THE TORO COMPANY DEFERRED COMPENSATION PLAN

Exhibit 10(b)

THE TORO COMPANY

DEFERRED COMPENSATION PLAN

FOR OFFICERS

Amended and Restated Effective January 1, 2009

 

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THE TORO COMPANY

DEFERRED COMPENSATION PLAN

FOR OFFICERS

Amended and Restated Effective January 1, 2009

The Toro Company hereby amends and restates its Deferred Compensation Plan for Officers, originally effective as of January 21, 1998.  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 document in accordance with then applicable IRS guidance.  All amounts earned or vested from January 1, 2005 through December 31, 2008 shall continue to be governed by this amendment and restatement, as modified by the operations of the Plan during such period in accordance with Internal Revenue Code Section 409A and then applicable IRS guidance (including transition relief).

The purpose of the Plan is to provide the opportunity for selected officers of the Company to defer receipt of compensation that may be payable under the Performance Share Plan and to acquire and retain Common Stock in the form of Units.  This amendment eliminates references to the opportunity to defer compensation under AMIP II but retains references to existing accounts previously established in connection with that compensation.

I.           DEFINITIONS

When used in the Plan, 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.

" 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 of the Plan, and includes Retained Units Accounts, Matching Units Accounts and Performance Share Units Accounts.

" AMIP II " means The Toro Company Annual Management Incentive Plan II, as amended from time to time, and any successor plan designated as such by the Board.

" Award Term " means the performance period established by the Committee for awards granted under the Performance Share Plan.

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

" 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.

" 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 the Plan.

" Common Stock " means the Company's common stock, par value $1.00 per share, and the related Preferred Share Purchase Rights, as such shares may be adjusted in accordance with Section 3.1(c).

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

" Deferral Election " shall mean a Participant's election under Section 2.3, made in a manner and on the form prescribed by the Committee.

" 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).

" Eligible Officer " means an officer of the Company or a Subsidiary, described in Section 2.1.

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

" Fair Market Value " means the closing price of one share of Common Stock as reported by the New York Stock Exchange, except that where a different meaning is established in the Performance Share Plan for any particular purpose, that meaning shall govern for that purpose.

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

" IRS " means the Internal Revenue Service.

" Matching Units Account " means an Account previously established under the Plan in connection with AMIP II compensation, with entries denominated in Units (including fractions), but to which no additional Units may be credited.

 

 

" Participant " means an Eligible Officer who delivers a Deferral Election in accordance with Sections 2.2 and 2.3 and for whom Units are actually credited to an Account.  An individual shall not cease to be a Participant if the person ceases to be an Eligible Officer, as long as Units remain credited to such Participant's Accounts.  A Beneficiary, a spouse or former spouse, or an executor or personal administrator of a Participant's estate shall not be treated as a Participant even if such individual or the Participant's estate has an interest in the Participant's benefits under the Plan.

" Performance Shares " are rights to receive shares of Common Stock or Units, awarded under the Performance Share Plan.

" Performance Share Units Account " means an Account with entries denominated in Units that are credited in accordance with Section 3.2.

" Performance Share Award " means the award that sets forth the number of Performance Shares granted under the Performance Share Plan.

" Performance Share Plan " means The Toro Company Performance Share Plan, as amended from time to time, and any successor plan designated as such by the Board.

" Plan " means the Deferred Compensation Plan for Officers, as amended from time to time.

" Retained Units Account " means an Account previously established under the Plan in connection with AMIP II compensation, with entries denominated in Units (including fractions), but to which no additional Units may be credited.

" 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.

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

" Trust " means a trust established or maintained by the Company that may be used in connection with the Plan to assist the Company in meeting its obligations under the Plan.  The Plan shall constitute an unfunded arrangement, and the Trust shall not affect the status of the Plan as an unfunded plan.  Participants and their Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of any such Trust.

" Trustee " means the corporation or person or persons 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.

" Unit " means a denomination that has a value equal to one share of Common Stock, subject to adjustment by the Committee as contemplated by Section 3.1(c) of the Plan.

II.           ELIGIBILITY; PARTICIPATION; DEFERRAL

An officer of the Company or a Subsidiary who is granted a Performance Share Award under the Performance Share Plan is eligible to participate in the Plan.

An Eligible Officer may become a Participant in the Plan by executing and delivering to the Company’s Director of Compensation and Benefits, or successor position, a Deferral Election in the form prescribed by the Company.

(a)            Deadline for Delivery .  An Eligible Officer may elect to defer Performance Shares that may be delivered in settlement of a Performance Share Award by completing and submitting a Deferral Election to the Director of Compensation and Benefits, or successor position, on or before the date that is the last day of the Fiscal Year immediately prior to the commencement of the last Fiscal Year of the Award Term to which the Performance Share Award relates, provided that the Eligible Officer performs services continuously from the later of the beginning of the Award Term or the date the performance goals are established by the Committee through the date an election is made.  In no event may a Deferral Election be made after such compensation has become "readily ascertainable" as defined in Treasury Regulation Section 1.409A-2(a)(8).

(b)            Amount to Be Deferred .  The Deferral Election shall relate to compensation that may be earned with respect to the Award Term to which a Performance Share Award relates.  A Deferral Election may designate up 100% of Performance Shares in a Performance Share Award to be deferred.

 

 

(c)            Effectiveness .  The Deferral Election is irrevocable, shall be effective upon delivery and shall remain in effect only with respect to the Award Term for which it is made.

III.           PARTICIPANTS' ACCOUNTS

   (a)            Certification Required .  No Units or other amount shall be credited to any Account with respect to any Performance Share Award until the Committee has certified in writing as required by the Performance Share Plan that the performance goals established with respect to such award have been achieved and Performance Shares in such award have vested.

(b)           Separate Accounts .  The value of each of a Participant's Retained Units Account and Matching Units Account, if any, and Performance Share Units Account shall be accounted for separately.

(c)           Account Value .  Subject to the provisions of this Section 3.1(c), the value of Units in any Account shall fluctuate with the Fair Market Value of the Common Stock.  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 (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) conversion to a cash balance, or (iv) any other adjustment the Committee determines to be equitable and consistent with the purposes of the Plan.  In the event that Common Stock is converted into cash in connection with a corporate transaction described in this Section 3.1(c), 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 cash amounts shall thereafter 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.

(d)           Dividends .  In the event that the Company pays dividends on its Common Stock, each 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 Fair Market Value of one share of the Common Stock on the dividend payment date.

 

 

(e)           Continuation of Accounts .  Notwithstanding that a Participant ceases to be an Eligible Officer, any Accounts established for such Participant shall continue to be maintained until distribution of the assets in accordance with the Plan and the Part