ex10_3.htm


    
      
         

      

      
         

        
        

      

      
         

      

    


    Exhibit
      10.3

    


    THE
      TORO COMPANY

    2000
      DIRECTORS STOCK PLAN

    (As
      Amended January 15, 2008)

    


    


    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 and related preferred share purchase rights (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
      date
      shall be such Nonemployee Director’s proportionate share of the available number
      of shares and options (rounded down to the greatest number of whole
 shares), provided that if a sufficient number of shares of Common Stock is
      available to issue all of the Directors Shares, then the entire number of
      Directors Shares shall be issued first and the number of shares to be subjected
      to options shall be prorated in accordance with this section.

    


    4.           
Shares
      in Lieu of
      Fees.  A
      Nonemployee Director shall have
      the right to elect to receive shares of Common Stock in lieu of annual retainer
      and meeting fees otherwise payable in cash.  The
      election to receive Common Stock
      shall be made prior to the date fees are otherwise scheduled to be paid but
      not
      later than May 31 of the calendar year for which the fees are to be
      paid.  Fees
      that are earned after the date a
      director makes an election shall be reserved through the rest of the calendar
      year and shares shall be issued in December of that year.  The
      number of shares to be issued shall
      be determined by dividing the dollar amount of reserved fees by the 4 p.m.
      Eastern Time closing price of one share of Common Stock as reported by the
      New
      York Stock Exchange for the date that the shares are issued.

    


    5.           
Stock
      Subject to
      Plan.  Subject
      to adjustment as provided
      in this paragraph and subject to increase by amendment of the Plan, the total
      number of shares of Common Stock reserved and available for issuance in
      connection with the Plan
      shall be 455,000
      shares.  If
      any Directors Option granted
      hereunder expires unexercised, terminates, is exchanged for other options
      without the issuance of shares of Common Stock or is exercised by delivery
      or
      constructive delivery of shares of Common Stock already owned by the option
      holder, the shares of Common Stock reserved for issuance pursuant to such option
      shall, to the extent of any such termination or to the extent the shares covered
      by an option are not issued or used, again be available for option grants under
      the Plan, unless prohibited by applicable law or regulation.  Any
      shares issued by the Company in
      connection with the assumption or substitution of outstanding option grants
      from
      any acquired corporation shall not reduce the shares available for stock awards
      or option grants under the Plan.  In
      the event of a corporate transaction
      involving the Company, the Common Stock or the Company’s corporate or capital
      structure, including but not limited to any stock dividend, stock split,
      extraordinary cash dividend, recapitalization, reorganization, merger,
      consolidation, reclassification, split-up, spin-off, combination or exchange
      of
      shares, or a sale of the Company or of all or part of its assets or any
      distribution to stockholders other than a normal cash dividend, the Committee
      shall make such proportional adjustments as are necessary to preserve the
      benefits or potential benefits of the Directors Shares and Directors
      Options. Action
      by the Committee may include all
      or any adjustment in (a) the maximum number and kind of securities subject
      to the Plan as set forth in this paragraph; (b) the maximum number and kind
      of securities that may be made subject to Directors Options and the
      determination of the number or kind of Directors Shares; (c) the number and
      kind of securities subject to any outstanding Directors Option; and (d) any
      other adjustments that the Committee determines to be equitable.

    


    6.           
Change
      of
      Control.  In
      the event of a Change of
      Control of the Company as hereinafter defined, all Directors Options shall
      fully
      vest, and be exercisable in their entirety immediately, and notwithstanding
      any
      other provisions of the Plan, shall continue to be exercisable for three years
      following the Change of Control, but not later than ten years after the date
      of
      grant.

    


    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: (i) any acquisition directly from the
      Company, (ii) any acquisition by the Company, (iii) any acquisition by
      any employee benefit plan (or related trust) sponsored or maintained by the
      Company or any corporation controlled by the Company or (iv) any
      acquisition by any corporation pursuant to a transaction that complies with
      clauses (i), (ii) and (iii) of subsection c. of this Section 6;
      or

    


    b.           
Individuals
      who, as of the date hereof,
      constitute the Board of Directors of the Company (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 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 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 which 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.

    


    7.           
Administration
      of the
      Plan.  The
      Plan shall be administered by
      a committee composed of those members of the Board of Directors of the Company
      who are also employees of the Company (the “Committee”).  The
      Committee shall have the authority
      to carry out all provisions of the Plan; provided, however, that it shall have
      no discretion to determine which Nonemployee Directors may receive Directors
      Shares or Directors Options or to set the value of such Directors Shares or
      Directors Options, other than to make the calculations required by
      Section 3.a., Section 3.b. or Section 5.

    


    8.           
Tax
      Withholding.  The
      Company shall have the right
      to deduct from any settlement made under the Plan, including the exercise of
      an
      option or the sale of shares of Common Stock, any federal, state or local taxes
      of any kind required by law to be withheld with respect to such payments or
      to
      require the option holder to pay the amount of any such taxes or to take such
      other action as may be necessary in the opinion of the Company to satisfy all
      obligations for the payment of such taxes.  If
      Common Stock is withheld or
      surrendered to satisfy tax withholding, such stock shall be valued at its fair
      market value as of the date such Common Stock is withheld or
      surrendered.  The
      Company may also deduct from any
      such settlement any other amounts due the Company by the option holder.

    


    9.           
Effective
      Date and
      Term of Plan.  The
      Plan first became effective
      March 14, 2001 and shall end March 12, 2011, unless terminated earlier
      by action of the Board of Directors.

    


    10.           
Amendment.  The
      Board may amend, suspend or
      terminate the Plan at any time, with or without advance notice to Plan
      participants.  The
      effective date of any amendment to
      the Plan shall be the date of its adoption by the Board of Directors, subject
      to
      stockholder approval, if required.  No
      amendment of the Plan shall adversely
      affect in a material manner any right of any option holder with respect to
      any
      option theretofore granted without such option holder’s written consent.

    


    11.           
Governing
      Law.  The
      Plan, Directors Shares,
      Directors Options and agreements entered into under the Plan shall be construed,
      administered and governed in all respects under and by the applicable laws
      of
      the State of Delaware, excluding any conflicts or choice of law rule or
      principle that might otherwise refer construction or interpretation of the
      Plan
      or an option or an award or agreement to the substantive law of another
      jurisdiction.