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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 18, 2011
THE TORO COMPANY
(Exact name of registrant as specified in its charter)
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Delaware
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1-8649
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41-0580470 |
(State of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification Number) |
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8111 Lyndale Avenue South |
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Bloomington, Minnesota
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55420 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (952) 888-8801
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Section 5 Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
(e) |
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On January 18, 2011, the Board of Directors of The Toro Company, upon recommendation of
the Compensation & Human Resources Committee, adopted a new Change in Control Severance
Compensation Policy, or CIC Policy, applicable to all of Toros executive officers, including
its named executive officers. Adoption of the CIC Policy effectively terminated the change of
control employment agreements between Toro and certain of its executive officers, as each
officer voluntarily agreed to terminate such agreement in connection with becoming subject to
the new CIC Policy. |
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Key changes incorporated into the CIC Policy include: |
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Replacing the modified single trigger included in the change in control employment
agreements with a double trigger for severance payments; |
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Decreasing the multiple of base salary and annual cash incentive award to be paid as
severance in the event of a termination in connection with a change in control from three
times to two times for all executives, except for the Chief Executive Officer; |
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Decreasing the amount of the annual cash incentive award to be used in calculating the
severance payment from the highest annual cash incentive award over the last three fiscal
years to the current target annual cash incentive award; |
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Reducing the payout of any performance share awards in connection with the change in
control from maximum levels of performance to target; |
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Eliminating additional gross-up payments; |
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Eliminating the additional three years of retirement plan benefits; |
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Requiring as a condition to receiving change in control severance benefits the
execution by the executive of a release substantially in the form attached to the CIC
Policy; and |
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Tightening the change in control definition to increase the acquisition of beneficial
ownership percentage from 15% to 20%. |
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Under the CIC Policy, if an executive officers employment is terminated by Toro without just
cause or if the executive officer terminates his or her employment for good reason within three
years after a change in control of Toro, or if such termination occurs at the request of a third
party who had taken steps reasonably calculated to effect the change in control, the executive
officer would be entitled to receive: |
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a lump sum cash severance payment equal to two times (or three times with respect to
the Chief Executive Officer) the sum of the executive officers then current annual base
salary and target annual cash incentive award; |
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a lump sum cash payment in an amount equal to the executive officers pro rated target
annual cash incentive award for the fiscal year in which the termination date occurs,
reduced by any amounts paid under the terms of the applicable incentive policy itself for the same
period of time; |
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eligibility for continuation coverage under Toros medical, dental and other group
health plans for a period of three years following the termination date and reimbursement
for any costs incurred in securing such continuation coverage that are in excess of costs
that would have been incurred by the executive immediately prior to his or her termination
date to obtain such coverage; and |
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two years of outplacement services. |
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The foregoing benefits are in addition to amounts otherwise payable under any other compensation
arrangements, including Toros stock-based incentive compensation plans, and are conditioned
upon the execution by the executive of a release substantially in the form attached to the CIC
Policy. Toro believes that its change in control arrangements, including the CIC Policy, are
important because they provide its executive officers with retention incentives and additional
monetary motivation to complete a transaction that the Board believes is in the best interests
of Toro and its shareholders. Toro also believes that it is in best interest of Toro and its
shareholders to assure that it will have the continued dedication of its executive officers,
notwithstanding the possibility, threat or occurrence of a change in control, and that it is
imperative to diminish the inevitable distraction of its executive officers by virtue of the
personal uncertainties and risks, including personal financial risks, created by a pending or
threatened change in control. |
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The foregoing description of the CIC Policy is a summary of the material terms of such policy,
does not purport to be complete and is qualified in its entirety by reference to the complete
text of the policy, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K
and is incorporated herein by reference. Certain terms used herein, including just cause,
good reason, and change in control are defined in the CIC Policy. |
Section 9 Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
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Exhibit No. |
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Description |
10.1
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The Toro Company Change in Control Severance Compensation
Policy and attached form of Release (filed herewith) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
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THE TORO COMPANY
(Registrant)
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Date: January 21, 2011 |
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/s/ Timothy P. Dordell
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Timothy P. Dordell |
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Vice President, Secretary and General Counsel |
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THE TORO COMPANY
CURRENT REPORT ON FORM 8-K
EXHIBIT INDEX
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Exhibit Number |
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Description |
10.1
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The Toro Company Change in Control Severance Compensation
Policy and attached form of Release (filed herewith) |
exv10w1
Exhibit 10.1
THE TORO COMPANY
CHANGE IN CONTROL SEVERANCE COMPENSATION POLICY
ARTICLE I INTRODUCTION
Section 1.1 Background. The Board of Directors of The Toro Company has considered the
effect a Change in Control of the Company may have on certain Executives of the Company. The Board
has determined that it is in the best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of its Executives, notwithstanding the possibility,
threat or occurrence of a Change in Control of the Company. The Board believes it is imperative to
diminish the inevitable distraction of its Executives by virtue of the personal uncertainties and
risks, including personal financial risks, created by a pending or threatened Change in Control of
the Company.
Section 1.2 Purpose. This Policy is designed to encourage the Executives full
attention and dedication to the Company currently and in the event of any threatened or pending
Change in Control transaction and, notwithstanding the outcome of any such proposed transaction, to
assure fair treatment of such Executives in the event of a Change in Control of the Company.
ARTICLE II ESTABLISHMENT OF THE POLICY
Section 2.1 Applicability of Policy. The benefits provided by this Policy shall be
available to all Executives who, at or after the Effective Date, meet the eligibility requirements
of Article IV hereof.
Section 2.2 Contractual Right to Benefits. Subject to the provisions of Article VIII
hereof, this Policy establishes and vests in each Participant a contractual right to the benefits
to which he or she is entitled hereunder, enforceable by the Participant against the Company on the
terms and subject to the conditions hereof.
ARTICLE III DEFINITIONS AND CONSTRUCTION
Section 3.1 Definitions. The following terms shall have the following meanings when
used in this Policy with initial capital letters:
(a) Base Pay of a Participant means the Participants annual base salary from
the Company as in effect on the Termination Date; provided, however, that any
reductions in Base Pay following the date of the Change in Control will not be taken into
account when determining Base Pay hereunder.
(b) Board means the Board of Directors of the Company.
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(c) Change in Control of the Company shall be deemed to have occurred if the
events set forth in any one of the following paragraphs shall have occurred:
(i) The acquisition by any Person of Beneficial Ownership of twenty percent
(20%) 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 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 in Control: (aa) any
acquisition directly from the Company, (bb) any acquisition by the Company, (cc) any
acquisition by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company, or (dd) any acquisition
by any corporation pursuant to a transaction that complies with clauses (A), (B) and
(C) of subsection (iii) of this Section 3.1(c) or
(ii) Individuals who, as of the Effective Date, 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 member of the
Board subsequent to the Effective Date whose election, or nomination for election by
the Companys shareholders, was approved by a vote of at least a majority of the
members of the Board 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 members of the Board 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 fifty percent (50%) of,
respectively, the then-outstanding shares of common stock of the Company 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 a corporation which as a result
of such transaction owns the Company or all or substantially all of the Companys
assets either directly
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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, twenty percent (20%) 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 execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
For purposes of this Section 3.1(c), Person shall be defined as provided for in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including
a group as defined in Section 13(d) thereof), and Beneficial Ownership shall be
defined as provided for in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(d) Code means the Internal Revenue Code of 1986, as amended.
(e) Company means The Toro Company, a Delaware corporation, and any successor
thereto as provided in Section 7.1 hereof.
(f) Effective Date means January 18, 2011.
(g) Exchange Act means the Securities Exchange Act of 1934, as amended.
(h) Executive means any person who is the Chief Executive Officer of the
Company, the President of the Company, a Vice President of the Company, or any other person
to whom a Vice President of the Company reports, including a Chief Operating Officer of the
Company.
(i) Good Reason means, without the express written consent of the
Participant:
(i) the assignment to the Participant of any duties inconsistent in any
substantial respect with the Participants position (including status, office or
title), authority or responsibilities as in effect during the 120-day
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period
immediately preceding the Change in Control, which assignment
results in a substantial diminution in such position, authority or
responsibilities or any other substantial adverse change in such position, authority
or responsibilities, excluding an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company as set forth below;
(ii) the substantial diminution in position (including status, office or
title), authority or responsibilities or any other substantial adverse change in the
position, authority or responsibilities of the individual to whom the Participant is
required to report;
(iii) the substantial diminution in the budget over which the Participant
retains authority;
(iv) any failure by the Company to furnish the Participant with compensation
(including Base Salary and Incentive Pay) and benefits at a level substantially
equal to or exceeding those received by the Participant from the Company or any
Subsidiary during the 120-day period preceding the Change in Control, other than (A)
an insubstantial and inadvertent failure remedied by the Company as set forth below,
(B) a reduction in compensation which is applied to all non-union employees of the
Company in the same dollar amount or percentage, or (C) a reduction or modification
of any employee benefit program covering substantially all of the employees of the
Company, which reduction or modification generally applies to all employees covered
under such program; or
(v) the Companys requiring the Participant to be based or to perform services
at any office or location that is in excess of 35 miles from the principal location
of the Participants work during the 120-day period immediately preceding the Change
in Control, except for travel reasonably required in the performance of the
Participants responsibilities; or
(vii) any purported termination of the Participants employment other than as
expressly permitted by this Policy; or
(viii) any failure by the Company to comply with and satisfy Section 7.1 of
this Policy.
Before a termination by the Participant under this Section 3.1(i) will constitute
termination for Good Reason, the Participant must give the Company a Notice of Termination
within 30 calendar days of the occurrence of the event that constitutes Good Reason.
Failure to provide such Notice of Termination within such 30-day period shall be conclusive
proof that the Participant shall not have Good Reason to terminate employment.
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For purposes of this Section 3.1(i), Good Reason shall exist only if the Company fails
to remedy the event or events constituting Good Reason within 30 calendar days after receipt
of the Notice of Termination from the Participant. If the Participant determines that Good
Reason for termination exists and timely files a Notice of Termination, such determination
shall be presumed to be true and the Company will have the burden of proving that Good
Reason does not exist.
(j) Incentive Pay means the target annual cash incentive award as notified to
the Participant for the year in which the Termination Date occurs under the Companys 2010
Equity and Incentive Plan or, if such plan is no longer in effect and/or has been replaced,
the annual bonus, incentive or other payment of cash compensation in addition to Base Pay,
made or to be made in regard to services rendered in any fiscal year or other annual
measurement period pursuant to any bonus, incentive, performance, or similar agreement,
policy, program or arrangement of the Company or any successor thereto.
(k) Just Cause means without the written consent of the Company, the
Participant (i) participates in fraud or embezzlement, in each case related to the Company
or its Subsidiaries, (ii) intentionally engages in other unlawful or criminal activity of a
serious nature in connection with his or her duties as an Executive which causes or may
reasonably be expected to cause substantial economic injury to or substantial injury to the
reputation of the Company or its Subsidiaries, (iii) enters a guilty plea with respect to or
is convicted of a felony that causes or may reasonably be expected to cause substantial
economic injury to or substantial injury to the reputation of the Company or its
Subsidiaries, (iv) commits any intentional and deliberate breach of his or her duties that,
individually or in the aggregate, are material in relation to the Participants overall
duties and cause or are reasonably expected to cause substantial economic injury to or
substantial injury to the reputation of the Company or its Subsidiaries, or (iv) materially
breaches any confidentiality or noncompete agreement entered into with the Company. The
Company shall have the burden of proving that Just Cause exists.
For purposes of this Policy, the Participant shall not be deemed to have been
terminated for Just Cause hereunder unless (A) the Participant receives a Notice of
Termination setting forth the grounds for the termination at least 30 calendar days prior to
the specified Termination Date, (B) if requested by the Participant, the Participant (and/or
the Participants counsel or other representative) is granted a hearing before the Board,
and (C) the Board determines, by resolution duly adopted by a majority of the members of the
Board, that the Participant violated one or more of the provisions of the definition of
Just Cause set forth above.
(l) Notice of Termination means (i) a written notice of termination by the
Company to the Participant for Just Cause, or (ii) a written notice of
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termination for Good Reason by the Participant to the Company, in either case, setting forth
in reasonable detail the specific reasons for termination and the facts and circumstances
claimed to provide a basis for termination of employment under the provision indicated.
(m) Participant means an Executive who meets the eligibility requirements of
Article IV hereof, other than an Executive who has entered into an employment, severance or
other similar agreement with the Company (other than a stock option or performance share
award agreement or other form of equity award agreement or participation document entered
into pursuant to a Company-sponsored plan which may incidentally refer to accelerated
vesting or accelerated payment upon a change in control (as defined in such separate plan or
document)) which becomes operative upon the occurrence of a change in control of the Company
(as defined in such agreement).
(n) Policy means this Change in Control Severance Compensation Policy.
(o) Protection Period means the period of time commencing on the date of the
first occurrence of a Change in Control and continuing until the third anniversary of the
occurrence of the Change in Control.
(p) Severance Payment means the payment of severance compensation as provided
in Article V hereof.
(q) Subsidiary means any corporation or other legal entity a majority of the
securities of which are owned by the Company or another Subsidiary of the Company.
(r) Termination Date means, (i) with respect to a termination by the Company
for Just Cause, the date on which the Participants employment is terminated as stated in
the Notice of Termination, and (ii) with respect to a termination by the Participant for
Good Reason, the date that is 30 calendar days following the Companys receipt of the Notice
of Termination, modified to the extent necessary to be consistent with the requirements of
Section 3.2(c) below.
Section 3.2 Status of Policy/Applicable Law.
(a) This Policy is classified as a payroll practice and is not a plan that is
subject to the provisions of the Employee Retirement Income Security Act of 1974, as
amended. The Policy will be interpreted and administered accordingly.
(b) This Policy shall in all respects be interpreted, enforced and governed in
accordance with the laws of the State of Minnesota, without regard to principles of
conflicts of laws.
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(c) Payment of amounts, including any Severance Payments, under this Policy are
intended to comply with an exception to or exclusion from the requirements of Code Section
409A to the maximum extent possible and, to the extent Code Section 409A is applicable to
any payments or benefits, this Policy is intended to comply with the requirements of Code
Section 409A. Notwithstanding any other provision of this Policy to the contrary, this
Policy shall be interpreted, operated and administered in a manner consistent with such
intentions. The payments or benefits to be made or provided under this Policy, including
any Severance Payments, are intended to be exempt from the requirements of Code Section 409A
because they are (i) non-taxable benefits, (ii) welfare benefits within the meaning of
Treas. Reg. Sec. 1.409A-1(a)(5), (iii) short-term deferrals under Treas. Reg. Sec.
1.409A-1(b)(4), or (iv) payments under a separation pay plan within the meaning of Treas.
Reg. Sec. 1.409A-1(b)(9). For purposes of Code Section 409A, each payment under this Policy
shall be treated as a separate payment. Without limiting the generality of the foregoing,
and notwithstanding any other provision of this Policy to the contrary, all references in
this Policy to the termination of the Participants employment or separation from service
(including the date of such termination or separation or Termination Date) are intended to
mean the Participants separation from service, within the meaning of Code Section
409A(a)(2)(A)(i). All reimbursements or in-kind benefits to be made under this Policy that
constitute deferred compensation subject to Code Section 409A shall be made in accordance
with the requirements of Treas. Reg. Sec. 1.409A-3(i)(1)(iv). If, at the time of
Participants termination of employment, Participant is a specified employee within the
meaning of Code Section 409A, then any payment of an amount that is deferred compensation
subject to Code Section 409A and payable on account of a separation from service shall be
suspended and not made until the first business day following the end of the six (6) month
period following the Participants termination of employment, or if earlier, upon the
Participants date of death.
Section 3.3 Severability. If a provision of this Policy shall be held illegal or
invalid, the illegality or invalidity shall not affect the remaining parts of this Policy and this
Policy shall be construed and enforced as if the illegal or invalid provision had not been
included.
ARTICLE IV ELIGIBILITY
Section 4.1 Participation. Each person who is an Executive on the Effective Date
shall be a Participant on the Effective Date. Thereafter, each other person who becomes an
Executive prior to both (a) a Change in Control, and (b) unless specifically provided for by the
Board at the time a Participant is elected as an Executive, the date a notice of termination of the
Policy is provided under Section 8.1(a), shall automatically become a Participant on the day on
which such person becomes an Executive.
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Section 4.2 Duration of Participation. A Participant shall cease to be a Participant
and shall have no rights hereunder, without further action, when he or she ceases to be an
Executive, unless such Participant is then entitled to payment of a Severance Payment as provided
in Section 5.1 hereof. A Participant entitled to a Severance Payment shall remain a Participant in
this Policy until the full amount of the Severance Payment has been paid to the Participant.
ARTICLE V SEVERANCE PAYMENTS
Section 5.1 Right to Severance Payment.
(a) Subject to Subsection (c) hereof, a Participant shall be entitled to receive from
the Company a Severance Payment in the amount provided in Section 5.2 hereof if there has
been a Change in Control and if, after a Change in Control and within the Protection Period,
(i) the Participants employment by the Company shall be terminated by the Company without
Just Cause, or (ii) the Participant shall terminate employment with the Company for Good
Reason.
(b) Notwithstanding anything to the contrary contained in this Policy, any termination
of employment of the Participant or removal of the Participant from the office or position
in the Company that occurs prior to a Change in Control but which the Participant reasonably
demonstrates occurred at the request of a third party who had taken steps reasonably
calculated to effect the Change in Control shall be deemed to be a termination or removal of
the Participant after a Change in Control for purposes of this Policy.
(c) Notwithstanding anything to the contrary contained in this Policy, a Participant
shall not be entitled to receive any Severance Payment hereunder unless within 65 days of
the Participants termination (i) he or she has signed and returned to the Company a release
substantially in the form attached to this Policy as Attachment A, and (ii) any
applicable rescission period for such release has expired. The Company shall provide a form
of release to the Participant not later than 5 days following the Participants Termination
Date.
Section 5.2 Amount of Severance Payment.
(a) Each Participant entitled to a Severance Payment under this Policy shall receive
the following Severance Payment from the Company.
(i) A lump sum cash payment in an amount equal to (A) for any Participant who
is designated as the Chief Executive Officer, three times the sum of Base Pay plus
Incentive Pay, and (B) for any other Participant, two times the sum of Base Pay plus
Incentive Pay; provided, however, that the amount of such cash payment
determined pursuant to this Section 5.2(a)(i) shall be reduced by an amount equal to
the aggregate amount of any other cash payments in the nature of severance payments
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paid or
payable by the Company or any Subsidiary pursuant to any agreement, policy, program,
arrangement or requirement of statutory or common law (other than this Policy or
cash payments received in lieu of stock incentives); and
(ii) A lump sum cash payment in an amount equal to (A) the Incentive Pay for
the fiscal year in which the Termination Date occurs, pro rated to reflect days
elapsed during the fiscal year in which the Termination Date occurs divided by 365
days times the Incentive Pay (expressed as a dollar amount), and (B) reduced by any
amounts paid under the terms of the applicable incentive bonus policy itself for the
same period of time.
(b) In addition to amounts provided for in section (a) above, each Participant entitled
to a Severance Payment under this Policy shall also be entitled to the additional Severance
Payments from the Company:
(i) for a period of two years following the Termination Date, reimbursement for
reasonable fees for outplacement services by a firm selected by the Participant and
at the expense of the Company; and
(ii) for a period of three years following the Termination Date (A) eligibility
for continuation coverage pursuant to or consistent with Section 4980B of the Code
(or any successor provision thereto) under the Companys medical, dental and other
group health plans, or successor plans as in effect from time to time, and (B)
reimbursement for any costs incurred in securing such continuation coverage that are
in excess of costs that would have been incurred by the Participant immediately
prior to the Termination Date to obtain such coverage. To the extent necessary to
comply with the requirements of Code Section 105(h) or other non-discrimination
requirements, the value of the group health plan coverage under this provision, less
amounts paid for such coverage, shall be taxed to the Participant.
(c) The Participant shall not be required to mitigate damages or the amount of his or
her Severance Payment by seeking other employment or otherwise, nor shall the amount of such
payment be reduced by any compensation earned by the Participant as a result of employment
after the termination of his or her employment by the Company.
Section 5.3 Time of Severance Payment. The Severance Payment to which a Participant
is entitled under Section 5.2(a) shall be paid to the Participant by the Company in cash and in
full on the
65th day following the Participants Termination Date. The Severance Payment
to which a Participant is entitled under Section 5.2(b) shall be paid to the Participant in cash or
in-kind not less frequently than on a semi-annual basis, subject to Section 5.1(c). If a
Participant should die before all amounts payable to him
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or her under this Policy have been paid, such unpaid amounts shall be paid to the personal
representative of the Participants estate.
Section 5.4 Liability for Payment. The Company shall be solely liable for and shall
pay the Severance Payments (or cause the Severance Payments to be paid) to the Participant.
ARTICLE VI OTHER RIGHTS AND BENEFITS NOT AFFECTED
Section 6.1 Other Benefits. Neither the provisions of this Policy nor the Severance
Payment provided for hereunder shall reduce or increase any amounts otherwise payable, or in any
other way affect a Participants rights as an employee of the Company, whether existing now or
hereafter, under any benefit, incentive, retirement, stock option, stock bonus, stock purchase or
employment agreement, policy (other than this Policy), program or arrangement (collectively, the
Other Plans), except to the extent specifically provided in such Other Plans. Notwithstanding
the generality of the foregoing, each Participant is entitled to receive any Base Salary accrued
but unpaid as of the Termination Date, vacation accrued but unused as the Termination Date, and any
other bonus, incentive or other pay or employee benefits that are accrued but unpaid as of the
Termination Date. Further, and notwithstanding the forgoing or the terms of any outstanding
performance share awards, any and all performance share awards granted to a Participant Change in
Control that have not vested as of the Change in Control, shall vest as of date of the Change in
Control and be paid out at target (not maximum). The manner of payout of any such performance
share awards to which a Participant is entitled shall be paid to the Participant by the Company as
provided for in the applicable award agreement or plan under which such awards were granted.
Section 6.2 Certain Limitations. This Policy does not constitute a contract of
employment or impose on any Participant or the Company any obligation to retain any Participant as
an employee or in any other capacity, to change or not change the status, terms or conditions of
any Participants employment, or to change or not change the Companys policies regarding
termination of employment.
ARTICLE VII SUCCESSORS SECTION
Section 7.1 Successors. Without limiting the obligations of any person or entity
under applicable law, the Company shall require any successor or assignee, whether direct or
indirect, by purchase, reorganization, merger, consolidation or otherwise, to all or substantially
all the business or assets of the Company, expressly and unconditionally to assume and agree to
perform the Companys obligations under this Policy, in the same manner and to the same extent that
the Company would be required to perform if no such succession or assignment had taken place. In
such event, the term Company, as used in this Policy, shall mean the Company as hereinbefore
defined and any successor assignee to the business or assets which by reason hereof becomes bound
by the terms and provisions of this Policy.
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ARTICLE VIII DURATION, AMENDMENT AND TERMINATION
Section 8.1 Duration/Termination.
(a) This Policy will terminate as to all Participants: (i) if a Change in Control has
not occurred, the date that is two years following the giving of notice to each Executive
who is a Participant on the date of the notice that the Board has determined (by resolution
adopted by a majority of the members of the Board) that the Policy will terminate; and (ii)
if a Change in Control has occurred, the expiration of the Protection Period.
(b) Notwithstanding the foregoing, if a Change in Control occurs, this Policy shall
continue in full force and effect, and shall not terminate or expire until after all
Participants who were Participants on the date of the Change in Control who became entitled
to a Severance Payment hereunder shall have received such payment in full.
Section 8.2 Amendment. Unless a Change in Control has previously occurred, this
Policy may be amended in any respect by resolution duly adopted by a majority of the members of the
Board; provided, however, that no such amendment shall adversely affect the rights of a
Participant under this Policy without the Participants consent unless such amendment does not
become effective until the date that is two years following the giving of notice to all
Participants of the adoption of such amendment by the Board. If a Change in Control occurs,
notwithstanding the foregoing, this Policy no longer shall be subject to amendment, change,
substitution, deletion or revocation in any respect.
Section 8.3 Form of Amendment/Termination. The form of any proper amendment or
termination of this Policy shall be a written instrument signed by a duly authorized officer or
officers of the Company, certifying that the amendment or termination has been approved by the
Board as provided in Sections 8.1 or 8.2 hereof. A proper amendment of this Policy automatically
shall effect a corresponding amendment to all Participants rights hereunder. A proper termination
of this Policy automatically shall effect a termination of all Participants rights and benefits
hereunder without further action.
ARTICLE IX MISCELLANEOUS SECTION
Section 9.1 Legal Fees and Expenses
(a) It is the intent of the Company that Participants not be required to incur any
expenses associated with the enforcement of rights under this Policy because the cost and
expense thereof would substantially detract from the benefits intended to be extended to
Participants hereunder. Accordingly, if the Company has failed to comply with any of its
obligations under this Policy or in
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the event that the Company or any other person takes any action to declare this Policy void
or unenforceable, or institutes any litigation designed to deny, or to recover from, a
Participant the benefits intended to be provided to the Participant hereunder, the Company
irrevocably authorizes the Participant from time to time to retain counsel of his or her
choice, at the expense of the Company, as hereafter provided, to represent the Participant
in connection with the initiation or defense of any legal action, whether by or against the
Company, in any jurisdiction. The Company shall pay or cause to be paid and shall be solely
responsible for any and all reasonable attorneys fees and expenses incurred by the
Participant in enforcing his or her rights hereunder individually (but not as a
representative of any class) as a result of the Companys failure to perform this Policy or
any provision hereof or as a result of the Company or any person contesting the validity or
enforceability of this Policy or any provision hereof.
(b) Notwithstanding any provision of the Policy to the contrary, all fees and expenses
subject to payment or reimbursement pursuant to this Section 9.1 shall be paid not later
than the last day of the calendar year following the calendar year in which the Participant
incurs such fees or expenses. The Participant shall be solely responsible for timely
providing to the Company sufficient proof of the fees and expenses to be paid or reimbursed
pursuant to this Section.
Section 9.2 Withholding of Taxes. The Company may withhold from any amounts payable
under this Policy all foreign, federal, state, or other taxes as the Company reasonably determines
are required pursuant to any law or government regulation or ruling.
Section 9.3 Successors.
(a) This Policy shall inure to the benefit of and be enforceable by the Participants
personal or legal representatives, executors, administrators, successors, heirs,
distributees and/or legatees.
(b) The rights under this Policy are personal in nature and neither the Company nor any
Participant shall, without the consent of the other, assign or transfer any rights or
obligations hereunder except as expressly provided in Sections 5.3 and 7.1 hereof. Without
limiting the generality of the foregoing, the Participants right to receive a Severance
Payment hereunder shall not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than by a transfer by his or her will or by the laws
of descent and distribution and, in the event of any attempted assignment or transfer
contrary to this Section 9.3(b), the Company, shall have no liability to pay any amount so
attempted to be assigned or transferred.
(c) The Company and each Participant recognize that each party will have no adequate
remedy at law for breach by the other of any of the
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agreements contained herein and, in the event of any such breach, the Company, and each
Participant hereby agree and consent that the other shall be entitled to a decree of
specific performance, mandamus or other appropriate remedy to enforce performance of this
Policy.
Section 9.4 Notices. For all purposes of this Policy, all communications, including
without limitation notices, consents, requests or approvals provided for herein, shall be in
writing and shall be deemed to have been duly given when delivered or five business days after
having been mailed by registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the General Counsel of the Company), at its principal
executive office and to any Participant at his or her principal residence as shown in the relevant
records of the Company, or to such other address as any party may have furnished to the other in
writing and in accordance herewith, except that notices of change of address shall be effective
only upon receipt.
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ATTACHMENT A
RELEASE
This Release (the Release) is required to be delivered by (Executive) as a
condition of Executives receipt of severance and other benefits under The Toro Company Change in
Control Severance Compensation Policy (the Policy).
1. Executive agrees that, in consideration of the severance and other benefits to which he/she
is eligible under the terms of the Policy, he/she will, and hereby does knowingly and voluntarily,
forever and irrevocably release and discharge The Toro Company, a Delaware corporation
(collectively, with its affiliates, the Company), and each of its and their respective officers,
directors, employees, shareholders, members, agents, predecessors, successors, purchasers, assigns,
representatives and benefit plans (collectively with the Company, the Releasees) of any and all
actions, causes of action, grievances, demands, rights, claims for damages, indemnity, costs,
interest, loss or injury whatsoever, including claims for reinstatement, back pay, front pay,
attorneys fees and any form of injunctive relief, which he/she now has, has had, or may have,
whether the same be at law, in equity, or mixed, in any way arising from or relating to Executives
employment with the Company or the termination of that employment. Executive expressly
acknowledges that this release specifically includes, but is not limited to, Executives intent to
release Company from any claim of age, race, sex, religion, national origin, parental status,
sexual orientation, ancestry, harassment, veteran status, retaliation or any other claim of
employment discrimination or harassment under Title VII of the Civil Rights Act of 1964 (42 U.S.C.
§ 2000e et seq.), the Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit
Protection Act (OWBPA) (29 U.S.C. § 621, et seq.), the Americans with Disabilities Act (42 U.S.C. §
12101, et seq.), the Family and Medical Leave Act (29 U.S.C. § 2601 et seq.), Worker Adjustment and
Retraining Notification Act, Employee Retirement Income Security Act, the Rehabilitation Act of
1973 (29 U.S.C. § 701, et seq.), the Minnesota Human Rights Act (MHRA), and any other similar
federal, state or local law regarding employment. Executive is not waiving rights or claims that
otherwise cannot be waived by applicable law, including without limitation claims: (a) that may
arise after the date of this Release, (b) for indemnification and/or advanced expenses under
applicable law, any directors and officers liability insurance, applicable articles of
incorporation or by-laws, (c) to enforce the Policy, (d) to exercise vested equity awards
determined as of the date hereof, (e) to benefits which have accrued and are payable pursuant to
the Companys employee benefit plans, including deferred compensation plans, (f) for unemployment
insurance benefits; (g) for workers compensation benefits related to any injury he/she sustained
in the course of his/her duties for the Company, (h) to rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended, (COBRA), and (i) to his/her rights, if any, under the
Uniformed Services Employment and Reemployment Rights Act (USERRA) 38 U.S.C. § 4301, et seq.
2. Executive agrees not to sue any Releasee or participate in any lawsuit against a Releasee
concerning any claim released under Section 1 above, or to challenge the enforceability of this
Release or the release given thereby. This covenant
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not to sue does not apply to any claim that Executive did not knowingly and voluntarily sign
this Release as required by the ADEA and the OWBPA.
3. Notwithstanding the above, Executive is not waiving and is not being required to waive any
right that cannot be waived under law, including the right to file an administrative charge or
participate in an administrative investigation or proceeding; provided, however, that
Executive hereby waives all right to any monetary recovery should any foreign, federal, state or
other administrative agency pursue any claims on Executives behalf arising out of or related to
employment with and/or termination of employment with any of the Releasees.
4. Executive and the Company each agree to treat this Release as confidential and will not
discuss or disclose, the terms of this Release, other than his/her immediate family members,
attorneys and financial advisors, or as required by law.
5. Executive has been advised that this Release shall be executed by him/her no earlier than
Executives termination date and no later than forty-five (45) days after Executives Termination
Date. Executive understands that insofar as this Release relates to Executives rights, if any,
under the ADEA, it shall not become effective or enforceable until seven days after he/she signs
it. Executive further understands that insofar as this Release relates to Executives rights, if
any, under the MHRA, it shall not become effective or enforceable until fifteen days (15) after
he/she signs it. Executive acknowledges that he/she has been advised to consult with an attorney
if he/she chooses before signing this Release. Executive understands that he/she has the right to
revoke this Release, insofar as it extends to Executives claims, if any, under the ADEA, by
written notice of such to the Company within seven (7) calendar days following his/her signing this
Release. Executive understands that he/she has the right to revoke this Release insofar as it
extends to his/her claims, if any, under the MHRA, by written notice to the Company within fifteen
(15) calendar days of Executives signing this Agreement. Any such revocation must be in writing
and hand-delivered to the Company or, if sent by mail, postmarked within the applicable revocation
period, sent by certified mail, return receipt requested, and addressed to: The Toro Company,
Attention: General Counsel, 8111 Lyndale Avenue S., Bloomington, Minnesota, 55401.
6. Executive expressly acknowledges and understands that this Release is not an admission of
liability under any statute or otherwise by Company, and it does not admit any violation of
Executives legal rights.
7. The parties agree that this Release shall be binding upon and inure to the benefit of
Executives assigns, heirs, executors and administrators as well as all Releasees.
8. This Release shall in all respects be interpreted, enforced and governed in accordance with
the laws of the State of Minnesota, without regard to principles of conflicts of laws, and
furthermore, any dispute regarding this Release shall be subject to
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the exclusive jurisdiction of any court of competent jurisdiction located in
Minneapolis, Minnesota.
9. The language of all parts of this Release shall in all cases be construed as a whole,
according to its fair meaning, and not strictly for or against any of the parties. In the event
that one or more provisions of this Release shall for any reason be held to be illegal or
unenforceable, this Release shall be revised only to the extent necessary to make the Release or
such provision(s) legal and enforceable.
10. Employee acknowledges that he/she has received a list of the ages and job descriptions of the
individuals who are eligible to receive severance benefits under the Policy.
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EXECUTIVE
Signature Page to Release