THE TORO COMPANY FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit
10.1
THE
TORO COMPANY
FIRST
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment"), is entered into as
of December 31, 2008 and effective as of January 1, 2009 and amends the
Employment Agreement (the "Agreement") dated as of [__________] between The Toro
Company, a Delaware corporation (the Company"), and [__________] (the
"Executive").
WHEREAS,
the Company and the Executive wish to amend the Agreement in certain respects to
reflect the provisions of Section 409A of the Internal Revenue Code, as
amended, and any regulations and other guidance issued thereunder;
NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, and for other good and valuable consideration, the Company and the
Executive agree as follows:
1. Section
3 shall be amended in its entirety to read as follows:
Employment
Period. The Company hereby agrees to continue the Executive in
its employ, and the Executive hereby agrees to remain in the employ of the
Company subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary of such
date (the "Employment Period"); provided, however, that for purposes of Section
6(a), the Employment Period shall end two and one-half months plus one day after
the end of the year that contains the first day of the Window Period, as that
term is defined in Section 5(c).
2. Section
4(b)(ii) shall be amended in its entirety to read as follows:
(ii) Annual Bonus. In
addition to Annual Base Salary, the Executive shall be awarded, for each fiscal
year ending during the Employment Period, an annual bonus (the "Annual Bonus")
in cash at least equal to the Executive's highest bonus under the Company's
applicable annual cash incentive plans, or any comparable bonus under any
predecessor or successor plan, for the last three full fiscal years prior to the
Effective Date (annualized in the event that the Executive was not employed by
the Company for the whole of such fiscal year) (the "Recent Annual
Bonus"). Each such Annual Bonus shall be paid during the period two
and one-half months after the end of the fiscal year next following the fiscal
year for which the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus in accordance with the Company's
applicable deferred compensation plan.
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3. Section
4(b)(v) shall be amended in its entirety to read as follows:
(v) Expenses. During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies;
provided that the Executive shall submit any request for such expense
reimbursement under this Section 4(b)(v) or any other provision of this
Agreement within six months of the date the expense was incurred. If
the Company reimburses the Executive for any amount to which the Executive is
entitled to reimbursement hereunder, such reimbursement shall be made promptly,
but in any event on or before the last day of the Executive's taxable year
following the taxable year in which the expense or cost was incurred and
otherwise so as not to provide for a "deferral of compensation" within the
meaning of Code Section 409A.
4. Section
5(c) shall be amended in its entirety to read as follows:
(c) Good Reason. The
Executive's employment may be terminated during the Employment Period by the
Executive for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean the occurrence or existence of any of the following events or
conditions during the Employment Period:
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(i) any
action by the Company which results in a diminution in the Executive's
authority, duties or responsibilities, excluding for this purpose an
isolated, immaterial or inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice thereof
given by the Executive;
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(ii) any
failure by the Company to comply with any of the provisions of Section
4(b) of this Agreement, other than an isolated, immaterial or inadvertent
failure not occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
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(iii) the
Company's requiring the Executive to be based at any office or location
other than as provided in Section 4(a)(i)(B)
hereof;
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(iv) any
termination by the Company of the Executive's employment otherwise than as
expressly permitted by this Agreement;
or
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(v) any
failure by the Company to comply with and satisfy Section 11(c) of this
Agreement.
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Notwithstanding any provision in this
Agreement to the contrary, termination of the Executive's employment shall not
be for Good Reason unless (x) the Executive notifies the Company or any
successor in writing of the occurrence or existence of the event or condition
that the Executive believes constitutes Good Reason within 90 days of the
initial existence of such event or condition (which notice specifically
identifies the event or condition), (y) the Company or any successor fails to
correct the event or condition so identified in all material respects within 30
days after the date on which it receives such notice (the "Remedial Period"),
and (z) the Executive actually terminates employment within 30 days after the
expiration of the Remedial Period and before the Company or any successor
remedies the event or condition (even if after the end of the Remedial Period).
If the Executive terminates employment before the expiration of the Remedial
Period or after the Company or any successor remedies the event or condition
(even if after the end of the Remedial Period), then the Executive's termination
will not be considered to be for Good Reason. The Executive may combine the
notice required by this Section 5(c) with the Notice of Termination required by
Section 5(d). Anything in this Agreement to the contrary
notwithstanding, a termination by the Executive for any reason during the 30-day
period immediately following the first anniversary of the Effective Date (the
"Window Period") shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.
5. The
first line of Section 6(a)(i) shall be amended to read in its entirety as
follows:
(i) the
Company shall pay to the Executive in a lump sum in cash within 30 days after
the Date of Termination the aggregate of the following amounts; provided,
however, that no payments may be made pursuant to this Section 6(a)(i) later
than two and one-half months after the end of the year that contains the first
day of the Window Period:
6. Section
6(a)(i)(A) shall be amended to read in its entirety as follows:
A. the sum of (1) the
Executive's Annual Base Salary through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I) the Recent Annual
Bonus and (II) the Annual Bonus paid or payable (and annualized for any fiscal
year consisting of less than twelve full months or during which the Executive
was employed for less than twelve full months), for the most recently completed
fiscal year during the Employment Period, if any (such higher amount being
referred to as the "Highest Annual Bonus") and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, and (3) any accrued vacation
pay to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) shall be hereinafter referred to as the "Accrued
Obligations");
7. Section
6(a)(ii) shall be amended in its entirety to read as follows:
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(ii) for three years after the
Executive's Date of Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, the Company shall
continue benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
(to the extent not subject to the requirements of Code Section 409A) if the
Executive's employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and their families,
provided, however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility; provided further, that to the extent the
foregoing coverage commitment applies to a group health plan subject to the
requirements Section 4980B(f) of the Internal Revenue Code of 1986, as
amended ("COBRA"), the Company shall be deemed to satisfy such commitment by
providing COBRA coverage at no cost to the Executive for the COBRA term and such
coverage commitment shall be conditioned on the Executive properly electing
COBRA coverage. Thereafter, the value of any group health plan
coverage pursuant to this Section 6(a)(ii) shall be taxed to the
Executive. For purposes of determining eligibility (but not the time
of commencement of benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive shall be considered
to have remained employed until three years after the Date of Termination and to
have retired on the last day of such period.
8. Section
6(a)(iii) shall be amended in its entirety to read as follows:
(iii) the
Company shall pay, as incurred, the reasonable costs of outplacement services
for a period of two years after the Executive's Date of Termination, the scope
and provider of which shall be selected by the Executive in his sole
discretion;
9. Section
9(a) shall be amended by adding the following sentence to the end of the
section:
Notwithstanding
anything to the contrary in this Agreement, the Company shall pay the Gross-Up
Payment to the Executive by the end of the Executive's taxable year that
immediately follows the Executive's taxable year in which the related Excise Tax
is remitted to the relevant taxing authorities. In the event a
reduction is required to be applied to the Payments pursuant to the foregoing
provisions of this Section 9(a), the Payments shall be reduced by the Company in
its reasonable discretion in the following order: (i) reduction of any
Payments that are subject to Code Section 409A on a pro-rata basis or such
other manner that complies with Code Section 409A, as determined by the
Company and (ii) reduction of any Payments that are exempt from Code
Section 409A.
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10. Section
9(c) shall be amended to add the following language to the end of the
section:
Any
indemnification payments made by the Company to the Executive pursuant to this
Section 9(c) for any Excise Tax (including interest and penalties with respect
thereto) incurred by the Executive in connection with such tax contest shall be
made to the Executive by the end of the Executive's taxable year that
immediately follows the Executive's taxable year in which the Excise Tax
(together with any interest and penalties) is remitted to the relevant taxing
authority. Any indemnification payments made by the Company to the Executive for
any other costs or expenses (other than Excise Tax, together with penalties and
interest with respect thereto) incurred by the Executive in connection with such
tax contest shall be made to the Executive (i) by the end of the Executive's
taxable year that immediately follows the Executive's taxable year in which the
taxes that are the subject of the tax contest are remitted to the relevant
taxing authority or (ii) where as a result of such tax contest no taxes are
remitted, the end of the Executive's taxable year immediately following the
Executive's taxable year in which the tax contest is completed or there is a
final and nonappealable settlement or other resolution of the tax
contest.
11. Section
9(d) is amended in its entirety to read as follows:
(d) If, after the receipt by
the Executive of an amount paid by the Company pursuant to Section 9, the
Executive becomes entitled to receive any tax refund due to an overpayment of
any Excise Tax (including interest and penalties with respect thereto), the
Executive shall (subject to the Company's complying with the requirements of
Section 9(c)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon). If, after the receipt by
the Executive of an amount paid by the Company pursuant to Section 9, a
determination (within the meaning of Section 1313 of the Code) is made that the
Executive shall not be entitled to any tax refund and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, the Executive shall
not be required to make any repayments to the Company pursuant to this Section
9(d).
12. A
new Section 12 is added to the Agreement as follows, and the remaining Section
is renumbered accordingly:
12. Code Section
409A. The parties intend that this Agreement and the benefits
provided hereunder be exempt from the requirements of Code Section 409A to
the maximum extent possible, whether pursuant to the short-term deferral
exception described in Treasury Regulation Section 1.409A-1(b)(4), the
involuntary separation pay plan exception described in Treasury Regulation
Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code
Section 409A is applicable to this Agreement, the parties intend that this
Agreement comply with the deferral, payout and other limitations and
restrictions imposed under Code Section 409A. Notwithstanding any
other provision of this Agreement to the contrary, this Agreement shall be
interpreted, operated and administered in a manner consistent with such
intentions. Without limiting the generality of the foregoing, and
notwithstanding any other provision of this Agreement to the contrary, with
respect to any payments and benefits under this Agreement to
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which
Code Section 409A applies, all references in this Agreement to the
termination of the Executive's employment or separation from service are
intended to mean the Executive's "separation from service," within the meaning
of Code Section 409A(a)(2)(A)(i). In addition, if the Executive
is a "specified employee" within the meaning of Code Section 409A at the
time of the Executive's separation from service, then to the extent necessary to
avoid subjecting the Executive to the imposition of any additional tax under
Code Section 409A, amounts that would otherwise be payable under this
Agreement based on the Executive's separation from service, shall not be paid to
the Executive during the six-month period immediately following the Executive's
separation from service, but shall instead be accumulated and paid to the
Executive (or, in the event of the Executive's death, the Executive's estate) in
a lump sum on the first business day after the earlier of the date that is six
months following the Executive's separation from service or the Executive's
death. No additional interest or earnings shall be due on such
amounts during such six-month period, except as otherwise specified by this
Agreement. This Agreement shall be deemed to be amended, and any
deferrals and distributions hereunder shall be deemed to be modified, to the
extent permitted by and necessary to comply with Code Section 409A and to avoid
or mitigate the imposition of additional taxes under Code Section
409A. Notwithstanding the foregoing, no provision of this Agreement
shall be interpreted or construed to transfer any liability for failure to
comply with Code Section 409A from the Executive or any other individual to
the Company or any of its Affiliated Companies.
13. New
Section 13(a) is amended to read in its entirety as follows:
(a) This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws, except to the extent
preempted by federal law. The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
COUNTERPARTS.
This Amendment may be executed in counterparts, each of which shall be deemed to
be an original.
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IN
WITNESS WHEREOF, the parties have executed this Amendment on the dates set forth
below.
THE
TORO COMPANY
By: ____________________________________
[insert name]
[insert title]
Dated:
___________________
EXECUTIVE
____________________________________
[insert name]
Dated:
___________________
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