2000 DIRECTORS STOCK
PLAN
(As Amended March 18,
2009)
1.
Purpose of the Plan. The purpose of The Toro
Company 2000 Directors Stock Plan (“Plan”) is to enable
The Toro Company (the “Company”) to attract and retain
experienced and knowledgeable directors to serve on the Board of
Directors of the Company or its subsidiaries, and to further align
their interests with those of the stockholders of the Company by
providing for or increasing their stock ownership interests in the
Company. It is intended that the Plan be interpreted so
that transactions under the Plan are exempt under Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), to the extent applicable.
2.
Eligibility. All members of the Company’s
Board of Directors who are not current employees of the Company or
any of its subsidiaries (“Nonemployee Directors”) are
eligible to participate in the Plan.
3.
Plan Awards.
a.
Directors Shares. To carry out the purposes of
the Plan, the Company shall, on the first business day of each
fiscal year, issue to each person who is then a Nonemployee
Director, shares of the Company’s Common Stock, $1.00 par
value (the “Common Stock”), in an amount equal to
$20,000 divided by the fair market value of one share of Common
Stock rounded down to the greatest number of whole shares
(“Directors Shares”), subject to adjustment as provided
in Section 5 hereof. Fair market value for this
purpose shall be the average of the 4 p.m. Eastern Time closing
prices of the Common Stock as reported by the New York Stock
Exchange for each of the trading days in the three calendar months
immediately prior to the date of issue of the Directors
Shares.
b.
Directors Options.
i.
Annual Grant. Subject to the terms and
conditions of this Section 3.b., on the first business day of
each fiscal year, the Company shall grant to each person who is
then a Nonemployee Director , a nonqualified option to
purchase shares of the Common Stock (a “Directors
Option”). Each such option shall have a grant date
fair value of $40,000, determined using a standard Black-Scholes,
binomial or monte carlo valuation formula, based on assumptions
consistent with those used to value option grants disclosed under
Schedule 14A under the Securities Exchange Act of 1934, or
successor requirements, for the business day prior to the date of
grant.
ii.
Vesting, Transferability and
Exercisability.
(a)
Vesting. Except as provided in
Sections 3.b.ii.(c)(1) and (2) and Section 6,
Directors Options shall vest and become exercisable in three equal
installments on each of the first, second and third anniversaries
following the date of grant, and shall remain exercisable for a
term of ten years after the date of grant.
(b)
No Transfer. No Directors Option shall be
assigned or transferred, except by will or the laws of descent and
distribution. An option so transferred may be exercised
after the death of the individual to whom it is granted only by
such individual’s legal representatives, heirs or legatees,
not later than the earlier of the date the option expires or one
year after the date of death of such individual, and only with
respect to an option exercisable at the time of death.
(c)
Exercise. During the lifetime of a
Nonemployee Director, Directors Options held by such individual may
be exercised only by the Nonemployee Director and only while
serving as a member of the Board of Directors of the Company and
only if the Nonemployee Director has been continuously so serving
since the date such options were granted, except as
follows:
(1)
Disability or Death. In the event of
disability or death of a Nonemployee Director, all outstanding
unvested options shall vest effective as of the date of death or
termination of service by reason of disability, and all such vested
options may be exercised by such individual or his or her legal
representatives not later than the earlier of the date the option
expires or one year after the date such service as a Nonemployee
Director ceases by reason of disability or death.
(2)
Termination. If a Nonemployee Director
has served as a member of the Board of Directors for ten full
fiscal years or longer and terminates service on the Board, (A)
outstanding unvested options shall remain outstanding and continue
to vest in accordance with their terms, and (B) the
Nonemployee Director may exercise all such vested outstanding
options for up to four years after the date of termination, but not
later than the date an option expires. If a Nonemployee
Director has served as a member of the Board of Directors for less
than ten years and terminates service on the Board, (C) all
unvested options shall expire and be canceled and (D) the
Nonemployee Director may exercise any vested outstanding options
for up to three months after the date of termination, but not later
than the date an option expires.
(d)
Methods of Exercise and Payment of Exercise
Price. Subject to the terms and conditions of
the Plan and the terms and conditions of the option agreement, a
vested option may be exercised in whole at any time or in part from
time to time, by delivery to the Company at its principal office of
a written notice of exercise specifying the number of shares with
respect to which the option is being exercised, accompanied by
payment in full of the exercise price for shares to be purchased at
that time. Payment may be made (1) in cash,
(2) by tendering (either actually or by attestation) shares of
Common Stock already owned for at least six months (or shorter
period necessary to avoid a charge to the Company’s earnings
for financial statement purposes) valued at the fair market value
of the Common Stock on the date of exercise, (3) in a
combination of cash and Common Stock or (4) by delivery of a
notice of exercise of options, together with irrevocable
instructions, approved in advance by proper officers of the
Company, (A) to a brokerage firm designated by the Company, to
deliver promptly to the Company the aggregate amount of sale or
loan proceeds to pay the exercise price and any related tax
withholding obligations and (B) to the Company, to deliver
certificates for such purchased shares directly to such brokerage
firm, all in accordance with regulations of the Federal Reserve
Board.
No shares of
Common Stock shall be issued until full payment has been
made.
c.
Share Proration. If, on any date on which
Directors Shares are to be issued pursuant to Section 3.a. or
Directors Options are to be granted pursuant to Section 3.b.,
the number of shares of Common Stock is insufficient for the
issuance of the entire number of shares to be issued or for the
grant of the entire number of options, as calculated in accordance
with Section 3.a. or Section 3.b., respectively, then the
number of shares to be issued and options to be granted to each
Nonemployee Director entitled to receive Directors Shares or
Directors Options on such d
