddle

 

 

 

 

 

*

 

Director

Willard D. Oberton

 

 

 

 

 

*

 

Director

Ajita G. Rajendra

 

 

 

 

 

*

 

Director

John P. Wiehoff

 

 


 

 

 

*By:

/s/ Norman C. Linnell

 

 

Norman C. Linnell

 

 

Attorney-in-Fact

 

II-5

EXHIBIT INDEX

 

 

 

Exhibit
Number

 

Description

 

 

 

4.1

 

Restated Certificate of Incorporation of Donaldson Company, Inc. (incorporated by reference to Exhibit 3-A to Donaldson Company, Inc.’s Annual Report on Form 10-K for the year ended July 31, 2010).

 

 

 

4.2

 

Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of Donaldson Company, Inc., dated as of March 3, 2006 (incorporated by reference to Exhibit 3-B to Donaldson Company, Inc.’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2006).

 

 

 

4.3

 

Amended and Restated Bylaws of Donaldson Company, Inc. (as of January 30, 2009) (incorporated by reference to Exhibit 3-C to Donaldson Company, Inc.’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2009).

 

 

 

4.4

 

Preferred Stock Amended and Restated Rights Agreement between Donaldson Company, Inc. and Wells Fargo Bank, N.A., as Rights Agent, dated as of January 27, 2006 (incorporated by reference to Exhibit 4.1 to Donaldson Company, Inc.’s Current Report on Form 8-K filed on February 1, 2006).

 

 

 

4.5

 

Donaldson Company, Inc. 2010 Master Stock Incentive Plan (effective November 19, 2010).

 

 

 

5.1

 

Opinion of Dorsey & Whitney LLP.

 

 

 

23.1

 

Consent of Dorsey & Whitney LLP (included in Exhibit 5.1).

 

 

 

23.2

 

Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers LLP.

 

 

 

24.1

 

Power of Attorney.


Exhibit 4.5













DONALDSON COMPANY, INC.

2010 MASTER STOCK INCENTIVE PLAN











Table of Contents

 

 

 

 

Section 1.

Purpose

 

1

 

 

 

 

Section 2.

Definitions

 

1

 

 

 

 

Section 3.

Administration

 

4

 

 

 

 

(a)

Power and Authority of the Committee

 

4

 

 

 

 

(b)

Delegation

 

5

 

 

 

 

(c)

Power and Authority of the Board of Directors

 

5

 

 

 

 

Section 4.

Shares Available for Awards

 

5

 

 

 

 

(a)

Shares Available

 

5

 

 

 

 

(b)

Accounting for Awards

 

6

 

 

 

 

(c)

Adjustments

 

6

 

 

 

 

(d)

Award Limitations Under the Plan

 

7

 

 

 

 

Section 5.

Eligibility

 

7

 

 

 

 

Section 6.

Awards

 

7

 

 

 

 

(a)

Options

 

7

 

 

 

 

(b)

Stock Appreciation Rights

 

9

 

 

 

 

(c)

Restricted Stock and Restricted Stock Units

 

10

 

 

 

 

(d)

Performance Awards

 

10

 

 

 

 

(e)

Dividend Equivalents

 

12

 

 

 

 

(f)

Stock Awards

 

12

 

 

 

 

(g)

Other Stock-Based Awards

 

12

 

 

 

 

(h)

General

 

12

 

 

 

 

Section 7.

Amendment and Termination; Corrections

 

15

 

 

 

 

(a)

Amendments to the Plan

 

15

 

 

 

 

(b)

Amendments to Awards

 

15

 

 

 

 

(c)

Correction of Defects, Omissions and Inconsistencies

 

16

 

 

 

 

Section 8.

Income Tax Withholding

 

16

 

 

 

 

Section 9.

General Provisions

 

17

 

 

 

 

(a)

No Rights to Awards

 

17

 

 

 

 

(b)

Award Agreements

 

17

 

 

 

 

(c)

Plan Provisions Control

 

17

 

 

 

 

(d)

No Rights of Stockholders

 

17

-i-


 

 

 

 

(e)

No Limit on Other Compensation Arrangements

 

17

 

 

 

 

(f)

No Right to Employment or Directorship

 

17

 

 

 

 

(g)

Governing Law

 

18

 

 

 

 

(h)

Severability

 

18

 

 

 

 

(i)

No Trust or Fund Created

 

18

 

 

 

 

(j)

Other Benefits

 

18

 

 

 

 

(k)

No Fractional Shares

 

18

 

 

 

 

(l)

Headings

 

19

 

 

 

 

  (m)

Forfeiture

 

19

 

 

 

 

Section 10.

Effective Date of the Plan

 

19

 

 

 

 

Section 11.

Term of the Plan

 

19

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DONALDSON COMPANY, INC.
2010 MASTER STOCK INCENTIVE PLAN

Section 1.          P urpose

             The purpose of the Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining employees, officers, consultants, independent contractors and non-employee Directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to afford such persons an opportunity to acquire an ownership interest in the Company, thereby aligning the interests of such persons with the Company’s stockholders.

Section 2.         D efinitions

             As used in the Plan, the following terms shall have the meanings set forth below:

             (a)        “ Affiliate ” shall mean (i) any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee.

             (b)        “ Award ” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent, Stock Award or Other Stock-Based Award granted under the Plan.

            (c)        “ Award Agreement ” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 9(b).

            (d)        “ Board ” shall mean the Board of Directors of the Company.

            (e)        “ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

            (f)        “ Committee ” shall mean the committee designated by the Board to administer the Plan. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “non-employee director” within the meaning of Rule 16b-3 and an “outside director” within the meaning of Section 162(m). The Company expects to have the Plan administered in accordance with the requirements for the award of “qualified performance-based compensation” within the meaning of Section 162(m).

            (g)        “ Company ” shall mean Donaldson Company, Inc., a Delaware corporation, and any successor corporation.

            (h)        “ Director ” shall mean a member of the Board.

          (i)           “ Dividend Equivalent ” shall mean any right granted under Section 6(e) of the Plan.

          (j)           “ Eligible Person ” shall mean any employee, officer, consultant, independent contractor, advisor or non-employee Director providing services to the Company or any Affiliate.

          (k)          “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

          (l)           “ Fair Market Value ” shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. Notwithstanding the foregoing, unless otherwise determined by the Committee, the Fair Market Value of a Share as of a given date shall be, if the Shares are then traded on the New York Stock Exchange, the closing price of one Share as reported on the New York Stock Exchange on such date or, if the New York Stock Exchange is not open for trading on such date, on the most recent preceding date when the New York Stock Exchange is open for trading.

          (m)          “ Full Value Award ” shall mean any Award other than an Option or Stock Appreciation Right, the value of which Option or Stock Appreciation Right is based solely on an increase in the value of the Shares after the date of grant of such Award.

          (n)          “ Incentive Stock Option ” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision.

          (o)          “ Non-Qualified Stock Option ” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.

          (p)          “ Option ” shall mean an Incentive Stock Option or a Non-Qualified Stock Option to purchase shares of the Company.

          (q)          “ Other Stock-Based Award ” shall mean any right granted under Section 6(g) of the Plan.

          (r)           “ Participant ” shall mean an Eligible Person designated to be granted an Award under the Plan.

          (s)           “ Performance Award ” shall mean any right granted under Section 6(d) of the Plan.

          (t)           “Performance Goal” shall mean one or more of the following performance goals, either individually, alternatively or in any combination, applied on a corporate, subsidiary, division, business unit or line of business basis:

 

 

 

 

•

earnings per share; return on investment;

 

•

revenues, including net sales growth;

 

•

earnings, including net operating profit after taxes;

-2-


 

 

 

•

return on equity;

 

•

profit margins;

 

•

cost reductions;

 

•

inventory levels;

 

•

delivery performance;

 

•

safety performance;

 

•

quality performance;

 

•

core operating earnings;

 

•

total stockholder return;

 

•

cash flow, including operating cash flows, free cash flow, discounted cash flow return on investment, and cash flow in excess of cost of capital;

 

•

economic value added;

 

•

stockholder value added;

 

•

market share;

 

•

price to earnings ratio;

 

•

expense ratios;

 

•

workforce goals;

 

•

total expenditures;

 

•

completion of key projects.

          Each such performance goal may be based (i) solely by reference to absolute results of individual performance or organizational performance at various levels (e.g., the Company’s performance or the performance of a subsidiary, division, business segment or business unit of the Company) or (ii) upon organizational performance relative to the comparable performance of other companies selected by the Committee. To the extent consistent with Section 162(m), the Committee may also exclude charges related to an event or occurrence which the Committee determines should appropriately be excluded, including (X) restructurings, acquisitions, divestitures, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (Y) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (Z) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles (or other accounting principles which may then be in effect). To the extent that Section 162(m) of the Code or applicable tax and/or securities laws change to permit Committee discretion to alter the governing performance measures without disclosing to stockholders and obtaining stockholder approval of such changes and without thereby exposing the Company to potentially adverse tax or other legal consequences, the Committee shall have the sole discretion to make such changes without obtaining stockholder approval.

          (u)          “ Person ” shall mean any individual or entity, including a corporation, partnership, limited liability company, association, joint venture or trust.

          (v)          “ Plan ” shall mean the Donaldson Company, Inc. 2010 Stock Incentive Plan, as amended from time to time.

          (w)          “ Prior Plan ” shall mean the Donaldson Company, Inc. 2001 Master Stock Incentive Plan, as amended from time to time. For avoidance of doubt, any reference to Prior

-3-


 

 

 

Plan shall include reference to the Donaldson Company, Inc. Qualified Performance-Based Compensation Plan, which was established under the 2001 Master Stock Plan for the purpose of authorizing the issuance of Performance Awards specifically intended to qualify as “qualified performance-based compensation” within the meaning of Section 162(m) of the Code.

 

 

 

          (x)          “ Qualified Performance Award ” shall mean a Performance Award that (i) is made to an officer of the Company who may be a “covered employee” under Section 162(m), and (ii) is intended to be “qualified performance-based compensation” within the meaning of Section 162(m).

 

 

 

          (y)          “ Restricted Stock ” shall mean any Share granted under Section 6(c) of the Plan.

 

 

 

          (z)          “ Restricted Stock Unit ” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future date.

 

 

 

          (aa)          “ Rule 16b-3 ” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation.

 

 

 

          (bb)           “Section 162(m)” shall mean Section 162(m) of the Code, or any successor provision, and the applicable Treasury Regulations promulgated thereunder.

 

 

 

          (cc)           “Section 409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder.

 

 

 

          (dd)          “ Securities Act ” shall mean the Securities Act of 1933, as amended.

 

 

 

          (ee)          “ Shares ” shall mean shares of common stock, $5.00 par value per share, of the Company or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan.

 

 

 

          (ff)           “Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A.

 

 

 

          (gg)          “ Stock Appreciation Right ” shall mean any right granted under Section 6(b) of the Plan.

 

 

 

          (hh)          “ Stock Award ” shall mean any Share granted under Section 6(f) of the Plan.


 

 

S ection 3.

Administration


 

 

 

          (a)           P ower and Authority of the Committee . The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or

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types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement; (v) amend the terms and conditions of any Award or Award Agreement, subject to the limitations under Section 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating to any Award, subject to the limitations under Section 7, (vii) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, promissory notes (subject to the limitations in Section 6(a)(iii)(A)), other securities, other Awards or other property, or canceled, forfeited or suspended; (viii) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (ix) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xi) adopt such modifications, rules, procedures and subplans as may be necessary or desirable to comply with provisions of the laws of non-U.S. jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate.

 

 

 

          (b)           D elegation . The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards; provided , however , that the Committee shall not delegate such authority (i) with regard to grants of Awards to be made to officers or members of the Board of Directors of the Company or any Affiliate who are subject to Section 16 of the Exchange Act, (ii) in such a manner as would cause the Plan not to comply with the requirements of Section 162(m) or (iii) in such a manner as would contravene Section 157 of the Delaware General Corporation Law.

 

 

 

          (c)           P ower and Authority of the Board of Directors . Notwithstanding anything to the contrary contained herein, the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of Section 162(m).


 

 

S ection 4.

Shares Available for Awards


 

 

 

          (a)           S hares Available . Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be issued under all Awards under the Plan shall be the sum of (i) 4,600,000 and (ii) any Shares subject to any award under the Prior Plan that, after the effective date of this Plan, are not purchased or are forfeited or reacquired by the

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Company, or otherwise not delivered to the Participant due to termination or cancellation of such award. Notwithstanding the foregoing and subject to adjustment as provided in Section 4(c) of the Plan, the number of Shares available for granting Full Value Awards shall not exceed the sum of (i) 1,000,000 and (ii) any Shares subject to any full value award under the Prior Plan that, after the effective date of this Plan, are forfeited or reacquired by the Company, or otherwise not delivered to the Participant due to termination or cancellation of such award. If any Shares covered by an Award or to which an Award relates are not purchased or are forfeited or are reacquired by the Company (including shares of Restricted Stock, whether or not dividends have been paid on such shares), or if an Award otherwise terminates or is cancelled without delivery of any Shares, then the number of Shares counted pursuant to Section 4(b) of the Plan against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture, reacquisition by the Company, termination or cancellation, shall again be available for granting Awards under the Plan. Notwithstanding anything to the contrary in this Section 4(a), the following Shares will not again become available for issuance under the Plan: (i) any Shares which would have been issued upon any exercise of an Option but for the fact that the exercise price was paid by a “net exercise” pursuant to Section 6.4(a)(iii)(B) or any Shares tendered in payment of the exercise price of an Option; (ii) any Shares withheld by the Company or Shares tendered to satisfy any tax withholding obligation with respect to an Award; (iii) Shares covered by a Stock Appreciation Right issued under the Plan that are not issued in connection with settlement in Shares upon exercise; or (iv) Shares that are repurchased by the Company using Option exercise proceeds.

 

 

 

          (b)           A ccounting for Awards . For purposes of this Section 4, if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan. For purposes of determining the number of Shares covered on the date of grant by a Stock Appreciation Right that is to be settled in Shares, the aggregate number of Shares with respect to which the Stock Appreciation Right is to be exercised shall be counted against the number of Shares available for Awards under the Plan (without regard to the number of actual Shares issued upon settlement). Awards that do not entitle the holder thereof to receive or purchase Shares shall not be counted against the aggregate number of Shares available for Awards under the Plan.

 

 

 

          (c)           A djustments . In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) that thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any Award and (iv) the limitations contained in Section 4(d)(i) below; provided , however , that the number of Shares covered by any Award or to which such Award relates shall always be a

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whole number. Such adjustment shall be made by the Committee or the Board, whose determination in that respect shall be final, binding and conclusive.


 

 

 

 

 

 

 

(d)

A ward Limitations Under the Plan .

 

 

 

 

 

 

 

(i)

Limitation for Awards Denominated in Shares . No Eligible Person may be granted any Award or Awards denominated in Shares, for more than 500,000 Shares (subject to adjustment as provided for in Section 4(c) of the Plan), in the aggregate in any calendar year.

 

 

 

 

 

 

 

 

(ii)

Section 162(m) Limitation for Performance Awards Denominated in Cash . The maximum amount payable pursuant to all Qualified Performance Awards denominated in cash to any Participant in the aggregate in any taxable year shall be $5,000,000 in value, whether payable in cash, Shares or other property. This limitation contained in this Section 4(d)(ii) does not apply to any Award or Awards subject to the limitation contained in Section 4(d)(i). The limitation contained in this Section 4(d)(ii) shall apply only with respect to any Award or Awards granted under this Plan, and limitations on awards granted under any other stockholder-approved incentive plan maintained by the Company will be governed solely by the terms of such other plan.


 

 

S ection 5.

Eligibility

          Any Eligible Person shall be eligible to be designated a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes, without limitation, officers and Directors who are also employees), and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision.

 

 

S ection 6.

Awards


 

 

 

 

 

 

          (a)       O ptions . The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:

 

 

 

 

 

(i)

Exercise Price . The purchase price per Share purchasable under an Option shall be determined by the Committee and shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option; provided, however, that the Committee may designate a purchase price below Fair Market Value on the date of grant (A) to the extent necessary or appropriate, as determined by the Committee, to satisfy applicable legal or regulatory requirements of a foreign jurisdiction or (B) if the Option is

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granted in substitution for a stock option previously granted by an entity that is acquired by or merged with the Company or an Affiliate.

 

 

 

 

 

 

 

 

(ii)

Option Term . The term of each Option shall be fixed by the Committee at the time but shall not be longer than 10 years from the date of grant.

 

 

 

 

 

 

 

 

(iii)

Time and Method of Exercise . The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms, including, but not limited to, cash, Shares, other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable exercise price, in which, payment of the exercise price with respect thereto may be made or deemed to have been made.

 

 

 

 

 

 

 

 

 

(A)

Promissory Notes . Notwithstanding the foregoing, the Committee may accept a promissory note as consideration only if (i) the acceptance of such note does not conflict with Section 402 of the Sarbanes-Oxley Act of 2002, and (ii) the par value of any Shares to be issued pursuant to such exercise is paid in the form of cash, services rendered, personal property, real property or a combination thereof.

 

 

 

 

 

 

 

 

 

 

(B)

Net Exercises . The Committee may, in its discretion, permit an Option to be exercised by delivering to the Participant a number of Shares having an aggregate Fair Market Value (determined as of the date of exercise) equal to the excess, if positive, of the Fair Market Value of the Shares underlying the Option being exercised, on the date of exercise, over the exercise price of the Option for such Shares.

 

 

 

 

 

 

 

 

 

(iv)

Incentive Stock Options . Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options:

 

 

 

 

 

 

 

 

 

(A)

The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000.

 

 

 

 

 

 

 

 

 

 

(B)

All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by the Board or the date this Plan was approved by the stockholders of the Company.

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(C)

Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant; provided , however , that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, such Incentive Stock Option shall expire and no longer be exercisable no later than five years from the date of grant.

 

 

 

 

 

 

 

 

 

 

(D)

The purchase price per Share for an Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option; provided , however , that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliates, the purchase price per Share purchasable under an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option.

 

 

 

 

 

 

 

 

 

 

(E)

Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option.


 

 

 

          (b)           S tock Appreciation Rights . The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine, at any time during a specified period before or after the date of exercise) over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right; provided, however, that the Committee may designate a grant price below Fair Market Value on the date of grant (A) to the extent necessary or appropriate, as determined by the Committee, to satisfy applicable legal or regulatory requirements of a foreign jurisdiction or (B) if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee (except that the term of each Stock Appreciation Right shall not be longer than 10 years from the date of grant). The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.

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          (c)           R estricted Stock and Restricted Stock Units . The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:


 

 

 

 

 

 

 

 

(i)

Restrictions . Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate.

 

 

 

 

 

 

 

 

(ii)

Issuance and Delivery of Shares . Any Restricted Stock granted under the Plan shall be issued at the time such Awards are granted and may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. Shares representing Restricted Stock that are no longer subject to restrictions shall be delivered (including by updating the book-entry registration) to the Participant promptly after the applicable restrictions lapse or are waived. In the case of Restricted Stock Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to Restricted Stock Units evidencing the right to receive Shares, such Shares shall be issued and delivered to the holder of the Restricted Stock Units.

 

 

 

 

 

 

 

 

(iii)

Forfeiture . Except as otherwise determined by the Committee, upon a Participant’s termination of employment or resignation or removal as a Director (in either case, as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock and all Restricted Stock Units held by such Participant at such time shall be forfeited and reacquired by the Company; provided , however , that the Committee may, when it finds that a waiver would be in the best interests of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock or Restricted Stock Units, except as otherwise provided in the Award Agreement.

 

 

 

 

 

 

          (d)           P erformance Awards . The Committee is hereby authorized to grant Performance Awards to Eligible Persons, subject to the terms of the Plan and any applicable Award Agreement. A Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock and Restricted Stock Units), other securities, other Awards or other property and (ii) shall confer on the holder thereof the

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right to receive payments, in whole or in part, upon the achievement of one or more objective Performance Goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan, the Performance Goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. Qualified Performance Awards shall be conditioned solely on the achievement of one or more objective Performance Goals established by the Committee within the time prescribed by Section 162(m), and shall otherwise comply with the requirements of Section 162(m), as described below.

 

 

 

 

 

 

 

 

(i)

Timing of Designations; Duration of Performance Periods . For each Qualified Performance Award, the Committee shall, not later than 90 days after the beginning of each performance period, (i) designate all Participants for such performance period and (ii) establish the objective performance factors for each Participant for that performance period on the basis of one or more of Performance Goals, the outcome of which is substantially uncertain at the time the Committee actually establishes the Performance Goal. The Committee shall have sole discretion to determine the applicable performance period, provided that in the case of a performance period less than 12 months, in no event shall a performance goal be considered to be pre-established if it is established after 25 percent of the performance period (as scheduled in good faith at the time the Performance Goal is established) has elapsed.

 

 

 

 

 

 

 

 

(ii)

Certification . Following the close of each performance period and prior to payment of any amount to a Participant with respect to a Qualified Performance Award, the Committee shall certify in writing as to the attainment of all factors (including the performance factors for a Participant) upon which any payments to a Participant for that performance period are to be based.

 

 

 

 

 

 

 

 

(iii)

Payment of Qualified Performance Awards . Certified Awards shall be paid no later than two and one-half months following the conclusion of the applicable performance period; provided, however, that the Committee may establish procedures that allow for the payment of Awards on a deferred basis, subject to the requirements of Section 409A. The Committee may, in its discretion, reduce the amount of a payout achieved and otherwise to be paid in connection with a Qualified Performance Award, but may not exercise discretion to increase such amount.

 

 

 

 

 

 

 

 

(iv)

Certain Events . If a Participant dies or becomes permanently and totally disabled before the end of a performance period or after the performance period and before an Award is paid, the Committee may, in its discretion, determine that the Participant shall be paid a pro-rated portion of the Award that the Participant would have received but for his or her death or disability.

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          (e)           Di vidend Equivalents . The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options or Stock Appreciation Rights to such Eligible Persons, and (ii) no Dividend Equivalent payments shall be made to a Participant with respect to any Performance Award prior to the date on which all conditions or restrictions relating to such Awards have been satisfied, waived, or lapsed.

 

 

 

          (f)           S tock Awards . The Committee is hereby authorized to grant to Eligible Persons Shares without restrictions thereon, as deemed by the Committee to be consistent with the purpose of the Plan. Subject to the terms of the Plan and any applicable Award Agreement, such Stock Awards may have such terms and conditions as the Committee shall determine.

 

 

 

          (g)           O ther Stock-Based Awards . The Committee is hereby authorized to grant to Eligible Persons such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. The Committee shall determine the terms and conditions of such Awards, subject to the terms of the Plan and any applicable Award Agreement. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(g) shall be purchased for consideration having a value equal to at least 100% of the Fair Market Value of such Shares, or other securities on the date the purchase right is granted. The consideration paid by the Participant may be paid by such method or methods and in such form or forms, including, without limitation, cash, Shares, promissory notes (subject to the limitations in (a)(iii)(A)), other securities, other Awards or other property or any combination thereof, as the Committee shall determine.

 

 

 

          (h)           G eneral .


 

 

 

 

 

 

 

 

(i)

Consideration for Awards . Awards may be granted for no cash consideration or for any cash or other consideration as may be determined by the Committee or required by applicable law.

 

 

 

 

 

 

 

 

(ii)

Awards May Be Granted Separately or Together . Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any other plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards.

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(iii)

Forms of Payment under Awards . Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, promissory notes ( provided , however , that the acceptance of such promissory notes does not conflict with Section 402 of the Sarbanes-Oxley Act of 2002), other securities, other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents with respect to installment or deferred payments.

 

 

 

 

 

 

 

 

(iv)

Term of Awards . Subject to Section 6(a)(iv)(C), the term of each Award shall be for a period not to exceed 10 years from the date of grant.

 

 

 

 

 

 

 

 

(v)

Limits on Transfer of Awards . Except as otherwise provided by the Committee or in this Section 6(h)(v), no Award (other than a Stock Award) and no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution. Notwithstanding the immediately preceding sentence, no Incentive Stock Option shall be transferable by a Participant other than by will or by the laws of descent and distribution. The Committee may establish procedures as it deems appropriate for a Participant to designate a Person or Persons, as beneficiary or beneficiaries, to exercise the rights of the Participant and receive any property distributable with respect to any Award in the event of the Participant’s death. The Committee, in its discretion and subject to such additional terms and conditions as it determines, may permit a Participant to transfer a Non-Qualified Stock Option to any “family member” (as defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act) at any time that such Participant holds such Option; provided, however that such transfers may not be for value (as defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act) and the family member may not make any subsequent transfers other than by will or by the laws of descent and distribution. Each Award under the Plan or right under any such Award shall be exercisable during the Participant’s lifetime only by the Participant (except as provided herein or in an Award Agreement or amendment thereto relating to a Non-Qualified Stock Option) or, if permissible under applicable law, by the Participant’s guardian or legal representative. No Award (other than a Stock Award) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate.

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(vi)

Restrictions; Securities Exchange Listing . All Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may cause appropriate entries to be made with respect to, or legends to be placed on the certificates for, such Shares or other securities to reflect such restrictions. The Company shall not be required to deliver any Shares or other securities covered by an Award unless and until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

 

 

 

 

 

 

 

 

(vii)

Prohibition on Option and Stock Appreciation Right Repricing . Except as provided in Section 4(c) hereof, the Committee may not, without prior approval of the Company’s stockholders, seek to effect any re-pricing of any previously granted, “underwater” Option by: (i) amending or modifying the terms of the Option to lower the exercise price; (ii) canceling the underwater Option and granting either (A) replacement Options or Stock Appreciation Rights having a lower exercise price; (B) Restricted Stock, Restricted Stock Units, Performance Award or other Stock Award in exchange; or (iii) repurchasing the underwater Options. An Option will be deemed to be “underwater” at any time when the Fair Market Value of the Shares covered by such Option is less than the exercise price of the Option.

 

 

 

 

 

 

 

 

(viii)

Acceleration of Vesting or Exercisability . No Award Agreement shall contain a definition of change in control that has the effect of accelerating the exercisability of any Award or the lapse of restrictions relating to any Award upon only the announcement or stockholder approval of (rather than consummation of) any reorganization, merger or consolidation of, or sale or other disposition of all or substantially all of the assets of, the Company.

 

 

 

 

 

 

 

 

(ix)

Section 409A Provisions . Notwithstanding anything in the Plan or any Award Agreement to the contrary, to the extent that any amount or benefit that constitutes “deferred compensation” to a Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to a Participant under the Plan or any Award Agreement solely by reason of the occurrence of a change in control or due to the Participant’s disability or “separation from service” (as such term is defined under Section 409A), such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such change in control, disability or separation from service meet the definition of a change in ownership or effective control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of

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the Code and applicable proposed or final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise. Any payment or distribution that otherwise would be made to a Participant who is a Specified Employee (as determined by the Committee in good faith) on account of separation from service may not be made before the date which is six months after the date of the Specified Employee’s separation from service (or if earlier, upon the Specified Employee’s death) unless the payment or distribution is exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise.


 

 

S ection 7.

Amendment and Termination; Corrections


 

 

 

 

 

 

          (a)        A mendments to the Plan . The Board may amend, alter, suspend, discontinue or terminate the Plan at any time; provided , however , that, notwithstanding any other provision of the Plan or any Award Agreement, prior approval of the stockholders of the Company shall be required for any amendment to the Plan that would:

 

 

 

 

 

 

 

 

(i)

require stockholder approval under the rules or regulations of the Securities and Exchange Commission, the New York Stock Exchange or any other securities exchange that are applicable to the Company;

 

 

 

 

 

 

 

 

(ii)

increases the number of shares authorized under the Plan as specified in Section 4(a) of the Plan;

 

 

 

 

 

 

 

 

(iii)

increase the number of shares or value subject to the limitations contained in Section 4(d) of the Plan;

 

 

 

 

 

 

 

 

(iv)

permit repricing of Options or Stock Appreciation Rights, which is currently prohibited by Section 6(h)(vii) of the Plan;

 

 

 

 

 

 

 

 

(v)

permit the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, contrary to the provisions of Section 6(a)(i) and Section 6(b) of the Plan; or

 

 

 

 

 

 

 

 

(vi)

cause the Company to be unable to grant Incentive Stock Options under the Plan, or would cause Section 162(m) to become unavailable with respect to the Plan.

 

 

 

 

 

 

          (b)        A mendments to Awards . Except as otherwise expressly provided in the Plan, the Committee may waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively. Except as otherwise expressly provided in the Plan (specifically including the next two sentences hereof), the Committee may amend, alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, but no such action may adversely affect the rights of the holder of such Award without the consent of the Participant or holder or beneficiary thereof. If any provision of the Plan or an Award

-15-


 

 

 

 

 

 

Agreement would result in adverse tax consequences under Section 409A, the Committee may amend that provision (or take any other action reasonably necessary) to avoid any adverse tax results and no action taken to comply with Section 409A shall be deemed to impair or otherwise adversely affect the rights of any holder of an Award or beneficiary thereof. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company or any other similar corporate transaction or event involving the Company (or the Company shall enter into a written agreement to undergo such a transaction or event), the Committee or the Board may, in its sole discretion, provide for any of the following to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs):

 

 

 

 

 

 

 

 

(i)

either (A) termination of any such Award, whether or not vested, in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights (and, for the avoidance of doubt, if, as of the date of the occurrence of the transaction or event described in this Section 7(b)(i)(A), the Committee or the Board determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without any payment) or (B) the replacement of such Award with other rights or property selected by the Committee or the Board, in its sole discretion;

 

 

 

 

 

 

 

 

(ii)

that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

 

 

 

 

 

 

 

 

(iii)

that such Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the applicable Award Agreement; or

 

 

 

 

 

 

 

 

(iv)

that the Award cannot vest, be exercised or become payable after a date certain in the future, which may be the effective date of such event.

 

 

 

 

 

 

          (c)        C orrection of Defects, Omissions and Inconsistencies . The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan.


 

 

S ection 8.

Income Tax Withholding

          In order to comply with all applicable federal, state, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, local or foreign payroll, withholding, income or other taxes, which are

-16-

the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. In order to assist a Participant in paying all or a portion of the applicable taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes or (b) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes. The election, if any, must be made on or before the date that the amount of tax to be withheld is determined.

 

 

S ection 9.

General Provisions


 

 

 

          (a)           N o Rights to Awards . No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.

 

 

 

          (b)           A ward Agreements . No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee.

 

 

 

          (c)           P lan Provisions Control . In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control.

 

 

 

          (d)           N o Rights of Stockholders . Except with respect to Restricted Stock and Stock Awards (and subject to such conditions as the Committee may impose on such Awards pursuant to Section 6(c)(i) or Section 6(f)), neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a stockholder of the Company with respect to any Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued.

 

 

 

          (e)           N o Limit on Other Compensation Arrangements . Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases.

 

 

 

          (f)           N o Right to Employment or Directorship . The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any

-17-


 

 

 

Affiliate, or the right to be retained as a Director, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, or remove a Director in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment, or remove a Director who is a Participant, free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee or Director of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee or Director might otherwise have enjoyed but for termination of employment or directorship, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby.

 

 

 

          (g)           G overning Law . The internal law, and not the law of conflicts, of the State of Delaware shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award.

 

 

 

          (h)           S everability . If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.

 

 

 

          (i)           N o Trust or Fund Created . Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

 

 

 

          (j)           O ther Benefits . No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan.

 

 

 

          (k)           N o Fractional Shares . No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Share or whether such fractional Share or any rights thereto shall be canceled, terminated or otherwise eliminated.

-18-


 

 

 

          (l)           H eadings . Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

 

 

 

          (m)           F orfeiture . All Awards under this Plan shall be subject to forfeiture and/or penalty conditions or provisions as determined by the Committee and set forth in the applicable Award Agreement.


 

 

S ection 10.

Effective Date of the Plan

          The Plan was adopted by the Board on September 24, 2010. The Plan shall be subject to approval by the stockholders of the Company at the annual meeting of stockholders of the Company to be held on November 19, 2010, and the Plan shall be effective as of the date of such stockholder approval. On and after stockholder approval of the Plan, no awards shall be granted under the Prior Plan, but all outstanding awards previously granted under the Prior Plan shall remain outstanding and subject to the terms of the Prior Plan.

 

 

S ection 11.

Term of the Plan

          No Award shall be granted under the Plan after ten years from the earlier of the date of adoption of the Plan by the Board or the date of stockholder approval or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan; provided, however, that no Qualified Performance Award shall be granted under the Plan after the fifth year following the year in which stockholders approved the Performance Goals unless and until the Performance Goals are re-approved by the stockholders. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan.

-19-

Exhibit 5.1

[Dorsey & Whitney LLP Letterhead]

November 19, 2010

Donaldson Company, Inc.
1400 West 94th Street
Minneapolis, Minnesota 55431

Re:    Registration Statement on Form S-8

Ladies and Gentlemen:

          We have acted as counsel to Donaldson Company, Inc., a Delaware corporation (the “Company”), in connection with a Registration Statement on Form S-8 (the “Registration Statement”) relating to the registration of the offer and sale by the Company of 4,600,000 shares of Common Stock, $5.00 par value per share (the “Shares”), pursuant to the Donaldson Company, Inc. 2010 Master Stock Incentive Plan (the “Plan”).

          We have examined such documents and have reviewed such questions of law as we have considered necessary and appropriate for the purposes of the opinions set forth below. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons. As to questions of fact material to our opinions, we have relied upon certificates of officers of the Company and of public officials.

          Based on the foregoing, we are of the opinion that the Shares have been duly authorized and, upon issuance, delivery and payment therefor in accordance with the terms of the Plan and any relevant agreements thereunder, will be validly issued, fully paid and nonassessable.

          Our opinions expressed above are limited to the Delaware General Corporation Law.

          We hereby consent to the filing of this opinion as an exhibit to the Registration Statement..

 

 

 

Very truly yours,

 

 

 

/s/   Dorsey & Whitney LLP

 

 

     ALS

 


Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated September 24, 2010 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting of Donaldson Company, Inc., which appears in Donaldson Company, Inc.’s Annual Report on Form 10-K for the year ended July 31, 2010.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
November 19, 2010

Exhibit 24.1

POWER OF ATTORNEY

          KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints William M. Cook, Thomas R. VerHage or Norman C. Linnell, and each of them, the undersigned’s true and lawful attorneys-in-fact and agents, each acting alone, with the powers of substitution and revocation, for the undersigned and in the undersigned’s name, place and stead, in any and all capacities, to sign one or more Registration Statements on Form S-8, and any and all amendments (including post-effective amendments) thereto, relating to the issuance of shares of common stock of Donaldson Company, Inc. pursuant to the Donaldson Company, Inc. 2010 Master Stock Incentive Plan, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and with such state commissions and other agencies as necessary, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

          IN WITNESS WHEREOF, this Power of Attorney has been signed as of this 19th day of November, 2010, by the following persons:

 

 

 

Signature

 

Title

 

 

 

/s/ William M. Cook

 

President, Chief Executive Officer and Chairman

William M. Cook

 

(principal executive officer)

 

 

 

/s/ Thomas R. VerHage

 

Vice President and Chief Financial Officer

Thomas R. VerHage

 

(principal financial officer)

 

 

 

/s/ James F. Shaw

 

Controller

James F. Shaw

 

(principal accounting officer)

 

 

 

/s/ F. Guillaume Bastiaens

 

Director

F. Guillaume Bastiaens

 

 

 

 

 

/s/ Janet M. Dolan

 

Director

Janet M. Dolan

 

 

 

 

 

/s/ Jack W. Eugster

 

Director

Jack W. Eugster

 

 

 

 

 

/s/ John F. Grundhofer

 

Director

John F. Grundhofer

 

 

 

 

 

/s/ Michael J. Hoffman

 

Director

Michael J. Hoffman

 

 


 

 

 

 

 

 

/s/ Paul David Miller

 

Director

Paul David Miller

 

 

 

 

 

/s/ Jeffrey Noddle

 

Director

Jeffrey Noddle

 

 

 

 

 

/s/ Willard D. Oberton

 

Director

Willard D. Oberton

 

 

 

 

 

/s/ Ajita G. Rajendra

 

Director

Ajita G. Rajendra

 

 

 

 

 

/s/ John P. Wiehoff

 

Director

John P. Wiehoff