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THE TORO COMPANY
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
EFFECTIVE JANUARY 1, 1999
AS AMENDED JULY 20, 2000
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CONTENTS
<TABLE>
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Purpose ................................................................................................. 2
I. DEFINITIONS...................................................................................... 2
II. ELIGIBILITY, PARTICIPATION, DEFERRAL ELECTION.................................................... 6
2.1 Eligibility............................................................................. 6
2.2 Participation........................................................................... 6
2.3 Deferral Election....................................................................... 6
III. CREDITING;VESTING; TAXES......................................................................... 7
3.1 Amounts to be Credited to Accounts...................................................... 7
3.2 Vesting................................................................................. 8
IV. DISTRIBUTIONS.................................................................................... 9
4.1 Distributable Events.................................................................... 9
4.2 Method of Payment....................................................................... 9
4.3 Death Prior to Completion of Payment.................................................... 9
4.4 Payment Prior to Retirement............................................................. 10
4.5 Unforseeable Financial Emergencies...................................................... 10
4.6 Distribution in the Event of Taxation................................................... 10
4.7 Withholding............................................................................. 10
4.8 Deductions.............................................................................. 11
V. BENEFICIARY DESIGNATION.......................................................................... 11
VI. ADMINISTRATION................................................................................... 11
6.1 Committee Duties........................................................................ 11
6.2 Administrative Committee; Agents........................................................ 11
6.3 Binding Effect of Decisions............................................................. 12
6.4 Indemnity of Committee and Administrative Committee..................................... 12
VII. TERMINATION; AMENDMENT OR MODIFICATION........................................................... 12
7.1 Termination............................................................................. 12
7.2 Amendment or Modification............................................................... 12
VIII. TRUST............................................................................................ 13
8.1 Trust Assets............................................................................ 13
8.2 Enforcement of Funding.................................................................. 13
8.3 Miscellaneous........................................................................... 13
IX. MISCELLANEOUS.................................................................................... 13
9.1 Status of Plan.......................................................................... 13
9.2 Unsecured General Creditor.............................................................. 14
9.3 Nonassignability........................................................................ 14
9.4 Discharge of Obligations................................................................ 14
9.5 Not a Contract of Employment............................................................ 14
9.6 Governing Law........................................................................... 14
9.7 Notice.................................................................................. 15
9.8 Successors.............................................................................. 15
9.9 Validity................................................................................ 15
9.10 Court Order............................................................................. 15
9.11 No Assurance of Tax Consequences........................................................ 16
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THE TORO COMPANY
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
Effective January 1, 1999
As amended July 20, 2000
PURPOSE
The growth and success of The Toro Company depend on its ability to
attract and retain the services of Directors of the highest competence,
initiative, integrity, and ability. The purpose of this Plan is to advance the
interests of the Company and its stockholders through a deferred compensation
program designed to attract, motivate and retain Directors and selected
Consultants. This Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA.
I. DEFINITIONS
For purposes of this Plan, the following words and phrases have the
meanings indicated, unless a different meaning is clearly indicated by the
context:
"Account" means a book entry account established and maintained in the
Company's records in the name of a Participant pursuant to Articles II and III,
and includes a Cash Account, a Common Stock Units Account and a Retirement Units
Account.
"Beneficiary" means one or more individuals, trusts, estates or other
entities, designated in accordance with, or otherwise determined under, Article
V to receive benefits under this Plan upon the death of a Participant.
"Board" means the Board of Directors of the Company.
"Cash Account" means an Account with entries denominated in dollars,
credited in accordance with Section 3.1(a).
"Change of Control" means:
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of 15% or more of either (A) the then-outstanding shares of Common Stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined voting
power of the then-outstanding voting securities of the Company entitled to vote
generally in the
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election of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (D) any acquisition by any corporation
pursuant to a transaction that complies with clauses (A), (B) and (C) of
subsection (iii) of this definition; or
(ii) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Consummation of a reorganization, merger or consolidation of the
Company or sale or other disposition of all or substantially all of the assets
of the Company or the acquisition by the Company of assets or stock of another
entity (a "Business Combination"), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock and the combined
voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 15% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination, or the
combined voting power of the then-outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Business Combination and (C) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the
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execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or
(iv)Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"Committee" means the committee described in Article VI, and if an
Administrative Committee has been appointed pursuant to Section 6.2, shall
include such Administrative Committee.
"Common Stock" means The Toro Company Common Stock, $1.00 par value,
and related preferred share purchase rights, or any other equity security of the
Company designated by the Committee, as such shares may be adjusted in
accordance with Section 3.1(d)(i).
"Common Stock Units Account" means an Account with entries denominated
in Units (including fractions) that are credited in accordance with Section
3.1(b).
"Company" means The Toro Company, a Delaware corporation, and any
successor to all or substantially all of the Company's assets or business.
"Consultant" means an individual engaged by the Company as an
independent contractor to perform consulting or similar services for the Company
or a subsidiary of the Company under a written agreement that specifically
designates certain Consulting Fees as eligible for deferral under this Plan.
"Consulting Fees" means the consideration paid by the Company or a
subsidiary to a Consultant for services. Consulting Fees shall be calculated
before reduction for amounts voluntarily deferred or contributed by the
Participant pursuant to this Plan.
"Deferral Election" means a Participant's election under Section 2.2,
made in the form prescribed by the Committee.
"Director" means any member of the Board who is not an employee of the
Company or of any subsidiary of the Company.
"Directors Fees" means amounts paid to a Director as compensation (but
not as reimbursement of expenses) for serving on the Board, including retainer
fees, meeting fees and stock grants or awards.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and as in effect from time to time.
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"Participant" means a Director who elects to participate in the Plan in
accordance with Article II, and includes a Consultant who is selected to
participate in the Plan and who elects to do so. Status as a Participant shall
continue for as long as the individual has a balance credited to an Account
under the Plan, even if the Participant is no longer a Director or Consultant.
Neither a Beneficiary, a spouse or former spouse nor an executor or personal
administrator of a Participant's estate shall be treated as a Participant even
if such spouse or the Participant's estate has an interest in the Participant's
benefits under the Plan.
"Plan" means this Deferred Compensation Plan for Non-Employee
Directors, as it may be amended from time to time.
"Plan Year" means the calendar year.
"Retirement", "Retire(s)" or "Retired" refer to resignation or
retirement from the Board or termination of service as a Director for any
reason; and, with respect to a Consultant, means termination of service as a
Consultant for any reason.
"Retirement Units Account" means an Account with entries denominated in
Units (including fractions) that are credited in accordance with Section 3.1(c)
of the Plan.
"Retirement Stock Election" means an election permitted one time only
not later than October 31, 2000 to convert cash amounts previously accrued for a
Director's benefit pursuant to The Toro Company Non-Employee Director Retirement
Plan, into Units credited to a Retirement Units Account under this Plan.
"Trust" means one or more trusts established by the Company to be used
in connection with the Plan.
"Trustee" means the financial institution acting at the time as trustee
of the Trust.
"Unforeseeable Financial Emergency" means an unanticipated severe
financial hardship to the Participant resulting from (i) a sudden and unexpected
illness or accident of the Participant or a dependent of the Participant, (ii) a
loss of the Participant's residence or other property due to casualty, or (iii)
other extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the sole
discretion of the Committee.
A "Unit" has a value equal to one share of Common Stock, subject to
adjustment by the Committee in accordance with Section 3.1(d) of the Plan.
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II. ELIGIBILITY, PARTICIPATION, DEFERRAL
ELECTION
2.1 ELIGIBILITY
Any Director is eligible to participate in the Plan. A Consultant who
is selected by the Company to participate is eligible to participate in the
Plan.
2.2 PARTICIPATION
A Director or eligible Consultant may become a Participant in the Plan
by completing, signing and delivering to the Office of the Corporate Secretary a
Deferral Election, which may include a beneficiary designation, and such other
material as the Committee may request.
2.3 DEFERRAL ELECTION
(a) Deadline for Delivery. A Director or an eligible Consultant may
deliver a Deferral Election not later than December 31 of any year prior to a
Plan Year in which it is to become effective.
(i) Notwithstanding the foregoing:
(A) In a year in which the Plan is amended to permit deferral
of compensation not previously subject to deferral, a Director or eligible
Consultant may submit a Deferral Election not later than 30 days after the
effective date of the amendment, provided that the election shall be effective
only with respect to Directors Fees or Consulting Fees not due and payable at
the time the election is received.
(B) In a year in which an individual first becomes a Director
or an eligible Consultant, the individual may submit a Deferral Election not
later than 30 days after the date the individual becomes eligible to participate
in the Plan, provided that the election shall be effective only with respect to
Directors Fees or Consulting Fees not due and payable at the time the election
is received.
(b) Election Irrevocable. A Deferral Election is effective upon
delivery and is irrevocable with respect to the Plan Year for which it is made.
A Participant may change a Deferral Election for a subsequent Plan Year by
delivering a new Deferral Election to the Office of the Corporate Secretary not
later than December 31 of the preceding Plan Year.
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III. CREDITING; VESTING; TAXES
3.1 AMOUNTS TO BE CREDITED TO ACCOUNTS
(a) Cash Account. A Participant's Cash Account shall be credited with
Directors Fees deferred pursuant to a valid Deferral Election and shall be
further credited with interest at a rate and in a manner determined by the
Committee to be consistent with the prime rate of interest charged to individual
borrowers by U.S. Bank, National Association (formerly First Bank National
Association) or its successor. Prior to a Change of Control, the method for
determining the interest crediting rate may be changed at any time, at the
discretion of the Committee. After the Trust is funded in event of a Change of
Control, the Trustee shall have authority to change the method of determining
the interest crediting rate.
Interest shall be credited at the end of each calendar quarter.
(b) Common Stock Units Account. A Participant's Common Stock Units
Account shall be credited with a number of Units equal to the number of shares
of Common Stock that otherwise would have been issued to Participant by way of a
stock grant or award and that were deferred pursuant to a valid Deferral
Election.
(c) Retirement Units Account. A Participant's Retirement Units Account
shall be credited with a number of Units equal to the dollar value of retirement
benefits accrued under The Toro Company Non-Employee Director Retirement Plan at
October 31, 2000 divided by the 4 p.m. New York Stock Exchange closing price of
one share of the Common Stock on October 31, 2000, provided the Participant is
eligible to make an election to convert such accrued benefits and has properly
made the election.
(d) Account Value. Subject to the provisions of subparagraph (i) of
this Section 3.1(d), the value of Units in a Common Stock Units Account or
Retirement Units Account shall fluctuate with the New York Stock Exchange price
of the Common Stock.
(i) In the event of a corporate transaction involving the Company
(including, without limitation, any merger, consolidation, recapitalization,
reorganization, split off, spin off, reclassification, combination, stock
dividend, stock split, reverse stock split, repurchase, exchange, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or change in the corporate
structure of the Company affecting the Common Stock, or a sale by the Company of
all or part of its assets or any distribution to stockholders other than a
normal cash dividend), the Committee shall adjust Accounts to preserve their
benefits or potential benefits. Action by the Committee may include all or any
of (i) appropriate adjustments in the number of Units then credited to an
Account; (ii) conversion of Units to other new or different securities into
which the Common Stock may be converted; (iii) cash payments, or
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(iv) any other adjustment the Committee determines to be equitable and
consistent with the purposes of this Plan. In the event that Common Stock is
converted into cash in connection with a corporate transaction described in this
subsection, the value of the Units in any Account shall be converted to a dollar
amount, by multiplying the number of Units in each Account by the fair market
value of a share of Common Stock on the date of the corporate transaction, and
such amounts shall be credited with interest at a rate and in a manner
determined by the Company to be consistent with the average prime rate of
interest charged by U.S. Bank, National Association to its individual borrowers.
If the Trust is funded in the event of a Change of Control, the Trustee shall
have authority to change the method of determining the interest crediting rate.
(e) Time of Crediting. Directors Fees and Consulting Fees deferred
under this Plan shall be withheld at the time they otherwise would be paid to
the Participant, whether or not payment occurs during the Plan Year itself.
Units credited to a Retirement Units Account will be credited as of October 31,
2000.
(f) Dividends. In the event that the Company pays dividends on its
Common Stock, each of the Common Stock Units Account and Retirement Units
Account shall be credited with additional Units (including fractions). The
number of additional Units to be credited shall be determined by dividing the
aggregate dollar value of the dividends that would be paid on the Units, if such
Units were Common Stock, by the 4 p.m. New York Stock Exchange closing price of
one share of the Common Stock on the dividend payment date.
(g) Self-Employment and Other Taxes. The Company may withhold from a
Participant's Directors Fees or Consulting Fees, in a manner determined by the
Committee, the Participant's share of self-employment, FICA and other taxes that
may be required to be withheld. If necessary, the Committee may reduce the
amount of Directors Fees or Consulting Fees a Participant elects to defer in
order to comply with this Section 3.1(g).
3.2 VESTING
A Participant's Cash Account and Common Stock Units Account shall at
all times be fully vested, subject only to the Participant's status as a general
creditor of the Company, as provided in Section 9.2. A Director Participant's
Retirement Units Account shall vest on the date that the Director completes five
full years of service as a member of the Board.
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IV. DISTRIBUTIONS
4.1 DISTRIBUTABLE EVENTS
Distributions under the Plan shall be payable in accordance with a
Participant's Deferral Election upon the earliest of (i) Retirement, (ii) prior
to Retirement if a valid election has been made under Section 4.4, or (iii) an
Unforeseeable Financial Emergency under Section 4.5.
4.2 METHOD OF PAYMENT
(a) A Participant may elect, in a manner determined by the
Committee, (i) to receive Cash Account distributions in a lump sum or in
quarterly installments over a period of time not to exceed ten years or such
period as the Committee may determine and (ii) to receive Common Stock Units
Account distributions in a single distribution or in annual installments over a
period of time not to exceed ten years or such period as the Committee may
determine and (iii) to receive Retirement Units Account distributions in a
single distribution or over a period of time not to exceed five years.
(b) An election may be changed to an allowable alternative payment
period by submitting a new election to the Committee, in a form approved by the
Committee, provided that an election submitted less than two years before the
distribution is to commence shall not be given effect. The most recent effective
election received by the Committee shall govern the payment. If a Participant
does not make a valid election with respect to the payment of benefits, then
such benefits shall be payable in a single distribution. The single distribution
shall be made, or installment payments shall commence, on or around the 15th day
of January immediately after the calendar year in which the Participant Retires.
(c) Any Account denominated in Units shall be payable only in shares of
Common Stock, except that cash shall be paid for any fractional share.
Distributions of Common Stock shall be made either in a single distribution or
in annual installments. If, at the time of any annual installment payment, the
total number of Units in a Participant's Common Stock Units Account and
Retirement Units Account is 1,000 or less, the balance in such Accounts shall be
distributed in a single distribution.
4.3 DEATH PRIOR TO COMPLETION OF PAYMENT
If a Participant dies after Retirement but before his or her Accounts
are distributed in full, the remaining Account Balance shall be paid to the
Participant's Beneficiary, in a lump sum or, if the Participant has so elected,
in installments.
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4.4 DISTRIBUTION PRIOR TO RETIREMENT
Subject to Committee approval, a Participant may irrevocably elect in a
Deferral Election to receive all or part of the balance of either or both of the
Cash Account or the Common Stock Units Account, but not the Retirement Units
Account, in any year prior to Retirement. Except as provided in Section 4.5, no
distribution prior to Retirement shall be made until at least two Plan Years
have elapsed following Committee approval of the election. A distribution in any
year shall not exceed the aggregate of the balance of each of the Cash Account
and Common Stock Units Account as of the last day of the Plan Year immediately
prior to the Plan Year in which the distribution is made. Any distribution made
pursuant to an approved election hereunder shall be made in a single
distribution by March 1 of the year in which it becomes payable.
4.5 UNFORESEEABLE FINANCIAL EMERGENCIES
A Participant who experiences an Unforeseeable Financial Emergency may
request either or both of (i) suspension of any deferrals then in effect and
(ii) a partial or full distribution from the Plan. The Committee shall in its
discretion act on the Participant's request, but a distribution shall not exceed
the lesser of the aggregate balance of the Participant's Accounts or the amount
reasonably needed to satisfy the Unforeseeable Financial Emergency.
4.6 DISTRIBUTION IN THE EVENT OF TAXATION
A Participant or Beneficiary may request the Committee before a Change
of Control, or the Trustee after a Change of Control, for a distribution of that
portion of any benefit under the Plan that has become taxable to such
Participant or Beneficiary prior to its receipt. The Committee shall not
unreasonably withhold its consent to any such request. After a Change of
Control, the Trustee shall consent to any such request upon a proper showing
that the benefits are taxable. Once consent to such a request is granted, the
Plan shall distribute to the Participant or Beneficiary an amount equal to the
taxable portion of the benefit, but not more than the aggregate balance then
credited to all of the Participant's Accounts. Distribution shall be made not
later than 90 days after the date a request is granted by the Committee. Such a
distribution shall reduce applicable Account balances and the benefits to be
paid under this Plan.
4.7 WITHHOLDING
The Company or the Trustee shall withhold from any distribution to a
Participant or Beneficiary all federal, state and local income, employment and
other taxes required to be withheld from such distribution, in amounts and in a
manner determined in the discretion of the Company or Trustee.
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4.8 DEDUCTIONS
Prior to a Change of Control, the Company may deduct from any
distribution to a Participant or Beneficiary any amounts due from the
Participant to the Company.
V. BENEFICIARY DESIGNATION
Each Participant shall have the right to designate one or more
Beneficiaries (including primary and contingent Beneficiaries) to receive any
benefits payable under the Plan. A Participant shall have the right to change a
Beneficiary by completing a new beneficiary designation on a form approved by
the Committee.
If a Participant fails to designate a Beneficiary or if all designated
Beneficiaries predecease the Participant or die prior to complete distribution
of the Participant's benefits, then payment shall be made as required under the
Participant's will; or, in the event there is no will under applicable state
law, then to the persons who, at the date of the Participant's death, would be
entitled to share in the distribution of the deceased Participant's estate under
applicable state law then in force governing the decedent's intestate property.
VI. ADMINISTRATION
6.1 COMMITTEE DUTIES
This Plan shall be administered by a Committee, which shall consist of
the Board, or such committee as the Board may appoint. Members of the Committee
may be Participants. The Committee shall have the discretion and authority,
subject to Section 7.2, to make amendments to this Plan or in its discretion it
may recommend amendments to the Board for its action. The Committee shall have
the discretion and authority to make, amend, interpret and enforce appropriate
rules and regulations for the administration of this Plan and to decide or
resolve, in its discretion, any and all questions involving interpretation of
the Plan. Any individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself. When making a
determination or calculation, the Committee shall be entitled to rely on
information furnished by a Participant or by the Company.
6.2 ADMINISTRATIVE COMMITTEE; AGENTS
The Committee may, from time to time, appoint an Administrative
Committee and delegate to the Administrative Committee such duties and
responsibilities (including the authority to make ministerial or administrative
amendments to this Plan) with respect to the Plan as the Committee may
determine. The Committee, and the Administrative Committee, may employ agents
and delegate to them such duties as either Committee sees fit (including acting
through a duly appointed representative) and may from time to time consult with
counsel who may be counsel to the Company.
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6.3 BINDING EFFECT OF DECISIONS
The decisions or actions of the Committee, and of the Administrative
Committee, with respect to the administration, interpretation and application of
the Plan and the rules and regulations hereunder shall be final and conclusive
and shall be binding upon all persons having any interest in the Plan.
6.4 INDEMNITY OF COMMITTEE AND ADMINISTRATIVE COMMITTEE
The Company shall indemnify and hold harmless the members of the
Committee, the Administrative Committee, and any agent or employee to whom the
duties of the Committee or the Administrative Committee may be delegated,
against any and all claims, losses, damages, expenses or liabilities arising
from any action or failure to act with respect to this Plan, except in the case
of willful misconduct.
VII. TERMINATION; AMENDMENT OR MODIFICATION
7.1 TERMINATION
Although the Company anticipates that the Plan will continue for an
indefinite period of time, it reserves the right to terminate the Plan at any
time with respect to any or all Participants. Upon termination, the Accounts of
the affected Participants shall be paid pursuant to the Participants' election
or, at the discretion of the Company, in a lump sum.
Termination of the Plan shall not adversely affect the rights under the
Plan of any Participant or Beneficiary who has become entitled to the payment of
any Plan benefits as of the date of termination. The Company shall, however,
have the right to accelerate installment payments without a premium or
prepayment penalty by paying the Account Balance in a single distribution.
7.2 AMENDMENT OR MODIFICATION
The Company may, at any time, amend or modify the Plan in whole or in
part; provided, that no amendment or modification shall decrease the balances of
a Participant's Accounts. No amendment or modification of the Plan shall affect
the rights of any Participant or Beneficiary who has become entitled to the
distribution of benefits under the Plan as of the date of the amendment or
modification. The Company shall, however, have the right to accelerate
installment payments by paying amounts then credited to the Accounts in a single
distribution without a premium or prepayment penalty.
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VIII. TRUST
8.1 TRUST ASSETS
The Company may transfer to the Trust such assets as it determines, in
its sole discretion, are necessary or appropriate to provide for its liabilities
under the Plan. In the event of a Change of Control, the Company shall, as soon
as possible, but in no event longer than 30 days following the Change of
Control, make irrevocable contributions to the Trust in amounts that are
sufficient to pay the Participants or Beneficiaries the benefits to which the
Participants or their Beneficiaries would be entitled pursuant to the terms of
the Plan as of the date on which the Change of Control occurred, including
benefits that vest under the Plan as a result of the Change of Control. The
Company is entitled at any time or times prior to a Change of Control, in its
sole discretion, to substitute assets of equal fair market value for any assets
held in the Trust.
8.2 ENFORCEMENT OF FUNDING
If following a Change of Control, irrevocable contributions to the
Trust have not been made as required in Section 8.1 hereof, any Participant or
Beneficiary shall have the right to seek specific performance from the Company
of its obligation to make such contributions. The Company consents to the
jurisdiction of the district courts of the State of Minnesota to determine any
action for such specific performance.
8.3 MISCELLANEOUS
The provisions of the Plan shall govern the rights of a Participant to
receive distributions pursuant to the Plan. The provisions of the Trust shall
govern the rights of the Company, Participants and the creditors of the Company
to any assets held by the Trust. The Company's obligations under this Plan may
be satisfied with Trust assets distributed pursuant to the terms of the Trust,
and the Company's obligations under the Plan shall be reduced to the extent of
any such distributions.
IX. MISCELLANEOUS
9.1 STATUS OF PLAN
The Plan is intended to be a plan that is not qualified within the
meaning of Section 401(a) of the Code and that is unfunded and maintained by an
employer primarily for the purpose of providing deferred compensation for a
select management group, within the meaning of ERISA Sections 201(2), 301(a)(3)
and 401(a)(1). The Plan shall be administered and interpreted in a manner
consistent with that intent.
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9.2 UNSECURED GENERAL CREDITOR
Participants and their Beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interests or claims in any property or
assets of the Company or of the Trust. For purposes of the payment of benefits
under this Plan, any and all of the Company's assets including any assets of the
Trust shall be, and remain until paid, the general, unpledged unrestricted
assets of the Company. The Company's obligation under the Plan shall consist
solely of an unfunded and unsecured promise to pay money in the future.
9.3 NONASSIGNABILITY
Neither a Participant nor a Beneficiary nor any other person shall have
any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof. All
of such rights are expressly declared to be unassignable and nontransferable.
None of the amounts payable under the Plan shall, prior to actual payment, be
subject to seizure, attachment, garnishment or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency or be transferable
to a spouse as a result of a property settlement or otherwise.
9.4 DISCHARGE OF OBLIGATIONS
The payment of benefits under the Plan to a Beneficiary shall fully and
completely discharge the Company and the Committee from all further obligations
under this Plan with respect to the Participant and any other Beneficiary.
9.5 NOT A CONTRACT OF EMPLOYMENT
The terms and conditions of this Plan shall not constitute a contract
of employment between the Company and the Participant. Nothing in this Plan
shall be deemed to give a Participant the right to be retained as a Director of
the Company or a Consultant to the Company, or interfere with the right of the
Company to sever its relationship with the Participant at any time.
9.6 GOVERNING LAW
This Plan and Deferral Elections under the Plan shall be construed,
administered and governed in all respects under and by the applicable laws of
the State of Delaware, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction to the substantive law of
another jurisdiction, to the extent not superseded by ERISA.
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<PAGE> 16
9.7 NOTICE
Any notice or filing required or permitted to be given to the Committee
under this Plan shall be sufficient if in writing and hand-delivered, or sent by
registered or certified mail or by facsimile, to the address below:
Corporate Secretary
The Toro Company
8111 Lyndale Avenue South
Bloomington, Minnesota 55420
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
Any notice or filing required or permitted to be given to a Participant
under this Plan shall be sufficient if in writing and hand-delivered, or sent by
mail, to the last known address of the Participant.
9.8 SUCCESSORS
The provisions of this Plan shall bind and inure to the benefit of the
Company and its successors and assigns and the Participant and the Participant's
designated Beneficiaries.
9.9 VALIDITY
If any provision of this Plan shall be found to be illegal or invalid
for any reason, such illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.
9.10 COURT ORDER
The Committee is authorized to make any payments directed by court
order. If a court determines that a spouse or former spouse of a Participant has
an interest in the Participant's benefits under the Plan in connection with a
property settlement or otherwise, the Committee, in its sole discretion, shall
have the right, notwithstanding any election made by a Participant, to
immediately distribute the spouse's or former spouse's interest in the
Participant's benefits under the Plan to that spouse or former spouse.
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<PAGE> 17
9.11 NO ASSURANCE OF TAX CONSEQUENCES
Neither the Company nor the Board nor any other person guarantees or
assures a Participant or Beneficiary of any particular federal or state income
tax, payroll tax, or other tax consequence of participation in this Plan. A
Participant should consult with professional tax advisors regarding all
questions related to the tax consequences of participation.
IN WITNESS WHEREOF, the Company has signed this Plan document as of
July 20, 2000.
THE TORO COMPANY
By
-------------------------------------
Title
-------------------------------------
<TABLE>
<CAPTION>
Plan History Action
------------ ------
<S> <C>
January 1, 1999 Effective Date (adopted by Board of Directors on
November 18, 1998)
July 20, 2000 Amendment to permit deferral of stock grants and awards
and to create retirement accounts for accrued benefits
under the Non-Employee Directors Retirement Plan, to be
terminated on October 31, 2000
</TABLE>
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