THE TORO COMPANY DEFERRED COMPENSATION PLAN

Exhibit 10(a)

 

 

TABLE OF CONTENTS

 

 

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The Toro Company hereby amends and restates its Deferred Compensation Plan.  This amendment and restatement is effective for all amounts deferred on or after January 1, 2005 that remain unpaid as of January 1, 2009.  All grandfathered amounts earned and vested as of December 31, 2004 shall continue to be governed by the 2004 Plan in accordance with then applicable IRS guidance.  All amounts earned or vested from January 1, 2005 through December 31, 2008 shall be governed by this amendment and restatement, as modified by the operations of the Plan during such period in accordance with Code Section 409A and then applicable IRS guidance (including transition relief).  The Plan is maintained by The Toro Company primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.  The Plan is unfunded for purposes of Title I of ERISA.

When used in the Plan document, the following terms have the meanings indicated unless a different meaning is plainly required by the context.

" 2004 Plan " means the terms of the Plan in place as of December 31, 2004.

" Beneficiary " means the person or persons selected by the Participant to receive the benefits provided under the Plan in the event of the Participant's death.

" Board " means the Board of Directors of the Company.

" Change of Control " means:

(a)            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 (i) the then-outstanding shares of Common Stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (z) any acquisition by any corporation pursuant to a transaction that complies with clauses (i), (ii) and (iii) of subsection (c) of this definition; or

 

 

(b)           Individuals who, as of the date hereof, constitute the Board (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 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

(c)           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, (i) 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 that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions 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, (ii) 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 (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(d)           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.

" Committee " means the Compensation and Human Resources Committee of the Board or any successor committee and its delegates with respect to the Plan.

 

 

" Common Stock " means the Company's common stock, par value $1.00 per share, and related preferred share purchase rights.

" Company " means The Toro Company, a Delaware corporation.  Except as used in Articles VII and VIII, "Company" also includes any participating Subsidiary.

" Compensation " means all amounts received by a Participant from the Company that are subject to federal income tax withholding; provided that (a) Compensation shall not include any amount received by a Participant on account of the grant or exercise of an option to purchase Common Stock, or on account of any other amount received in connection with The Toro Company Performance Share Plan or successor plan or otherwise based on the value of Common Stock; (b) Compensation shall include an amount equal to any reductions in a Participant's gross income as a result of salary reductions under Section 125, 132(f)(4) or 402(e)(3) of the Code; and (c) Compensation includes cash payments to which an employee may be entitled under The Toro Company Annual Management Incentive Plan I or II, or successor plan.

" Director " means the person serving as Director of Compensation and Benefits of the Company.

" Disability " means the Participant is (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (b) receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Company employees because of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (c) determined to be totally disabled by the Social Security Administration or Railroad Retirement Board; or (d) determined to be disabled in accordance with the Company's Long Term Disability Plan, provided that such plan's definition complies with Treasury Regulation Section 1.409A-3(i)(4).

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended.

" Fiscal Year " means the fiscal year of the Company, which begins on November 1st and ends on the following October 31st.

"IRS" means the Internal Revenue Service.

" Participant " means an eligible employee who has executed a deferred compensation agreement.

" Plan " means the Deferred Compensation Plan, including any amendments thereto.

" Plan Year " means the calendar year.

 

 

" Retirement Plan " means The Toro Company Investment, Savings and Employee Stock Ownership Plan or any successor or replacement plan.

" Specified Employee " means a Participant who, as of the date of the Participant's separation from service for any reason and unless the Company has designated otherwise in accordance with Treasury Regulation Section 1.409A-1(i), is an elected officer of the Company.  If a Participant is an elected officer as of December 31, the Participant shall be treated as a Specified Employee for the entire 12-month period beginning on the next following April 1.

“ Stable Return Fund Measure ” means the earnings rate paid or credited from time to time on assets held in the Stable Return Fund under the Retirement Plan.

" Subsidiary " means any corporation that is a component member of the controlled group of corporations of which the Company is the common parent.  Controlled group shall be determined by reference to Section 1563 of the Code but shall include any corporation described in Section 1563(b)(2) thereof.

" Trust " means the trust established or maintained by the Company that is used in connection with the Plan to assist the Company in meeting its obligations under the Plan.

" Trustee " means the corporation or individual selected by the Company to serve as Trustee for the Trust.

" Unforeseeable Emergency "  means a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant's spouse, the Participant's Beneficiary or the Participant's dependent (as defined in Code Section 152, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B)); loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, not as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.  For example, (a) imminent foreclosure of or eviction from the Participant's primary residence may constitute an Unforeseeable Emergency; (b) the need to pay for medical expenses, including nonrefundable deductibles, as well as for the costs of prescription drug medications, may constitute an Unforeseeable Emergency; (c) the need to pay for the funeral expenses of a spouse, a Beneficiary or a dependent (as defined in Code Section 152, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B)) may also constitute an Unforeseeable Emergency; and (d) the purchase of a home and the payment of college tuition are not Unforeseeable Emergencies.

All management or highly compensated employees who are at the director level or above with the Company are eligible to become Participants.

 

 

An eligible employee will become a Participant upon submission of a completed election form, in the form approved by the Committee, to the Director.

Once an employee has become a Participant, the Participant's account under the Plan will remain in effect until distributed as provided herein, even if for any subsequent Plan Year or portion thereof the employee ceases to meet the eligibility requirements of this Article II or ceases to be a Participant for any other reason.

(a)           A Participant may elect to defer Compensation for a calendar year by completing and submitting a deferral election in a manner and on the form prescribed by the Committee.  Such election must be submitted to the Director by December 31 to be effective in the following year.  Notwithstanding the foregoing, elections to defer cash bonus Compensation, including but not limited to payments under The Toro Company Annual Management Incentive Plan I or II, must be made on a Fiscal Year basis.  A Participant may elect to defer bonus Compensation by completing and submitting a deferral election as provided above by the end of the Fiscal Year immediately preceding the Fiscal Year in which the services giving rise to the bonus are to be performed.  An election shall take effect as of January 1 of the year following the year in which it is received or the first day of the Company's Fiscal Year following the Fiscal Year in which the deferral election is received by the Director.

(b)           A Participant shall not be eligible to defer Compensation for any calendar year or bonus Compensation for any Fiscal Year following the year in which the Participant no longer satisfies the eligibility requirements of the Plan, unless the Committee in its discretion permits such a deferral.

The Company shall establish and maintain an account for each Participant and shall credit such account with amounts deferred by the Participant pursuant to Section 3.1 and the Participant's deferral election.

The Company shall credit a Participant's account as of December 31 each year with an amount equal to the difference between (a) the amount that would have been credited to the Participant's account under the Retirement Plan for the Plan Year had the Participant not made an election to defer Compensation for the year under Section 3.1 of the Plan, and (b) the amount actually credited to the Participant's account under the Retirement Plan for the Plan Year.  To prevent duplication of benefits, credits under this Section 3.3 shall not be made with respect to any year or partial year in which the Participant or any account of the Participant receives comparable credits under the Company's Supplemental Benefit Plan or any other Company plan.

 

 

 

Amounts held in an account maintained for a Participant shall be credited with earnings at a rate and in a manner authorized by the Committee from time to time; provided that the earnings rate shall be based on a Participant's selection from among fund choices made available by the Committee from time to time, and provided further that such choices shall not include a Common Stock fund.  Earnings shall be credited as of the end of each business day that the Committee authorizes the Plan's recordkeeping system to determine the value of gains and losses.  Notwithstanding the foregoing, for Participants who did not make a one-time election as of October 31, 2006 to allocate all funds in all accounts, past and future, so that earnings are based on the rate of return from one or more of the funds made available by the Committee as described above, the earnings shall be determined based on the Stable Return Fund Measure.

Available methods of distribution are (i) approximately equal annual, quarterly or monthly installment payments over a period not to exceed ten years or (ii) a single lump-sum distribution.

(a)           Except as provided in Section 5.3, the amount of the Participant's deferred compensation account shall be distributed on the Participant's retirement, resignation