Five Year
Post-Retirement
Consulting and Noncompetition Agreement
January 1, 2006 to
December 31, 2010
This Agreement is entered into as of
December 31, 2005, by and between The Toro Company
(“we” or “us”), a Delaware corporation, and
Kendrick B. Melrose (“you”), our retired Chief
Executive Officer, to set forth the terms and conditions of a
consulting and noncompetition arrangement between us in accordance
with provisions of the Chief Executive Officer Succession Incentive
Award Agreement (“CEO Incentive Agreement”) dated as of
July 31, 1995, as amended.
1. Consulting Services .
You will provide us such consulting services as you and we may
agree upon from time to time.
2. Office and Support
Services . We will provide for office and related services in
support of your consulting services, as provided for in this
agreement.
3. Term . This agreement
shall commence on January 1, 2006 and shall continue through
December 31, 2010, subject only to the provisions of
Section 7.
4. Noncompetition . You
hereby agree as follows:
a. You will not engage in or own
or control any interest in (except as a passive investor in
publicly held companies and except for investments held at the date
hereof) or act as an officer, director or employee of or consultant
or adviser to, any firm, corporation or institution in competition
with or engaged in a business substantially similar to that of Toro
(other than distributorships of Toro), including the manufacture or
sale of products or the provision of services which Toro was
engaged in, or was developing, at the time your employment with
Toro terminates, and including, but not limited to, Rainbird
Corporation, Jacobsen (business unit including but not limited to
Jacobsen Division of Textron Inc., Ransomes Inc., Cushman Inc. and
Steiner Turf Equipment Inc.), Briggs & Stratton Corporation,
MTD Products, Inc., Hunter Industries Incorporation, Scag Power
Equipment, The Electrolux Group and Deere & Company, or any
successor to any one of them, from January 1, 2006 through
December 31, 2010.
b. You will maintain
confidentiality with respect to data, manuals, specifications,
lists, notes, writings, customer and product lists, photographs,
microfilm, tape recordings and all other documents or tangible
materials whatsoever, including all copies or duplicates,
concerning any part of Toro’s activities or concerning any
part of your activities as a Toro employee or officer.
c. You understand that in the
event of a violation of any provision of this agreement, we shall
have the right to seek injunctive relief, in addition to any other
rights at law or in equity provided in this agreement or by
operation of law, without the requirement of posting bond. You
agree to reimburse Toro for all costs, expenses or damages,
including reasonable attorneys fees, that we incur as a result of
any violation by you of this Section 4, as may be determined
by a court or arbitrator.
d. You acknowledge that you
fully understand the restrictions imposed by this agreement and you
acknowledge that the restrictions are imposed under the CEO
Incentive Agreement, which provided for your retirement and was
approved by Toro stockholders and agreed to by you, and under which
you received compensation in the form of 69,686 shares of Toro
Common Stock and 69,686 Toro Common Stock units, the
December 31, 2005 fair market value (closing price on
December 30) of which is to be utilized by Toro to purchase a
retirement annuity payable to you commencing in January of 2006
until you reach age 75. You acknowledge that it is not your
intention to become employed following your retirement from Toro,
except as contemplated by this agreement or in connection with your
charitable or educational activities.
5. Payment .
a. Amount and Adjustment
. In accordance with the CEO Incentive Agreement, and subject to
your compliance with Section 4 hereof, we will pay to you or
on your behalf the expenses of an office and related support
services, based on an initial aggregate amount of $586,309, to be
adjusted annually in accordance with Section 5.c(1), and to be
paid
