AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1997
    
                                                      REGISTRATION NO. 333-20901
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
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                                AMENDMENT NO. 1
    
   
                                       TO
    
 
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
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                                THE TORO COMPANY
 
             (Exact name of registrant as specified in its charter)
 
                                       
               DELAWARE                                 41-0580470
   (State or other jurisdiction of                   (I.R.S. Employer
    incorporation or organization)                 Identification No.)
8111 LYNDALE AVENUE SOUTH, BLOOMINGTON, MINNESOTA 55420-1196 (612) 888-8801 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------ J. LAWRENCE MCINTYRE, ESQ. VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL THE TORO COMPANY 8111 LYNDALE AVENUE SOUTH BLOOMINGTON, MINNESOTA 55420-1196 TELEPHONE: (612) 888-8801 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------ COPIES TO: DEAN R. EDSTROM, ESQ. MITCHELL L. HOLLINS, ESQ. DOHERTY, RUMBLE & BUTLER PROFESSIONAL SONNENSCHEIN NATH & ROSENTHAL ASSOCIATION 8000 SEARS TOWER 3500 FIFTH STREET TOWERS CHICAGO, ILLINOIS 60606 150 SOUTH FIFTH STREET TELEPHONE: (312) 876-8144 TELEFAX: MINNEAPOLIS, MINNESOTA 55402-4235 (312) 876-7934 TELEPHONE: (612) 340-5555 TELEFAX: (612) 340-5584
------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, AS DETERMINED BY MARKET CONDITIONS. ------------------ If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE. PROSPECTUS [LOGO] SUBJECT TO COMPLETION, DATED JUNE 9, 1997 $250,000,000 THE TORO COMPANY DEBT SECURITIES COMMON STOCK WARRANTS UNITS OF SECURITIES ------------- The Toro Company (the "Company") may from time to time offer (i) its debt securities consisting of debentures, notes and/or other unsecured evidences of indebtedness (the "Debt Securities"), (ii) shares of its common stock, $1.00 par value per share (the "Common Stock"), (iii) warrants to purchase Debt Securities or Common Stock (the "Warrants") and (iv) units ("Units") consisting of two or more of the foregoing securities, with an aggregate initial public offering price of up to $250,000,000 or the equivalent thereof in one or more foreign currencies or composite currencies, on terms to be determined at the time of sale. The Debt Securities, Common Stock, Warrants and Units (collectively, the "Securities") may be offered separately or together, in separate series, in amounts, at prices and on terms to be set forth in one or more supplements to this Prospectus (a "Prospectus Supplement"). The specific terms of the Securities for which this Prospectus is being delivered will be set forth in the applicable Prospectus Supplement and will include, where applicable, (i) in the case of Debt Securities, the specific designation, aggregate principal amount, currency, denominations, maturity, premium, rate and time of payment of interest, terms for redemption at the option of the Company or repayment at the option of the holder, terms for sinking fund payments, covenants, terms for conversion or exchange into shares of Common Stock and the initial public offering price; (ii) in the case of shares of Common Stock, the initial public offering price; (iii) in the case of Warrants, the duration, offering price, exercise price and detachability, and (iv) in the case of Units, a description of the Securities comprising such Units and the offering price thereof. Units may be issued in amounts, at prices, on terms and containing such conditions, covenants and other provisions, and consisting of such Securities, as will be set forth in a Prospectus Supplement. The applicable Prospectus Supplement will also contain information, where applicable, about certain United States federal income tax considerations relating to, and any listing on a securities exchange of, the Securities covered by such Prospectus Supplement. The Securities may be offered directly, through agents designated from time to time by the Company, or to or through underwriters or dealers. If any agents or underwriters are involved in the sale of any of the Securities, their names, and any applicable fee, commission, purchase price or discount arrangements with them, will be set forth, or will be calculable from the information set forth, in the applicable Prospectus Supplement. See "Plan of Distribution." No Securities may be sold without delivery of the applicable Prospectus Supplement describing the method and terms of the offering of such Securities. -------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------- The date of this Prospectus is June , 1997. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND THEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF SUCH PROSPECTUS OR PROSPECTUS SUPPLEMENT OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE THEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE OF SUCH PROSPECTUS OR PROSPECTUS SUPPLEMENT. AVAILABLE INFORMATION The Company is subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices located at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois 60661. Copies of such materials can be obtained from the Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site (located at http://www.sec.gov) which includes reports, proxy statements and other information filed electronically by registrants, including the Company, with the Commission. The Company's Common Stock is listed on the New York Stock Exchange. Reports, proxy statements and other information concerning the Company can also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. The Company has filed with the Commission a Registration Statement on Form S-3 (together with all amendments, exhibits and schedules thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Securities offered hereby. This Prospectus and any Prospectus Supplement do not contain all the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information with respect to the Company and the Securities, reference is made to the Registration Statement, including the exhibits and schedules thereto, which may be inspected without charge at the principal office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies thereof may be obtained from the Commission at prescribed rates. Statements contained herein or in any Prospectus Supplement concerning any document filed as an exhibit to the Registration Statement do not purport to be complete, and in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. -------------- INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission are incorporated in and made a part of this Prospectus by reference: (i) Annual Report on Form 10-K for the fiscal year ended October 31, 1996; (ii) Quarterly Report on Form 10-Q for the three months ended January 31, 1997; (iii) Current Report on Form 8-K dated December 16, 1996; and (iv) Amendment No. 2 to Current Report on Form 8-K dated June 6, 1997. 2 All documents filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities offered hereby shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in any Prospectus Supplement or in a document incorporated or deemed to be incorporated by reference herein or therein shall be deemed to be modified or superseded for purposes of this Prospectus and any Prospectus Supplement to the extent that a statement contained herein or in any other subsequently filed document which is incorporated or deemed to be incorporated by reference herein or in any Prospectus Supplement modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus or any Prospectus Supplement. The Company will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the information incorporated herein by reference (other than exhibits, unless such exhibits are specifically incorporated by reference in such documents). Written requests for such copies should be directed to N. Jeanne Ryan, Assistant Secretary, The Toro Company, 8111 Lyndale Avenue South, Bloomington, Minnesota 55420. Telephone requests may be directed to (612) 888-8801. -------------- THE COMPANY The Toro Company is a leading manufacturer of consumer lawn mowers, snowthrowers, trimmers, commercial mowing and turf maintenance equipment and underground automatic irrigation systems. These products are sold under the Toro-Registered Trademark-, Wheel Horse-Registered Trademark-, Lawn-Boy-Registered Trademark- and other brand names to the consumer market and professional market, which includes entities that manage or construct golf courses, parks and other large turf areas. The consumer product line includes walk-behind mowers; riding mowers and lawn and garden tractors; electrical home improvement products, such as low voltage lighting, electric trimmers and leaf blowers; and snow removal products. The professional product line includes commercial products for professional turf and golf course maintenance, such as precision cutting mowers and turf aeration equipment, and irrigation products such as sprinkler heads and control devices for underground irrigation systems. The Company sells most of its products through domestic and foreign distributors and mass merchandisers. The Company was incorporated in Minnesota in 1935 as the successor to a business founded in 1914. It was reincorporated in Delaware in 1983. The Company's executive offices are located at 8111 Lyndale Avenue South, Bloomington, Minnesota 55420, telephone number (612) 888-8801. Unless the context indicates otherwise, the term "Company" refers to The Toro Company and its subsidiaries. The Company finances a significant portion of its receivables through Toro Credit Company, its wholly owned consolidated finance subsidiary ("Toro Credit"). 3 RATIOS OF EARNINGS TO FIXED CHARGES The following table sets forth the ratios (unaudited) of earnings to fixed charges for the Company and its consolidated subsidiaries for each of the four fiscal years ended July 31, 1995, for the three month transition period ended October 31, 1995, for the fiscal year ended October 31, 1996 and for the three months ended January 31, 1997.
TRANSITION THREE PERIOD MONTHS YEAR ENDED JULY 31, ENDED YEAR ENDED ENDED ---------------------------------- OCTOBER 31, OCTOBER 31, JANUARY 31, 1992 1993 1994 1995 1995 1996 1997 --------- ------ ------ ------ ----------- ----------- ----------- Ratio of earnings to fixed charges(1)....................... -- (2) 2.12 3.32 5.10 3.02 4.60 2.12
- -------------- (1) Earnings consist of pre-tax earnings plus fixed charges. Fixed charges consist of interest on indebtedness, amortization of debt expense and premium, and that portion of rentals representative of interest. (2) For fiscal year ended July 31, 1992, earnings were insufficient to cover fixed charges by $34,903,000. USE OF PROCEEDS Except as otherwise provided in the applicable Prospectus Supplement, the net proceeds received by the Company from the sale of the Securities will be utilized by the Company as required from time to time for working capital and expansion of the businesses of the Company and its subsidiaries, including Toro Credit, for the repayment of existing indebtedness and for other general corporate purposes. To the extent not theretofore utilized, the net proceeds received by the Company may be placed in short-term investments, including commercial paper and certificates of deposit, or utilized to reduce other short- term borrowings. Except as may be indicated in the applicable Prospectus Supplement, no specific determination has been made as to the use of the proceeds of the Securities in respect of which this Prospectus is being delivered. DESCRIPTION OF DEBT SECURITIES The following description of the terms of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement (the "Offered Debt Securities") and the extent, if any, to which such general provisions may not apply thereto will be described in the Prospectus Supplement relating to such Offered Debt Securities. The Debt Securities are to be issued in one or more series under an Indenture dated as of January 31, 1997 (the "Indenture") between the Company and First Trust National Association, as Trustee (the "Trustee"), a copy of which is filed as an exhibit to the Registration Statement. The following summaries of certain provisions of the Debt Securities and the Indenture do not purport to be complete and are subject to, and are qualified in their entireties by reference to, all of the provisions of the Indenture, including the definitions therein of certain terms. Whenever particular provisions or defined terms in the Indenture are referred to herein, such provisions or defined terms are incorporated by reference herein. GENERAL The Indenture does not limit the amount of Debt Securities which can be issued thereunder and provides that Debt Securities of any series may be issued thereunder up to the aggregate principal 4 amount which may be authorized from time to time by the Company. The Indenture does not limit the amount of other indebtedness or securities, other than certain secured indebtedness as described below, which may be issued by the Company. All Debt Securities will be unsecured and will rank pari passu with all other unsecured and unsubordinated indebtedness of the Company. The Trustee will authenticate and deliver Debt Securities executed and delivered to it by the Company as set forth in the Indenture. Reference is made to the related Prospectus Supplement for the following and other possible terms of each series of the Offered Debt Securities in respect of which this Prospectus is being delivered: (i) the title of the Offered Debt Securities; (ii) any limit upon the aggregate principal amount of the Offered Debt Securities; (iii) if other than 100% of the principal amount, the percentage of their principal amount at which the Offered Debt Securities will be offered; (iv) the date or dates on which the principal of the Offered Debt Securities will be payable; (v) the rate or rates (or method of determination thereof), if any, at which the Offered Debt Securities will bear interest, the date or dates from which any such interest will accrue and on which such interest will be payable, and, with respect to Offered Debt Securities in registered form, the record dates for the determination of the holders to whom interest is payable; (vi) if other than as set forth herein, the place or places where the principal of and interest, if any, on the Offered Debt Securities will be payable; (vii) the price or prices at which, the period or periods within which and the terms and conditions upon which the Offered Debt Securities may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise; (viii) if other than the principal amount thereof, the portion of the principal amount of the Offered Debt Securities which will be payable upon maturity or acceleration of the maturity thereof; (ix) the obligation, if any, of the Company to redeem, purchase or repay the Offered Debt Securities, whether pursuant to any sinking fund or analogous provisions or pursuant to other provisions set forth therein or at the option of a holder thereof; (x) whether the Offered Debt Securities will be issuable in registered or bearer form or both, and the rights of the holders to exchange the Offered Debt Securities in bearer form for the Offered Debt Securities in registered form and vice versa and the circumstances under which any such exchanges, if permitted, may be made; (xi) whether and under what circumstances the Company will pay additional amounts on the Offered Debt Securities held by a person who is not a U.S. Person in respect of taxes or similar charges withheld or deducted and, if so, whether the Company will have the option to redeem the Offered Debt Securities rather than pay such additional amounts; (xii) whether and under what circumstances the Offered Debt Securities are convertible into Debt Securities of a different series; (xiii) information with respect to Warrants, if any; (xiv) the currency or currency unit in which the Offered Debt Securities are issued or payable; (xv) whether the Offered Debt Securities will be represented in whole or in part by one or more global notes registered in the name of a depositary or its nominee; and (xvi) any other terms or conditions not inconsistent with the provisions of the Indenture upon which the Offered Debt Securities will be offered. "Principal" when used herein includes, when appropriate, the premium, if any, on the Debt Securities. One or more series of Debt Securities may be sold at a substantial discount below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates. Federal income tax consequences and special considerations applicable thereto will be described in the Prospectus Supplement or Prospectus Supplements relating to any such series of Debt Securities. In general, federal income tax consequences applicable to a series of Debt Securities will be described in the Prospectus Supplement relating thereto, to the extent applicable. Unless otherwise provided in the Prospectus Supplement relating to any Offered Debt Securities, principal and interest, if any, will be payable, and the Debt Securities will be transferable or exchangeable, at the office or offices or agency maintained by the Company for such purposes, provided that payment of interest on any registered Debt Securities will be paid at such place of payment by check mailed to the persons entitled thereto at the addresses of such persons appearing on the Debt Securities register. Interest on registered Debt Securities will be payable on any interest payment date to the 5 persons in whose name the Debt Securities are registered at the close of business on the record date with respect to such interest payment date. The Debt Securities may be issued in registered form or, if provided by a supplement to the Indenture, in bearer form or both as specified in the terms of the series. Additionally, the Debt Securities may be represented in whole or in part by one or more global notes registered in the name of a depositary or its nominee and, if so represented, beneficial interests in such global note will be shown on, and transfers thereof will be effected only through, records maintained by the designated depositary and its participants. The Debt Securities offered hereby will be issued in denominations of $1,000 or any whole multiple of $1,000 or the equivalent thereof in foreign denominated currency or currency units, unless otherwise specified in the Prospectus Supplement relating to any Debt Securities. The Indenture requires the annual filing by the Company with the Trustee of a certificate as to compliance with certain covenants contained in the Indenture. The Company will comply with Section 14(e) under the Exchange Act, and any other tender offer rules under the Exchange Act which may then be applicable, in connection with any obligation of the Company to purchase Offered Debt Securities at the option of the holders thereof. Any such obligation applicable to a series of Debt Securities will be described in the Prospectus Supplement or Prospectus Supplements relating thereto. The Company may at any time purchase Debt Securities at any price in the open market or otherwise. Debt Securities so purchased by the Company may, at its sole option, be held, resold or surrendered to the Trustee in satisfaction of any sinking fund payment obligation or for cancellation. Unless otherwise described in a Prospectus Supplement relating to any Offered Debt Securities, there are no covenants or provisions contained in the Indenture which may afford the holders of Offered Debt Securities direct protection in the event of a highly leveraged transaction involving the Company. EXCHANGE AND TRANSFER At the option of the holder, subject to the terms of the Indenture and the limitations applicable to Global Securities (as defined in the Indenture), Debt Securities of each series will be exchangeable for other Debt Securities of the same series of any authorized denomination and of like tenor and aggregate principal amount. Subject to the terms of the Indenture and the limitations applicable to Global Securities, Debt Securities may be presented for exchange as provided above or for registration of transfer (duly endorsed or with the form of transfer endorsed thereon duly executed) at the office of the Security Registrar (as defined in the Indenture) or at the office of any transfer agent designated by the Company for such purpose. No service charge will be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Such transfer or exchange will be effected by the Security Registrar or such transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. The Company has appointed the Trustee as Security Registrar. The Company may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that the Company will be required to maintain a transfer agent in each place of payment for the Debt Securities of each series. If the Debt Securities of any series (or of any series and specified tenor) are to be redeemed in part, the Company will not be required to (i) issue, register the transfer of or exchange any Debt Security of that series (or of that series and specified tenor, as the case may be) during a period beginning at the 6 opening of business 15 days before the day of mailing of a notice of redemption of any such Debt Security that may be selected for redemption and ending at the close of business on the day of such mailing, or (ii) register the transfer of or exchange any Debt Security so selected for redemption, in whole or in part, except the unredeemed portion of any such Debt Security being redeemed in part. RESTRICTIVE COVENANTS LIMITATIONS ON LIENS Unless otherwise indicated in a Prospectus Supplement, the Company will covenant that, so long as any of the Debt Securities of a series remain outstanding, the Company will not, and will not permit any Restricted Subsidiary (as defined below) to, issue, incur, create, assume or guarantee, any debt for borrowed money secured by a mortgage, security interest, pledge, lien, charge or other encumbrance ("mortgages") upon any Principal Property (as defined below) of the Company or any Restricted Subsidiary or upon any shares of stock or indebtedness of any Restricted Subsidiary (whether such Principal Property, shares or indebtedness are existing or owned at the date of the Indenture or are thereafter created or acquired) without in any such case effectively providing concurrently with the issuance, incurrence, creation, assumption or guarantee of any such secured debt, or the grant of a mortgage with respect to any such indebtedness, that the Securities (together with, if the Company shall so determine, any other indebtedness of or guarantee by the Company or such Restricted Subsidiary ranking equally with the Securities) shall be secured equally and ratably with (or prior to) such secured debt. The foregoing restriction, however, will not apply to: (a) mortgages on property existing at the time of acquisition thereof by the Company or any Subsidiary (as defined below); (b) mortgages on property, shares of stock or indebtedness or other assets of any corporation existing at the time such corporation becomes a Restricted Subsidiary; (c) mortgages on property, shares of stock or indebtedness existing at the time of acquisition thereof by the Company or a Restricted Subsidiary or mortgages thereon to secure the payment of all or any part of the purchase price thereof, or mortgages on property, shares of stock or indebtedness to secure any indebtedness for borrowed money incurred prior to, at the time of, or within 270 days after, the latest acquisition thereof, or, in the case of property, the completion of construction, the completion of improvements, or the commencement of substantial commercial operation of such property for the purpose of financing all or any part of the purchase price thereof, such construction, or the making of such improvements; (d) mortgages to secure indebtedness owing to the Company or to a Restricted Subsidiary; (e) mortgages existing at the date of the Indenture; (f) mortgages on property of a corporation existing at the time such corporation is merged into or consolidated with the Company or a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of a corporation as an entirety or substantially as an entirety to the Company or a Restricted Subsidiary; (g) mortgages in favor of certain governmental subdivisions or agencies to secure indebtedness incurred to finance the purchase, construction or improvement of the property subject to such mortgages; (h) mortgages created in connection with the acquisition of assets or a project financed with, and created to secure; a Nonrecourse Obligation (as defined below); (i) extensions, renewals, refinancings or replacements of the foregoing any mortgage referred to in the foregoing clauses (a), (b), (c), (e), (f), (g) and (h) provided, however, that any 7 mortgages permitted by any of the foregoing clauses (a), (b), (c), (e), (f), (g) and (h) shall not extend to or cover any property of the Company or such Restricted Subsidiary, as the case may be, other than the property, if any, specified in such clauses and improvements thereto, and provided further that any refinancing or replacement of any mortgages permitted by the foregoing clauses (g) and (h) shall be of the type referred to in such clauses (g) and (h), as the case may be. Notwithstanding the restrictions described in the preceding paragraph, the Company or any Restricted Subsidiary will be permitted to issue, incur, create, assume or guarantee debt secured by a mortgage which would otherwise be subject to such restrictions, without equally and ratably securing the Securities, provided that after giving effect thereto, the aggregate amount of all debt so secured by mortgages (not including mortgages permitted under clauses (a) through (i) above) does not exceed 10% of the Consolidated Net Tangible Assets (as defined below) of the Company as most recently determined on or prior to such date. RESTRICTIONS ON SALE AND LEASEBACKS Unless otherwise indicated in a Prospectus Supplement, the Company will covenant that, so long as any of the Debt Securities of a series remain outstanding, the Company will not, nor will it permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction (as defined below) with respect to any Principal Property unless: (a) the Company or such Restricted Subsidiary would be entitled to incur indebtedness secured by a mortgage on the Principal Property involved in such transaction at least equal in amount to the Attributable Debt (as defined below) with respect to such Sale and Leaseback Transaction, without equally and ratably securing the Debt Securities; or (b) the Company shall apply an amount equal to the greater of the net proceeds of such sale or the Attributable Debt with respect to such Sale and Leaseback Transaction within 270 days of such sale to either (or a combination of) the retirement (other than any mandatory retirement, mandatory prepayment or sinking fund payment or by payment at maturity) of debt for borrowed money of the Company or a Restricted Subsidiary that matures more than 12 months after the creation of such indebtedness or the purchase, construction or development of other comparable property. LIMITATION ON SUBSIDIARY DEBT Unless otherwise indicated in a Prospectus Supplement, the Company will covenant that it will not permit any Subsidiary (other than Toro Credit, or any successor finance Subsidiary so long as such Subsidiary or successor has no operating assets and is engaged solely in financing activities) to Incur (as defined below) or have any Debt except: (a) Debt outstanding on the date of the Indenture; (b) Debt issued to and held by the Company or a Wholly Owned Subsidiary (as defined below); (c) Debt Incurred by a Person (as defined in the Indenture) prior to the time such Person became, merges into, or consolidates with a Subsidiary, or a Subsidiary merges into or consolidates with such Person and thereby such Person becomes a Subsidiary; (d) Debt which is exchanged for, or the proceeds of which are used to refinance or refund, any Debt permitted to be outstanding pursuant to clauses (a) through (c) above (or any extension or renewal thereof), in an aggregate principal amount not to exceed the principal amount of the Debt so exchanged, refinanced or refunded and provided such refinancing or refunding Debt by its terms, or by the terms of any agreement or instrument pursuant to which such Debt is issued (x) does not provide for payments of principal at the stated maturity of such Debt or by way of a sinking fund applicable to such Debt or by way of any mandatory redemption, defeasance, retirement or repurchase of such Debt by the Company (including any redemption, retirement or repurchase which is contingent upon events or circumstances, but excluding any retirement required by virtue of acceleration of such Debt upon an event of default thereunder), in each case prior to the stated maturity of the Debt being refinanced or refunded and (y) does not permit redemption or other retirement (including pursuant to an offer to purchase made by the Company) of such Debt at the option of the holder thereof prior to the stated maturity of the Debt being refinanced or refunded, other than a redemption or other 8 retirement at the option of the holder of such Debt (including pursuant to an offer to purchase made by the Company) which is conditioned upon the change of control of the Company; and (e) Debt having a principal amount and liquidation value not in excess of 20% of the Consolidated Net Tangible Assets of the Company. CERTAIN DEFINITIONS APPLICABLE TO COVENANTS The term "Attributable Debt" means, at the time of determination, the present value of the total net amount of rent and other payments required to be paid under a lease during the remaining term thereof (including any renewal term or period for which such lease has been extended), discounted at the rate of interest set forth or implicit in the terms of such lease or, if not practicable to determine such rate, the weighted average interest rate per annum (in the case of Original Issue Discount Securities (as defined in the Indenture), the imputed interest rate) borne by the Debt Securities of each series outstanding pursuant to the Indenture compounded semi-annually. For purposes of the foregoing definition, rent shall not include amounts required to be paid by the lessee, whether or not designated as rent or additional rent, on account of or contingent upon maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall be the lesser of the net amount determined assuming termination upon the first date such lease may be terminated (in which case the net amount shall also include the amount of the penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) and the net amount determined assuming no such termination. The term "Consolidated Net Tangible Assets" means, as of any particular time, total assets (excluding applicable reserves and other properly deductible items) less: (a) total current liabilities, except for (1) notes and loans payable, (2) current maturities of long-term debt, and (3) current maturities of obligations under capital leases; and (b) goodwill, patents and trademarks, to the extent included in total assets; all as set forth on the most recent consolidated balance sheet of the Company and its Restricted Subsidiaries and computed in accordance with generally accepted accounting principles. The term "Debt" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed, (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses, (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person, (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business), (v) the maximum fixed redemption or repurchase price of redeemable stock of such Person at the time of determination, (vi) every obligation to pay rent or other payment amounts of such Person with respect to any Sale and Leaseback Transaction and (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise. The term "Incur" means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Debt or other obligation or the recording, as required pursuant to generally accepted accounting principles or otherwise, of any such Debt or other obligation on the balance sheet of such Person (and "Incurrence", "Incurred", "Incurrable" and "Incurring" shall have the meanings correlative to the foregoing); provided, however, that a change in generally accepted accounting principles that results in an obligation of such Person that exists at such time becoming Debt shall not be deemed an Incurrence of such Debt. 9 The term "Nonrecourse Obligation" means indebtedness or other obligations substantially related to (i) the acquisition of assets not previously owned by the Company or any Restricted Subsidiary or (ii) the financing of a project involving the development or expansion of properties of the Company or any Restricted Subsidiary, as to which the obligee with respect to such indebtedness or obligation has no recourse to the Company or any Restricted Subsidiary or any assets of the Company or any Restricted Subsidiary other than the assets which were acquired with the proceeds of such transaction or the project financed with the proceeds of such transaction (and the proceeds thereof). The term "Principal Property" means the land, land improvements, buildings and fixtures (to the extent they constitute real property interests), (including any leasehold interest therein) constituting the principal corporate office, any manufacturing facility, or any distribution center (whether now owned or hereafter acquired) which: (a) is owned by the Company or any Subsidiary; (b) is located within the United States; (c) has not been determined in good faith by the Board of Directors of the Company not to be materially important to the total business conducted by the Company and its Subsidiaries taken as a whole; and (d) has a market value on the date as of which the determination is being made in excess of 1.0% of Consolidated Net Tangible Assets of the Company as most recently determined on or prior to such date. The term "Restricted Subsidiary" means any Subsidiary which owns any Principal Property which has a market value on the date as of which the determination is being made in excess of 2.0% of Consolidated Net Tangible Assets of the Company as most recently determined on or prior to such date. The term "Sale and Leaseback Transaction" means any arrangement with any Person providing for the leasing by the Company or any Restricted Subsidiary of any Principal Property which property has been or is to be sold or transferred by the Company or such Restricted Subsidiary to such Person. The term "Subsidiary" means any corporation of which at least a majority of the outstanding voting stock having the power to elect a majority of the board of directors of such corporation is at the time owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. The term "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding capital stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person. CONSOLIDATION, MERGER AND SALE OF ASSETS The Company may not consolidate with or merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, any Person (a "successor Person"), and may not permit any Person to consolidate with or merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, the Company, unless (i) the successor Person (if any) is a corporation, partnership, trust or other entity organized and validly existing under the laws of any domestic jurisdiction and assumes the Company's obligations on the Debt Securities and under the Company's obligations on the Debt Securities and under the Indenture, (ii) immediately after giving effect to the transaction, no Event of Default (as defined below), and not event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing, (iii) if, as a result of the transaction, property of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance that would not be permitted under the limitation on mortgage, pledge, lien, security interest or other encumbrance described above under "Restrictive Covenants," the Company takes such steps as shall be necessary to secure the Securities equally and ratably with (or prior to) the indebtedness secured by such mortgage, pledge, lien, security interest or other encumbrance and (iv) certain other conditions are met. 10 EVENTS OF DEFAULT An Event of Default with respect to the Debt Securities of any series is defined in the Indenture as: (i) default in the payment of any interest upon any Debt Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or (ii) default in the payment of the principal of or any premium on any Debt Security of that series at its Maturity; or (iii) default in the deposit of any sinking fund payment, when and as due by the terms of a Debt Security of that series; or (iv) default in the performance, or breach, of any other covenant or warranty of the Company in the Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this paragraph specifically dealt with or which has expressly been included in the Indenture solely for the benefit of series of Securities other than that series) and continuance of such default or breach for a period of 30 days after there has been given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 10% in principal amount of the outstanding Debt Securities of that series a written notice as provided in the Indenture; or (v) a default under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company (including a default with respect to Securities of any series other than that series), or under any mortgage, indenture or instrument (including the Indenture) under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company having an aggregate principal amount outstanding of at least $10 million, whether such indebtedness now exists or shall hereafter be created, which default (A) shall constitute a failure to pay any portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace period with respect thereto or (B) shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without, in the case of clause (A), such indebtedness having been discharged or without, in the case of clause (B), such indebtedness having been discharged or such acceleration having been rescinded orannulled, in each such case, within a period of 10 days after there shall have been given to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in principal amount of the outstanding Debt Securities of that series a written notice as provided in the Indenture specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled, as the case may be, or (vi) certain events of bankruptcy, insolvency or reorganization of the Company or any Restricted Subsidiary. Additional Events of Default may be prescribed for the benefit of holders of certain series of Debt Securities which, if prescribed, will be described in the Prospectus Supplement relating to such Debt Securities. If a default occurs under the Indenture with respect to Debt Securities of any series, the Trustee will give the holders of Debt Securities of such series notice of such default as and to the extent provided by the Trust Indenture Act of 1939; provided, however, that in the case of any default of the character specified in clause (iv) of the preceding paragraph with respect to Debt Securities of such series, no such notice to holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this paragraph, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Debt Securities of such series. The Indenture provides that if an Event of Default (other than an Event of Default described in clause (vi) of the second preceding paragraph) with respect to any series of Debt Securities shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of Debt Securities of that series then outstanding by notice as provided in the Indenture may declare the principal amount (or, if the Debt Securities of that series are Original Issue Discount Securities (as defined), such portion of the principal amount as may be specified in the term of that series) of all the Debt Securities of that series to automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in principal amount of the Outstanding Securities of that series may, under certain circumstances, rescind and annul such acceleration if all Events of Default, 11 other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture. For information as to waiver of defaults, see "Modification and Waiver." Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee shall be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders of that series, unless such holders shall have offered to the Trustee reasonable security or indemnity. Subject to such provisions for security for indemnification and certain limitations contained in the Indenture, the holders of a majority in aggregate principal amount of the outstanding Debt Securities of each series affected by an Event of Default will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Indenture or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of that series. No holder of any Debt Security of any series will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other remedy thereunder, unless (i) such holder has previously given the Trustee written notice of a continuing Event of Default with respect to Debt Securities of that series, (ii) the holders of at least 25% in aggregate principal amount of the outstanding Debt Securities of that series shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as trustee and (iii) the Trustee has failed to institute such proceeding within 60 days after its receipt of such notice, request, and offer and has not received from the holders of a majority in aggregate principal amount of the outstanding Debt Securities of that series a direction inconsistent with such request. However, the right of a holder of any Debt Security to receive payment of the principal of and any interest on such Debt Security on or after the due dates expressed in such Debt Security, or to institute suit for the enforcement of any such payment on or after such dates, shall not be impaired without the consent of such holder. The Company will be required to furnish to the Trustee annually a statement by certain of its officers as to whether or not the Company, to the best of their knowledge, is in default in the performance or observance of any of the terms, provisions and conditions of the Indenture and, if so, specifying all such known defaults. SATISFACTION AND DISCHARGE OF INDENTURE The Indenture with respect to any series (except for certain specified surviving obligations) will be satisfied and discharged upon the satisfaction of certain conditions, including the deposit with the Trustee of money sufficient for the payment or redemption of all the Debt Securities of such series in accordance with the Indenture and terms of the Debt Securities of such series. MODIFICATION AND WAIVER The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Debt Securities of each affected series at the time outstanding, to execute supplemental indentures adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Indenture or any supplemental indenture with respect to the Debt Securities of such series or modifying in any manner the rights of the holders of the Debt Securities of such series; provided that no such supplemental indenture may, without the consent of the holder of each outstanding Debt Security affected thereby, (i) change the Stated Maturity (as defined in the Indenture) of the principal of, or any installment of principal of or interest on, any Debt Security, (ii) reduce the principal amount of, or any premium or interest on, any Debt Security, (iii) reduce the amount of principal of an Original Issue Discount Security or any other Debt Security payable upon acceleration of the Maturity (as defined in the Indenture) thereof, (iv) change the place or currency of payment of principal of, or any premium or interest on, any Debt Security, (v) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security, (vi) reduce the 12 percentage in principal amount of outstanding Debt Securities of any series, the consent of whose holders is required for modification or amendment of the Indenture, (vii) reduce the percentage in principal amount of outstanding Debt Securities of any series necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults or (viii) modify such provisions with respect to modification and waiver. The holders of not less than a majority in principal amount of the outstanding Debt Securities of any series may waive compliance by the Company with certain restrictive provisions of the Indenture. The holders of not less than a majority in principal amount of the outstanding Debt Securities of any series may waive any past default under the Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Indenture which cannot be amended without the consent of the holder of each outstanding Debt Security of such series affected. The Indenture provides that in determining whether the holders of the requisite principal amount of the outstanding Debt Securities have given or taken any direction, notice, consent, waiver or other action under the Indenture as of any date, (i) the principal amount of an Original Issue Discount Security that will be deemed to be outstanding will be the amount of the principal thereof that would be due and payable as of such date upon acceleration of the Maturity thereof to such date, (ii) if, as of such date, the principal amount payable at the Stated Maturity of a Debt Security is not determinable (for example, because it is based on an index), the principal amount of such Debt Security deemed to be outstanding as of such date will be an amount determined in the manner prescribed for such Debt Security and (iii) the principal amount of a Debt Security denominated in one or more foreign currencies or currency units that will be deemed to be outstanding will be the U.S. dollar equivalent, determined as of such date in the manner of such Debt Security (or, in the case of a Debt Security described in clause (i) or (ii) above, of the amount described in such clause). Certain Debt Securities, including those for whose payment or redemption money has been deposited or set aside in trust for the holders and those that have been fully defeased pursuant to Section 13.02 of the Indenture, will not be deemed to be outstanding. Except in certain limited circumstances, the Company will be entitled to set any day as a record date for the purpose of determining the holders of outstanding Debt Securities of any series entitled to give or take any demand, authorization, direction, notice, consent, waiver or other action under the Indenture, in the manner and subject to the limitations provided in the Indenture. In certain limited circumstances, the Trustee will be entitled to set a record date for action by holders. If a record date is set for any action to be taken by holders of a particular series, such action may be taken only by persons who are holders of outstanding Debt Securities of that series on the record date. To be effective, such action must be taken by holders of the requisite principal amount of such Debt Securities within a specified period following the record date. For any particular record date, this period will be 180 days or such shorter period as may be specified by the Company (or the Trustee, if it set the record date), and may be shortened or lengthened (but not beyond 180 days) from time to time. DEFEASANCE AND COVENANT DEFEASANCE The Indenture provides, that, if such provision is made applicable to the Debt Securities of a series, then the Company may elect either (a) to terminate (and be deemed to have satisfied) all its obligations with respect to such Debt Securities (except for the obligations to register the transfer or exchange of such Debt Securities, to replace temporary of mutilated, destroyed, lost or stolen Debt Securities, to maintain an office or agency in respect of the Debt Securities, to compensate and indemnify the Trustee and to punctually pay or cause to be paid the principal of, and interest on, all Debt Securities of such series when due) ("Defeasance") or (b) to be released from its obligations described above under "Limitations on Liens", "Restrictions on Sale and Leasebacks" and "Limitation on Subsidiary Debt" and certain requirements as to maintenance of Principal Properties and payment of taxes and other claims ("Covenant Defeasance"), upon the deposit with the Trustee, in trust for such purpose, of money and/or U.S. Government Obligations which through the payment of principal and interest in accordance with 13 their terms (without consideration of any reinvestment) will provide money, in an amount sufficient (in the opinion of a nationally recognized firm of independent public accountants) to pay the principal of and interest, if any, on the Outstanding Debt Securities of such series, and any mandatory sinking fund or analogous payments thereon, on the scheduled due dates therefor. Such a trust may be established only if, among other things, the Company has delivered to the Trustee an opinion of counsel with regard to certain matters, including an opinion to the effect that the Holders of such Debt Securities will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and discharge and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and Defeasance or Covenant Defeasance, as the case may be, had not occurred. The Prospectus Supplement may further describe the provisions, if any, permitting Defeasance or Covenant Defeasance with respect to the Debt Securities of any series. GOVERNING LAW The Indenture and the Debt Securities will be governed by and construed in accordance with the law of the State of New York. CONCERNING THE TRUSTEE The Company presently does, and may from time to time in the future, maintain lines of credit and have customary banking relationships with affiliates of First Trust National Association, the Trustee under the Indenture. The Company has debt securities outstanding under another indenture for which the Trustee is serving as trustee and the Trustee may serve as trustee for other debt securities issued by the Company from time to time. DESCRIPTION OF CAPITAL STOCK The Company's authorized capital stock consists of 35,000,000 shares of Common Stock, par value $1.00 per share; 1,000,000 shares of Voting Preferred Stock, par value $1.00 per share; and 1,000,000 shares of Non-Voting Preferred Stock, par value $1.00 per share, of which 150,000 shares are designated as Series A $11.28 Cumulative Non-Voting Preferred Stock (the "Series A Preferred Stock"). The Board of Directors has adopted a certificate of designation with respect to a series of 150,000 shares of Voting Preferred Stock, the Series B Junior Participating Voting Preferred Stock, $1.00 par value (the "Series B Preferred Stock"), in connection with the Company's Rights Agreement dated June 14, 1988 (the "Rights Agreement"). See "--Rights Plan." The following summary does not purport to be complete and is subject in all respects to the applicable provisions of the Delaware General Corporation Law and the Company's Certificate of Incorporation, as amended. COMMON STOCK At May 30, 1997, there were 12,076,474 shares of Common Stock outstanding. All outstanding shares of Common Stock are, and the shares offered hereby, when issued, will be fully paid and nonassessable. All holders of Common Stock have voting rights and are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. Holders of Common Stock do not have the right to cumulate votes in the election of directors and do not have a right of redemption or any preferential right of subscription for any securities of the Company, except as described below under "Rights Plan." Subject to preferences that may be applicable to any shares of preferred stock outstanding at the time, holders of Common Stock are entitled to dividends when and as declared by the Board of Directors 14 from funds legally available therefor and are entitled, in the event of liquidation, to share ratably in all assets remaining after payment of liabilities. PREFERRED STOCK At May 30, 1997, there were no shares of Series A Preferred Stock or Series B Preferred Stock outstanding. Previously outstanding shares of Series A Preferred Stock have been redeemed and may not be reissued as Series A Preferred Stock; however, the Board of Directors is authorized to retire such series in which case the shares previously designated as such series shall assume the status of authorized but unissued shares of Preferred Stock. The Series B Preferred Stock is issuable in accordance with the terms of the Company's Rights Agreement. See "Rights Plan" below. The Board of Directors has the authority, in most instances without further stockholder action, to issue from time to time all or any part of the authorized Preferred Stock. Additional Preferred Stock is issuable in one or more series, and the Board of Directors is authorized to determine the designation of and number of shares in each series and to fix the dividend, redemption, liquidation, retirement, conversion and voting rights, if any, of such series, and any other rights and preferences thereof. Any shares of Preferred Stock which may be issued may have disproportionately high voting rights or class voting rights, may be convertible into shares of Common Stock and may rank prior in right to shares of Common Stock as to payment of dividends and upon liquidation. Although the issuance of additional Preferred Stock may have an adverse effect on the rights (including voting rights) of holders of Common Stock, the consent of the holders of Common Stock would not be required for any such issuance of Preferred Stock. In addition, the issuance of additional Preferred Stock may have the effect of delaying, deferring or preventing a change in control of the Company. The Company has no current plans to issue any Preferred Stock, except as provided for in the Rights Agreement. See "--Rights Plan." RIGHTS PLAN On June 14, 1988, the Board of Directors declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of Common Stock to holders of record on June 24, 1988. Each Right entitles the registered holder to purchase from the Company, at a price of $85, one one-hundredth of a share of Series B Preferred Stock subject to adjustment as provided in the Rights Agreement. Pursuant to the Rights Agreement, one Right attaches to and trades together with each share of Common Stock issued by the Company, including any shares of Common Stock offered hereby. Until the earlier to occur of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired beneficial ownership of 20% or more of the outstanding Common Stock or (ii) 10 business days (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 20% or more of such outstanding Common Stock (the earlier of such dates being called the "Distribution Date"), the Rights will be attached to the Common Stock and will be evidenced by the Common Stock certificate. Until the Distribution Date, the Rights will be transferred with and only with the Common Stock. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date. The Rights are not exercisable until the Distribution Date. The Rights will expire on June 14, 1998 (the "Final Expiration Date"), unless the Final Expiration Date is extended or unless the Rights are earlier redeemed by the Company. 15 In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earning power are sold, each holder of a Right will thereafter have the right to receive, upon the exercise at the then current exercise price of the Right, shares of common stock of the acquiring company which at the time of such transaction have a market value of two times the exercise price of the Right. In the event that (i) any person becomes an Acquiring Person (unless such person first acquires 20% or more of the outstanding Common Stock by a purchase pursuant to a tender offer for all of the Common Stock for cash, which purchase increases such person's beneficial ownership to 80% or more of the outstanding Common Stock) or (ii) during such time as there is an Acquiring Person, there shall be any reclassification of securities or recapitalization or reorganization of the Company which has the effect of increasing by more than 1% the proportionate share of the outstanding shares of any class of equity securities of the Company or any of its subsidiaries beneficially owned by the Acquiring Person, each holder of a Right, other than Rights beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have the right to receive upon exercise Common Stock having a market value of two times the exercise price of the Right. At any time after the acquisition by a person or group of affiliated or associated persons of beneficial ownership of 20% or more of the outstanding Common Stock and prior to the acquisition by such person or group of 50% or more of the outstanding Common Stock, the Board of Directors may exchange the Rights (other than Rights owned by such person or group which have become void), in whole or in part, at an exchange ratio of one share of Common Stock, or one one-hundredth of a share of Series B Preferred Stock (or of a share of a class or series of the Company's Preferred Stock having equivalent rights, preferences and privileges), per Right. At any time prior to the acquisition by a person or group of affiliated or associated persons of beneficial ownership of 20% or more of the outstanding Common Stock, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption Price"). In addition, if a bidder who does not beneficially own more than 1% of the Common Stock (and who has not within the past year owned in excess of 1% of the Common Stock and, at a time he held such greater than 1% stake, disclosed, or caused the disclosure of, an intention which relates to or would result in the acquisition or influence of control of the Company) proposes to acquire all of the Common Stock (and all other shares of capital stock of the Company entitled to vote with the Common Stock in the election of directors or on mergers, consolidations, sales of all or substantially all of the Company's assets, liquidations, dissolutions or windings up) for cash at a price which a nationally recognized investment banker selected by such bidder states in writing is fair, and such bidder has obtained written financing commitments (or otherwise has financing) and complies with certain procedural requirements, then the Company, upon the request of the bidder, will hold a special stockholders meeting to vote on a resolution requesting the Board of Directors to accept the bidder's proposal. If a majority of the outstanding shares entitled to vote on the proposal vote in favor of such resolution, then for a period of 60 days after such meeting the Rights will be automatically redeemed at the Redemption Price immediately prior to the consummation of any tender offer for all of such shares at a price per share in cash equal to or greater than the price offered by such bidder. No redemption will be permitted or required after the acquisition by any person or group of affiliated or associated persons of beneficial ownership of 20% or more of the outstanding Common Stock. Immediately upon redemption, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including without limitation, the right to vote or to receive dividends. The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company unless the offer is conditional on a substantial number of Rights being acquired. The Rights, however, should not affect any prospective offeror willing to make an offer at an equitable price and which is otherwise in the best interests of the Company and its stockholders, as determined by the Board of Directors. The Rights should not interfere with any merger or other 16 business combination approved by the Board of Directors since the Board of Directors may, at its option, redeem the Rights at any time until there is an Acquiring Person. The foregoing summary of certain terms of the Rights is qualified in its entirety by reference to the Rights Agreement, a copy of which is incorporated by reference as an exhibit to the Registration Statement. CHANGE OF CONTROL Certain provisions of the Company's Certificate of Incorporation may have the effect of preventing, discouraging or delaying any change in the control of the Company. The following provisions may have anti-takeover effects: (a) the Board of Directors is classified into three classes, each of which serves for three years, with one class being elected each year; (b) directors may be removed only for cause and only with the approval of holders of at least 80% of the then outstanding shares of the capital stock entitled to vote generally in the election of directors ("Voting Stock"); (c) any vacancy on the Board may be filled only by the remaining directors then in office; (d) stockholder action must be taken at a meeting of stockholders and stockholders may not act by written consent; (e) special meetings of stockholders of the Company may be called only by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board; (f) a "fair price" provision requires the approval by the holders of 80% of the then outstanding Voting Stock as a condition for mergers and certain other business combinations of the Company with any holder of more than 10% of such voting power (an "Interested Stockholder") unless either (i) the transaction is approved by a majority of the members of the Board of Directors who are unaffiliated with the Interested Stockholder and were members of the Board of Directors prior to the time the Interested Stockholder became an Interested Stockholder or (ii) certain minimum price and procedural requirements are met; and (g) the stockholder vote required to alter, amend or repeal the foregoing provisions is 80% of the then outstanding Voting Stock. These provisions, individually and collectively, will make difficult and may discourage a merger, tender offer or proxy fight, even if such transaction or occurrence may be favorable to the interests of the stockholders, and may delay or frustrate the assumption of control by a holder of a large block of the Common Stock and the removal of incumbent management. Furthermore, these provisions may deter or could be utilized to frustrate a future takeover attempt which is not approved by the incumbent Board of Directors, but which the holders of a majority of the shares may deem to be in their best interests or in which stockholders may receive a substantial premium for their stock over prevailing market prices of such stock. By discouraging takeover attempts, these provisions might have the incidental effect of inhibiting certain changes in management (some or all of the members of which might be replaced in the course of a change of control) and also the temporary fluctuations in the market price of the stock which often result from actual or rumored takeover attempts. In addition, Section 203 of the Delaware General Corporation Law restricts certain business combinations between the Company and a stockholder who acquires 15% or more of the outstanding voting stock of the Company (an "interested stockholder"). Unless an exception from the restriction is available, the Company may not engage in certain business combinations involving the interested stockholder or its affiliates for a period of three years from the time the interested stockholder became such. The restriction does not apply if (i) prior to the interested stockholder becoming an interested stockholder the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, (ii) the interested stockholder acquires 85% of the outstanding voting stock in the same transaction in which the 15% threshold is exceeded or (iii) the proposed business combination is approved by the Board of Directors and authorized at a stockholders' meeting by at least 66 2/3% of the outstanding disinterested voting stock not owned by the interested stockholder. The three year probation will also be inapplicable if the Board of Directors and a majority of the Company's continuing directors approves a merger or sale or does not oppose a tender offer for at least 50% of the outstanding voting stock. 17 TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Stock is Norwest Bank Minnesota, National Association. Its mailing address is 161 North Concord Exchange, South St. Paul, Minnesota 55075-0738. DESCRIPTION OF WARRANTS The Corporation may issue Warrants for the purchase of Debt Securities ("Debt Warrants") or for the purchase of Common Stock ("Common Stock Warrants"). Warrants may be issued independently or together with Debt Securities or shares of Common Stock offered by any Prospectus Supplement and may be attached to or separate from such Debt Securities or shares of Common Stock. Each series of Warrants will be issued under a separate warrant agreement (a "Warrant Agreement") to be entered into between the Corporation and a bank or trust company, as Warrant Agent, all as set forth in the Prospectus Supplement relating to the particular issue of Warrants. The Warrant Agent will act solely as an agent of the Corporation in connection with the Warrants and will not assume any obligation or relationship of agency or trust for or with any holders of Warrants or beneficial owners of Warrants. Copies of the forms of Warrant Agreements, including the forms of Warrant certificates representing the Warrants, will be filed as exhibits or incorporated by reference in the Registration Statement to which this Prospectus pertains. The following summaries of certain provisions of the forms of Warrant Agreements and Warrant certificates do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the Warrant Agreements and the Warrant certificates. GENERAL If Warrants are offered, the applicable Prospectus Supplement will describe the terms of such Warrants, including, in the case of Debt Warrants, the following where applicable: (i) the offering price; (ii) the currencies in which such Debt Warrants are being offered; (iii) the designation, aggregate principal amount, currencies, denominations and terms of the series of Debt Securities purchasable upon exercise of such Debt Warrants; (iv) the designation and terms of any series of Debt Securities with which such Debt Warrants are being offered and the number of such Debt Warrants being offered with each such Debt Security or share of Common Stock; (v) the date on and after which such Debt Warrants and the related series of Debt Securities or shares of Common Stock will be transferable separately; (vi) the principal amount of the series of Debt Securities purchasable upon exercise of each such Debt Warrant and the price at which and currencies in which such principal amount of Debt Securities of such series may be purchased upon such exercise; (vii) the date on which the right to exercise such Debt Warrants shall commence and the date (the "Expiration Date") on which such right shall expire; (viii) whether the Debt Warrants will be issued in registered or bearer form; (ix) United States federal income tax consequences; and (x) any other terms of such Debt Warrants. In the case of Common Stock Warrants, the applicable Prospectus Supplement will describe the terms of such Common Stock Warrants, including the following where applicable: (i) the offering price; (ii) the aggregate number of shares of Common Stock purchasable upon exercise of such Common Stock Warrants; (iii) the designation and terms of the series of Debt Securities or shares of Common Stock with which such Common Stock Warrants are being offered and the number of such Common Stock Warrants being offered with each such Debt Security or share of Common Stock; (iv) the date on and after which such Common Stock Warrants and the related series of Debt Securities or shares of Common Stock will be transferable separately; (v) the number of shares of Common Stock purchasable upon exercise of each such Common Stock Warrant and the price at which such number of shares of Common Stock may be purchased upon each exercise; (vi) the date on which the right to exercise such Common Stock Warrants shall commence and the Expiration Date; (vii) United States federal income tax consequences; and (viii) any other terms of such Common Stock Warrants. Common Stock Warrants will be offered and exercisable for U.S. dollars only and will be in registered form only. 18 Warrant certificates may be exchanged for new Warrant certificates of different denominations, may (if in registered form) be presented for registration of transfer and may be exercised at the corporate trust office of the Warrant Agent or any other office indicated in the applicable Prospectus Supplement. Prior to the exercise of any Debt Warrant, holders of such Debt Warrants will not have any of the rights of holders of the Debt Securities purchasable upon such exercise, including the right to receive payments of principal of, premium, if any, or interest, if any, on the Debt Securities purchasable upon such exercise or to enforce covenants in the Indenture. Prior to the exercise of any Common Stock Warrants, holders of such Common Stock Warrants will not have any rights of holders of shares of Common Stock purchasable upon such exercise, including the right to receive payments of dividends, if any, on the shares of Common Stock purchasable upon such exercise or to exercise any applicable right to vote. EXERCISE OF WARRANTS Each Warrant will entitle the holder thereof to purchase such principal amount of Debt Securities or number of shares of Common Stock, as the case may be, at such exercise price as shall in each case be set forth in, or calculable from, the Prospectus Supplement relating to the offered Warrants. After the close of business on the Expiration Date (or such later date to which such Expiration Date may be extended by the Company), unexercised Warrants will become void. Warrants may be exercised by delivering to the Warrant Agent payment as provided in the applicable Prospectus Supplement of the amount required to purchase the Debt Securities or shares of Common Stock, as the case may be, purchasable upon such exercise together with certain information set forth on the reverse side of the Warrant certificate. Warrants will be deemed to have been exercised upon receipt of payment of the exercise price, subject to the receipt, within five business days, of the Warrant certificate evidencing such Warrants. Upon receipt of such payment and the Warrant certificate properly completed and duly executed at the corporate trust office of the Warrant Agent or any other office indicated in the applicable Prospectus Supplement, the Company will, as soon as practicable, issue and deliver the Debt Securities or shares of Common Stock, as the case may be, purchasable upon such exercise. If fewer than all of the Warrants represented by such Warrant certificate are exercised, a new Warrant certificate will be issued for the remaining amount of Warrants. The holder of a Warrant will be required to pay any tax or other governmental charge that may be imposed in connection with any transfer involved in the issuance of the Debt Securities or shares of Common Stock, as the case may be. AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENTS The Warrant Agreements may be amended or supplemented without the consent of the holders of the Warrants issued thereunder to effect changes that are not inconsistent with the provisions of the Warrants and that do not adversely affect the interests of the holders of the Warrants. COMMON STOCK WARRANT ADJUSTMENTS Unless otherwise indicated in the applicable Prospectus Supplement, the exercise price of, and the number of shares of Common Stock covered by, a Common Stock Warrant are subject to adjustment in certain events, including (i) the issuance of capital stock as a dividend or distribution on shares of the Common Stock; (ii) subdivisions and combinations of the shares of Common Stock; (iii) the issuance to all holders of shares of the Common Stock of certain rights or warrants entitling them to subscribe for or purchase shares of the Common Stock within 45 days after the date fixed for the determination of the stockholders entitled to receive such rights or warrants at less than the current market price (as defined in the Warrant Agreement for such series of Common Stock Warrants); and (iv) the distribution to all holders of shares of the Common Stock of evidences of indebtedness or assets of the Company (excluding certain cash dividends and distributions described below) or rights or warrants (excluding those referred to above). In the event that the Company shall distribute any rights or warrants to acquire 19 capital stock pursuant to clause (iii) above (the "Capital Stock Rights"), pursuant to which separate certificates representing such Capital Stock Rights will be distributed subsequent to the initial distribution of such Capital Stock Rights (whether or not such distribution shall have occurred prior to the date of the issuance of a series of Common Stock Warrants), such subsequent distribution shall be deemed to be the distribution of such Capital Stock Rights; provided that the Company may, in lieu of making any adjustment in the exercise price of and the number of shares of Common Stock covered by a Common Stock Warrant upon a distribution of separate certificates representing such Capital Stock Rights, make proper provision so that each holder of such a Common Stock Warrant who exercises such Common Stock Warrant (or any portion thereof) (a) before the record date for such distribution of separate certificates shall be entitled to receive upon such exercise shares of Common Stock issued with Capital Stock Rights and (b) after such record date and prior to the expiration, redemption or termination of such Capital Stock Rights shall be entitled to receive upon such exercise, in addition to the shares of Common Stock issuable upon such exercise, the same number of such Capital Stock Rights as would a holder of the number of shares of Common Stock that such Common Stock Warrant so exercised would have entitled the holder thereof to acquire in accordance with the terms and provisions applicable to the Capital Stock Rights if such Common Stock Warrant was exercised immediately prior to the record date for such distribution. Common Stock owned by or held for the account of the Company or any majority owned subsidiary shall not be deemed outstanding for the purpose of any adjustment. No adjustment in the exercise price of and the number of shares of Common Stock covered by a Common Stock Warrant will be made for regular quarterly or other periodic or recurring cash dividends or distributions or for cash dividends or distributions to the extent paid from retained earnings. No adjustment will be required unless such adjustment would require a change of at least 1% in the exercise price then in effect; provided that any such adjustment not so made will be carried forward and taken into account in any subsequent adjustment; and provided further that any such adjustment not so made shall be made no later than three years after the occurrence of the event requiring such adjustment to be made or carried forward. Except as stated above, the exercise price of and the number of shares of Common Stock covered by a Common Stock Warrant will not be adjusted for the issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock, or securities carrying the right to purchase any of the foregoing. In the case of (i) a reclassification or change of the Common Stock, (ii) a consolidation or merger involving the Company or (iii) a sale or conveyance to another corporation of the property and assets of the Company as an entirety or substantially as an entirety, in each case as a result of which holders of the Company's Common Stock shall be entitled to receive stock, securities, other property or assets (including cash) with respect to or in exchange for such Common Stock, the holders of the Common Stock Warrants then outstanding will be entitled thereafter to convert such Common Stock Warrants into the kind and amount of shares of stock and other securities or property which they would have received upon such reclassification, change, consolidation, merger, sale or conveyance had such Common Stock Warrants been exercised immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. DESCRIPTION OF UNITS OF SECURITIES The Company may issue Units consisting of two or more other constituent Securities, which Units may be issuable as, and for the period of time specified therein may be transferable as, a single Security only, as distinguished from the separate constituent Securities comprising such Units. Any such Units will be offered pursuant to a Prospectus Supplement which will (i) identify and designate the title of any series of Units; (ii) identify and describe the separate constituent Securities comprising such Units; (iii) set forth the price or prices at which such Units will be issued; (iv) describe, if applicable, the date on and after which the constituent Securities comprising the Units will become separately transferable; (v) provide information with respect to book-entry procedures, if any; (vi) discuss applicable United 20 States federal income tax considerations relating to the Units; and (vii) set forth any other terms of the Units and their constituent Securities. PLAN OF DISTRIBUTION The Company may sell the Securities to or through underwriters and also may sell Securities directly to other purchasers or through agents. Such underwriters may include Goldman, Sachs & Co., or a group of underwriters represented by firms including Goldman, Sachs & Co. Goldman, Sachs & Co. may also act as agents. The distribution of the Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Securities, underwriters may receive compensation from the Company or from purchasers of Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company and any profit on the resale of Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any such underwriter or agent will be identified, and any such compensation received from the Company will be described, in the applicable Prospectus Supplement. Under agreements which may be entered into by the Company, underwriters and agents who participate in the distribution of Securities may be entitled to indemnification by the Company against certain liabilities, including liabilities under the Securities Act. If so indicated in the applicable Prospectus Supplement, the Company will authorize underwriters or other persons acting as the Company's agents to solicit offers by certain institutions to purchase Securities from the Company pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others but in all cases such institutions must be approved by the Company. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of the Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. LEGAL MATTERS Unless otherwise indicated in a Prospectus Supplement, certain legal matters regarding the Securities will be passed upon for the Company by Doherty, Rumble & Butler Professional Association, Minneapolis, Minnesota, and for the underwriters, if any, by Sonnenschein Nath & Rosenthal, Chicago, Illinois. EXPERTS The consolidated financial statements and schedule of The Toro Company and subsidiaries as of October 31, 1995 and 1996 and for the years ended July 31, 1994 and 1995, the three months ended October 31, 1995 and the year ended October 31, 1996, incorporated by reference herein, have been incorporated herein in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public 21 accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The combined financial statements of James Hardie Irrigation, Inc., James Hardie Irrigation Pty Limited and James Hardie Irrigation Europe S.p.A. as of December 1, 1996 and for the year then ended, incorporated by reference herein, have been incorporated herein in reliance on the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. 22 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an estimate, subject to future contingencies, of the expenses to be incurred by the Registrant in connection with the issuance and distribution of the securities being registered: Registration Fee................................................ $ 75,758 *Legal Fees and Expenses......................................... 150,000 *Trustee Fees and Expenses....................................... 6,000 *Accounting Fees and Expenses.................................... 60,000 *Blue Sky Fees and Expenses...................................... 10,000 *Printing and Engraving Fees..................................... 40,000 *Rating Agency Fees.............................................. 100,000 *Miscellaneous................................................... 38,242 --------- Total.......................................................... $ 480,000 --------- --------- - -------------- * Estimated pursuant to instruction to Item 511 of Regulation S-K. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the General Corporation Law of the State of Delaware empowers a corporation incorporated under the statute to indemnify its directors, officers, employees and agents and its former directors, officers, employees and agents and those who serve in such capacities with another enterprise at the corporation's request against expenses (including attorneys' fees), as well as judgments, fines and settlements, actually and reasonably incurred by them in connection with any action, suit or proceeding in which they or any of them were or are made parties or are threatened to be made parties by reason of their serving or having served in such capacity. The power to indemnify exists only where such officer, director, employee or agent has acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and, in the case of a criminal action, where such person had no reasonable cause to believe his conduct was unlawful. Unless a court determines to the contrary, a corporation has no power of indemnification in any action or suit by or in the right of the corporation, where such person has been adjudged liable to the corporation. Indemnification against expenses is mandatory to the extent a claim, issue or matter has been successfully defended. Indemnification and advancement of expenses are not deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or otherwise. A Delaware corporation also has the power to purchase and maintain insurance on behalf of any person it has the power to indemnify, whether or not indemnity against liability would be allowed under the statute. Section 1 of Article XI of the Registrant's Certificate of the Incorporation provides, in accordance with Section 102(b)(7) of the Delaware General Corporation Law, for the elimination or limitation of the personal liability of a director to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director under certain circumstances. Section 2 of Article XI of the Registrant's Certificate of Incorporation mandates indemnification of a director or officer of Registrant or a person serving at the request of the Registrant as a director, officer, employee or agent of another entity to the fullest extent authorized by the Delaware General Corporation Law against expenses, liability and loss and authorizes the Board to express such rights in written contract. II-1 The Registrant also maintains liability insurance policies which provide for indemnification of a director or officer of Registrant or a person serving at the request of the Registrant as a director, officer, employee or agent of another entity against certain liabilities under certain circumstances. ITEM 16. EXHIBITS The following Exhibits are filed as part of this Registration Statement: *1 Form of Underwriting Agreement for Debt Securities. 4(a) Certificate of Incorporation of the Registrant as amended and corrected through May 18, 1987 (incorporated by reference to Exhibit 4.2 to Registrant's Registration Statement on Form S-3, Registration No. 33-16125). 4(b) Certificate of Amendment to Certificate of Incorporation dated December 8, 1987 (incorporated by reference to Exhibit 3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended January 29, 1988, Commission File No. 1-8649). 4(c) Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to Registrant's Annual Report on Form 10-K for the year ended July 31, 1991, Commission File No. 1-8649). 4(d) Rights Agreement dated as of June 14, 1988, between the Registrant and Norwest Bank Minnesota National Association, relating to rights to purchase Series B Junior Participating Voting Preferred Stock (incorporated by reference to Exhibit 1 to Registrant's Registration Statement on Form 8-A dated June 17, 1988, Commission File No. 1-8649). 4(e) Amendment to Rights Agreement dated as of August 14, 1990, between the Registrant and Norwest Bank Minnesota National Association (incorporated by reference to Exhibit 1 to Registrant's Report on Form 8-K dated August 14, 1990, Commission File No. 1-8649). 4(f) Specimen form of Common Stock certificate (incorporated by reference to Exhibit 4(c) to Registrant's Registration Statement on Form S-8, Registration No. 2-94417). 4(g) Form of Indenture. 4(h) Forms of Debt Securities (filed as part of Exhibit 4(g)). 5 Opinion of Doherty, Rumble & Butler Professional Association. *12 Computations of ratio of earnings to fixed charges. 23(a) Consent of Doherty, Rumble & Butler Professional Association (included as part of Exhibit 5). *23(b) Consent of KPMG Peat Marwick LLP. 24 Powers of Attorney (included on the signature pages of this Registration Statement). *25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of First Trust National Association as Trustee.
- -------------- * Filed or amended herewith. ITEM 17. UNDERTAKINGS (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; II-2 (ii) to reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commissions such indemnification is against public policy as expressed in the act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has bene settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, The Toro Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bloomington and the State of Minnesota, on the 9th day of June 1997. THE TORO COMPANY By /s/ KENDRICK B. MELROSE ----------------------------------------- Kendrick B. Melrose CHAIRMAN AND CHIEF EXECUTIVE OFFICER Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
NAME TITLE DATE - ------------------------------ -------------------------- ------------------- Chairman and Chief /s/ KENDRICK B. MELROSE Executive Officer - ------------------------------ (Principal Executive June 9, 1997 Kendrick B. Melrose Officer) Vice President and Chief /s/ STEPHEN P. WOLFE Financial Officer - ------------------------------ (Principal Financial June 9, 1997 Stephen P. Wolfe Officer) * Vice President and - ------------------------------ Controller (Principal Randy B. James Accounting Officer) * - ------------------------------ Director Ronald O. Baukol * - ------------------------------ Director Robert C. Buhrmaster * - ------------------------------ Director Janet K. Cooper * - ------------------------------ Director Alex A. Meyer
II-4
NAME TITLE DATE - ------------------------------ -------------------------- ------------------- * - ------------------------------ Director Robert H. Nassau * - ------------------------------ Director Dale R. Olseth * - ------------------------------ Director Edwin H. Wingate
*By: /s/ KENDRICK B. MELROSE ------------------------- June 9, 1997 Kendrick B. Melrose ATTORNEY-IN-FACT II-5 EXHIBIT INDEX DOCUMENT DESCRIPTION
FORM OF FILING --------------------------- *1 Form of Underwriting Agreement for Debt Securities........................ Electronic Transmission 4(a) Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 4.2 to Registrant's Registration Statement on Form S-3, Registration No. 33-16125). 4(b) Certificate of Amendment to Certificate of Incorporation dated December 8, 1987 (incorporated by reference to Exhibit 3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended January 29, 1988, Commission File No. 1-8649). 4(c) Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to Registrant's Annual Report on Form 10-K for the year ended July 31, 1991, Commission File No. 1-8649). 4(d) Rights Agreement dated as of June 14, 1988, between the Registrant and Norwest Bank Minnesota National Association, relating to rights to purchase Series B Junior Participating Voting Preferred Stock (incorporated by reference to Exhibit 1 to Registrant's Registration Statement on Form 8-A dated June 17, 1988, Commission File No. 1-8649). 4(e) Amendment to Rights Agreement dated as of August 14, 1990, between the Registrant and Norwest Bank Minnesota National Association (incorporated by reference to Exhibit 1 to Registrant's Report on Form 8-K dated August 14, 1990, Commission File No. 1-8649). 4(f) Specimen form of Common Stock certificate (incorporated by reference to Exhibit 4(c) to Registrant's Registration Statement on Form S-8, Registration No. 2-94417). 4(g) Form of Indenture (filed with the Registration Statement). 4(h) Debt Securities (filed as part of Exhibit 4(g)). 5 Opinion of Doherty, Rumble & Butler Professional Association (filed with the Registration Statement). *12 Computations of ratio of earnings to fixed charges (filed with the Registration Statement)................................................. Electronic Transmission 23(a) Consent of Doherty, Rumble & Butler Professional Association (included as part of Exhibit 5). *23(b) Consent of KPMG Peat Marwick LLP (filed with the Registration Statement).............................................................. Electronic Transmission
II-6
FORM OF FILING --------------------------- 24 Powers of Attorney (included on the signature pages of this Registration Statement). *25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of First Trust National Association as Trustee............................. Electronic Transmission
- -------------- * Filed or amended herewith. II-7



                               THE TORO COMPANY

                                DEBT SECURITIES


                                ---------------

                             UNDERWRITING AGREEMENT
                             ----------------------

                                                              June ...., 1997

To the Representatives of the
   several Underwriters named in the
   respective Pricing Agreements
   hereinafter described

Ladies and Gentlemen:

   From time to time The Toro Company, a Delaware corporation (the 
"Company"), proposes to enter into one or more Pricing Agreements (each a 
"Pricing Agreement") in the form of Annex I hereto, with such additions and 
deletions as the parties thereto may determine, and, subject to the terms and 
conditions stated herein and therein, to issue and sell to the firms named in 
Schedule I to the applicable Pricing Agreement (such firms constituting the 
"Underwriters" with respect to such Pricing Agreement and the securities 
specified therein) certain of its debt securities (the "Securities") 
specified in Schedule II to such Pricing Agreement (with respect to such 
Pricing Agreement, the "Designated Securities").

   The terms and rights of any particular issuance of Designated Securities 
shall be as specified in the Pricing Agreement relating thereto and in or 
pursuant to the indenture (the "Indenture") identified in such Pricing 
Agreement.

   1.  Particular sales of Designated Securities may be made from time to 
time to the Underwriters of such Securities, for whom the firms designated as 
representatives of the Underwriters of such Securities in the Pricing 
Agreement relating thereto will act as representatives (the 
"Representatives").  The term "Representatives" also refers to a single firm 
acting as sole representative of the Underwriters and to an Underwriter or 
Underwriters who act without any firm being designated as its or their 
representatives.  This Underwriting Agreement shall not be construed as an 
obligation of the Company to sell any of the Securities or as an obligation 
of any of the Underwriters to purchase the Securities.  The obligation of the 
Company to issue and sell any of the Securities and the obligation of any of 
the Underwriters to purchase any of the Securities shall be evidenced by the 
Pricing Agreement with respect to the Designated Securities specified 
therein.  Each Pricing Agreement shall specify the aggregate principal amount 
of such Designated Securities, the initial public offering price of such 
Designated Securities, the purchase price to the Underwriters of such 
Designated Securities, the names of the Underwriters of such Designated 
Securities, the names of the Representatives of such Underwriters and the 
principal amount of such Designated Securities to be purchased by each 
Underwriter and shall set forth the date, time and manner of delivery of such 
Designated Securities and payment therefor.  The Pricing Agreement shall also 
specify (to the extent not set forth in the Indenture and the registration 
statement and prospectus with respect thereto) the terms of such Designated 
Securities.  A Pricing Agreement shall be in the form of an executed writing 
(which may be in counterparts), and may be evidenced by an exchange of 
telegraphic communications or any other rapid transmission device designed to 
produce a written record of communications transmitted.  The obligations of 
the Underwriters under this Agreement and each Pricing Agreement shall be 
several and not joint.
       
   2.  The Company represents and warrants to, and agrees with, each of the 
Underwriters that:

   
         (a)  A registration statement on Form S-3 (File No. 333-20901 in 
       respect of the Securities has been filed with the Securities and 
       Exchange Commission (the "Commission"); such registration statement, 
       as amended by pre-effective amendment number 1 thereto (as amended, 
       the "Initial Registration Statement"), and any post-effective 
       amendment thereto, each in the form heretofore delivered or to be 
       delivered to the Representatives and, excluding exhibits thereto, but 
       including all documents incorporated by reference in the prospectus 
       contained therein, to the Representatives for each of the other 
       Underwriters, has been declared effective by the Commission in such 
       form; other than a registration statement, if any, increasing the 
       size of the offering (a "Rule 462(b) Registration Statement"), filed 
       pursuant to Rule 462(b) under the Securities Act of 1933, as amended 
       (the "Act"), which became effective upon filing, no other document 
       with respect to the Initial Registration Statement or document 
       incorporated by reference therein has heretofore been filed or 
       transmitted for filing with the Commission (other than prospectuses 
       filed pursuant to Rule 424(b) of the rules and regulations of the 
       Commission under the Act, each in the form heretofore delivered to 
       the Representatives); and no stop order suspending the effectiveness 
       of the Initial Registration Statement, any post-effective amendment 
       thereto or the Rule 462(b) Registration Statement, if any, has been 
       issued and no proceeding for that purpose has been initiated or 
       threatened by the Commission (any preliminary prospectus included in 
       the Initial Registration Statement or filed with the Commission 
       pursuant to Rule 424(a) under the Act, is hereinafter called a 
       "Preliminary Prospectus"; the various parts of the Initial 
       Registration Statement and the Rule 462(b) Registration Statement, if 
       any, including all exhibits thereto and the documents incorporated by 
       reference in the prospectus contained in the Initial Registration 
       Statement at the time such part of the registration statement became 
       effective but excluding Form T-1, each as amended at the time such 
       part of the registration statement became effective or such part of 
       the Rule 462(b) Registration Statement, if any, became or hereafter 
       becomes effective, are hereinafter collectively called the 
       "Registration Statement"; the prospectus relating to the Securities, 
       in the form in which it has most recently been filed, or transmitted 
       for filing, with the Commission on or prior to the date of this 
       Agreement, being hereinafter called the "Prospectus"; any reference 
       herein to any Preliminary Prospectus or the Prospectus shall be 
       deemed to refer to and include the documents incorporated by 
       reference therein pursuant to the applicable form under the Act, as 
       of the date of such Preliminary Prospectus or Prospectus, as the case 
       may be; any reference to any amendment or supplement to any 
       Preliminary Prospectus or the Prospectus shall be deemed to refer to 
       and include any documents filed after the date of such Preliminary 
       Prospectus or Prospectus, as the case may be, under the Securities 
       Exchange Act of 1934, as amended (the "Exchange Act"), and 
       incorporated by reference in such Preliminary Prospectus or 
       Prospectus, as the case may be; any reference to any amendment to the 
       Registration Statement shall be deemed to refer to and include any 
       annual report of the Company filed pursuant to Sections 13(a) or 
       15(d) of the Exchange Act after the effective date of the Initial 
       Registration Statement that is incorporated by reference in the 
       Registration Statement; and any reference to the 

    

                                      2



       Prospectus as amended or supplemented shall be deemed to refer to the 
       Prospectus as amended or supplemented in relation to the applicable 
       Designated Securities in the form in which it is filed with the 
       Commission pursuant to Rule 424(b) under the Act in accordance with 
       Section 5(a) hereof, including any documents incorporated by reference 
       therein as of the date of such filing);

         (b)  The documents incorporated by reference in the Prospectus, when 
       they became effective or were filed with the Commission, as the case 
       may be, conformed in all material respects to the requirements of the 
       Act or the Exchange Act, as applicable, and the rules and regulations 
       of the Commission thereunder, and none of such documents contained an 
       untrue statement of a material fact or omitted to state a material 
       fact required to be stated therein or necessary to make the statements 
       therein not misleading; and any further documents so filed and 
       incorporated by reference in the Prospectus or any further amendment 
       or supplement thereto, when such documents become effective or are 
       filed with the Commission, as the case may be, will conform in all 
       material respects to the requirements of the Act or the Exchange Act, 
       as applicable, and the rules and regulations of the Commission 
       thereunder and will not contain an untrue statement of a material fact 
       or omit to state a material fact required to be stated therein or 
       necessary to make the statements therein not misleading; PROVIDED, 
       HOWEVER, that this representation and warranty shall not apply to any 
       statements or omissions made in reliance upon and in conformity with 
       information furnished in writing to the Company by an Underwriter of 
       Designated Securities through the Representatives expressly for use in 
       the Prospectus as amended or supplemented relating to such Securities;

         (c)  The Registration Statement and the Prospectus conform, and any 
       further amendments or supplements to the Registration Statement or the 
       Prospectus will conform, in all material respects to the requirements 
       of the Act and the Trust Indenture Act of 1939, as amended (the "Trust 
       Indenture Act") and the rules and regulations of the Commission 
       thereunder and do not and will not, as of the applicable effective 
       date as to the Registration Statement and any amendment thereto and as 
       of the applicable filing date as to the Prospectus and any amendment 
       or supplement thereto, contain an untrue statement of a material fact 
       or omit to state a material fact required to be stated therein or 
       necessary to make the statements therein not misleading; PROVIDED, 
       HOWEVER, that this representation and warranty shall not apply to any 
       statements or omissions made in reliance upon and in conformity with 
       information furnished in writing to the Company by an Underwriter of 
       Designated Securities through the Representatives expressly for use in 
       the Prospectus as amended or supplemented relating to such Securities; 
       there is no material document of a character required to be described 
       in the Registration Statement or the Prospectus or to be filed as an 
       exhibit to the Registration Statement which is not described or filed 
       as required; 

         (d)  Neither the Company nor any of its subsidiaries has sustained 
       since the date of the latest audited financial statements included or 
       incorporated by reference in the Prospectus any material loss or 
       interference with its business from fire, explosion, flood or other 
       calamity, whether or not covered by insurance, or from any labor 
       dispute or court or governmental action, order or decree, otherwise 
       than as set forth or contemplated in the Prospectus; and, since the 
       respective dates as of which information is given in the Registration 
       Statement and the Prospectus, there has not been any change in the 
       capital stock or long-term debt of the Company or any of its 


                                      3



       subsidiaries, or any material adverse change, or any development 
       involving a prospective material adverse change, in or affecting the 
       general affairs, management, financial position, stockholders' equity 
       or results of operations of the Company and its subsidiaries, 
       otherwise than as set forth or contemplated in the Prospectus;

         (e)  The Company has been duly incorporated and is validly existing 
       as a corporation in good standing under the laws of the jurisdiction 
       of its incorporation, with corporate power and authority to own its 
       properties and conduct its business as described in the Prospectus, 
       and has been duly qualified as a foreign corporation for the 
       transaction of business and is in good standing under the laws of each 
       other jurisdiction in which it owns or leases properties or conducts 
       any business so as to require such qualification, except where the 
       failure to be so qualified would not, individually or in the 
       aggregate, have a material adverse effect on the current or future 
       position (financial or otherwise), stockholders' equity or results of 
       operations of the Company and its subsidiaries taken as a whole, upon 
       the Company's ability to perform its obligations under this Agreement 
       or upon the validity or consummation of the transactions contemplated 
       by this Agreement (a "Material Adverse Effect"); and each subsidiary 
       of the Company has been duly incorporated and is validly existing as a 
       corporation in good standing under the laws of its jurisdiction of 
       incorporation, with corporate power and authority to own its 
       properties and conduct its business as described in the Prospectus, 
       and has been duly qualified as a foreign corporation for the 
       transaction of business and is in good standing under the laws of each 
       other jurisdiction in which it owns or leases properties or conducts 
       any business so as to require such qualification, except where the 
       failure to be so qualified would not, individually or in the 
       aggregate, have a Material Adverse Effect; 

         (f)  The Company has an authorized and outstanding capitalization as 
       set forth in the Prospectus, and all of the issued shares of capital 
       stock of the Company have been duly and validly authorized and issued 
       and are fully paid and non-assessable; and all of the issued shares of 
       capital stock of each subsidiary of the Company have been duly and 
       validly authorized and issued, are fully paid and non-assessable and 
       (except for directors' qualifying shares and as set forth or 
       incorporated by reference in the Registration Statement) are owned 
       directly or indirectly by the Company, free and clear of all liens, 
       encumbrances, equities or claims;

         (g)  The Securities have been duly authorized, and, when Designated 
       Securities are issued and delivered pursuant to this Agreement and the 
       Pricing Agreement with respect to such Designated Securities, such 
       Designated Securities will have been duly executed, authenticated, 
       issued and delivered and will constitute valid and legally binding 
       obligations of the Company entitled to the benefits provided by the 
       Indenture, which will be substantially in the form filed as an exhibit 
       to the Registration Statement; the Indenture has been duly authorized 
       and duly qualified under the Trust Indenture Act and, at the Time of 
       Delivery for such Designated Securities (as defined in Section 4 
       hereof), the Indenture will constitute a valid and legally binding 
       instrument, enforceable in accordance with its terms, subject, as to 
       enforcement, to bankruptcy, insolvency, reorganization and other laws 
       of general applicability relating to or affecting creditors' rights 
       and to general equity principles; and the Indenture conforms, and the 
       Designated Securities will conform, to the descriptions thereof 
       contained in the Prospectus as amended or supplemented with respect to 
       such Designated Securities;


                                      4



         (h)  The issue and sale of the Securities and the compliance by the 
       Company with all of the provisions of the Securities, the Indenture, 
       this Agreement and any Pricing Agreement, and the consummation of the 
       transactions herein and therein contemplated will not conflict with or 
       result in a breach or violation of any of the terms or provisions of, 
       or constitute a default under, any indenture, mortgage, deed of trust, 
       loan agreement or other agreement or instrument to which the Company 
       or any of its subsidiaries is a party or by which the Company or any 
       of its subsidiaries is bound or to which any of the property or assets 
       of the Company or any of its subsidiaries is subject, nor will such 
       action result in any violation of the provisions of the Certificate of 
       Incorporation or By-laws of the Company or any of its subsidiaries or 
       any statute or any order, rule or regulation of any court or 
       governmental agency or body having jurisdiction over the Company or 
       its subsidiaries or any of their properties; and no consent, approval, 
       authorization, order, registration or qualification of or with any 
       such court or governmental agency or body is required for the issue 
       and sale of the Securities or the consummation by the Company of the 
       transactions contemplated by this Agreement or any Pricing Agreement 
       or the Indenture, except such as have been, or will have been prior to 
       the Time of Delivery, obtained under the Act and the Trust Indenture 
       Act and such consents, approvals, authorizations, registrations or 
       qualifications as may be required under state securities or Blue Sky 
       laws in connection with the purchase and distribution of the 
       Securities by the Underwriters;

         (i)  The statements set forth in the Prospectus as amended or 
       supplemented under the captions "Description of Debt Securities," 
       "Description of Securities," "Description of Capital Stock," 
       "Description of Warrants" and "Description of Units of Securities," 
       insofar as they purport to constitute a summary of the terms of such 
       securities, and under the captions "Plan of Distribution" and 
       "Underwriting", insofar as they purport to describe the provisions of 
       the laws and documents referred to therein, are accurate and fairly 
       and correctly present in all material respects the information 
       required to be presented by the Act or the rules and regulations of 
       the Commission thereunder; 

         (j)  Neither the Company nor any of its subsidiaries is in violation 
       of its Certificate of Incorporation or By-laws or in default in the 
       performance or observance of any material obligation, agreement, 
       covenant or condition contained in any indenture, mortgage, deed of 
       trust, loan agreement, lease or other agreement or instrument to which 
       it is a party or by which it or any of its properties may be bound;

         (k)  Other than as set forth in the Prospectus, there are no legal 
       or governmental proceedings pending to which the Company or any of its 
       subsidiaries is a party or of which any property of the Company or any 
       of its subsidiaries is the subject which, if determined adversely to 
       the Company or any of its subsidiaries, would individually or in the 
       aggregate have a Material Adverse Effect; and, to the best of the 
       Company's knowledge, no such proceedings are threatened or 
       contemplated by governmental authorities or threatened by others;

         (l)  The Company is not and, after giving effect to the offering and 
       sale of the Securities, will not be an "investment company" or an 
       entity "controlled" by an "investment company", as such terms are 
       defined in the Investment Company Act of 1940, as amended (the 
       "Investment Company Act");

         (m)  To the best of the Company's knowledge, neither the Company nor 
       any of its affiliates does business with the government of Cuba or 
       with any person or affiliate located in Cuba within the meaning of 
       Section 517.075, Florida Statutes; 


                                      5



   
         (n)  KPMG Peat Marwick LLP, who have audited certain financial 
       statements of the Company and its subsidiaries, and who have audited 
       certain combined financial statements of James Hardie Irrigation (a 
       division of James Hardie Irrigation, Inc.), James Hardie Irrigation 
       Pty. Limited and James Hardie Irrigation Europe S.p.A. (collectively, 
       the "James Hardie Irrigation Group"), included or incorporated by 
       reference in the Prospectus, are independent certified public 
       accountants as required by the Act and the rules and regulations of 
       the Commission thereunder;
    

         (o)  The consolidated financial statements and schedules of the 
       Company included or incorporated by reference in the Registration 
       Statement present fairly the consolidated financial position of the 
       Company as of the respective dates of such financial statements, and 
       the consolidated results of operations and cash flows of the Company 
       for the respective periods covered thereby, all in conformity with 
       generally accepted accounting principles consistently applied 
       throughout the periods involved, except as disclosed in the 
       Prospectus.  The combined financial statements and schedules of The 
       James Hardie Irrigation Group included or incorporated by reference in 
       the Registration Statement present fairly the consolidated financial 
       position of the covered entities as of the date of such financial 
       statements, and the results of operations and cash flows of the 
       covered entities for the period covered thereby, all in conformity 
       with generally accepted accounting principles consistently applied 
       throughout the period involved, except as disclosed in the Prospectus. 
       The supporting schedules included in the Registration Statement 
       present fairly the information required to be stated therein.  The 
       financial information set forth in the Prospectus as amended or 
       supplemented under the captions "Selected Historical and Pro Forma 
       Financial and Other Data" and "Ratios of Earnings to Fixed Charges" 
       presents fairly, on the basis stated therein, the information set 
       forth therein.  The pro forma information included or incorporated by 
       reference in the Prospectus as amended or supplemented presents fairly 
       the information shown therein, has been prepared in accordance with 
       generally accepted accounting principles and the Commission's rules 
       and guidelines with respect to pro forma information, has been 
       properly compiled on the pro forma basis described therein, and, in 
       the opinion of the Company, the assumptions used in the preparation 
       thereof are reasonable and the adjustments used therein are 
       appropriate under the circumstances;

         (p)  The Company together with its subsidiaries owns and possesses 
       all right, title and interest in and to, or has duly licensed from 
       third parties a valid, enforceable right to use, all patents, patent 
       rights, licenses, inventions, copyrights, know-how (including trade 
       secrets and other unpatented or unpatentable proprietary or 
       confidential information, systems or procedures), trademarks, service 
       marks and trade names (collectively, "Patent and Proprietary Rights") 
       currently or proposed to be employed by it in connection with its 
       business, except where the failure to own or license such Patent and 
       Proprietary Rights would not, individually or in the aggregate, have a 
       Material Adverse Effect.  Neither the Company nor any of its 
       subsidiaries has received any notice of infringement or 
       misappropriation of or conflict with asserted rights of others with 
       respect to any Patent or Proprietary Rights, or of any facts which 
       would render any Patent or Proprietary Rights invalid or inadequate to 
       protect the interest of the Company or its subsidiaries therein, and 
       which asserted infringement, misappropriation or conflict or 
       invalidity or inadequacy, individually or in the aggregate, would or 
       could reasonably be expected to result in a Material Adverse Effect;


                                      6



         (q)  The Company and its subsidiaries (A) are in compliance in all 
       respects with applicable federal, state, local and foreign laws and 
       regulations, except where the failure to be in compliance would not 
       have a Material Adverse Effect; and (B) possess and are in compliance 
       with the terms and conditions of such licenses, permits, consents, 
       orders, certificates or authorizations issued by the appropriate 
       federal, state, foreign or local regulatory agencies or bodies 
       necessary to conduct the businesses now operated by each of them, 
       except for licenses, permits, consents, orders, certificates or 
       authorizations, the absence of which, individually or in the 
       aggregate, would not have a Material Adverse Effect; neither the 
       Company nor any of its subsidiaries has received any notice of 
       proceedings relating to the revocation or modification of any such 
       licenses, permits, consents, orders, certificates or authorizations 
       other than revocations or modifications which, individually or in the 
       aggregate, would not have a Material Adverse Effect; 

         (r)  The Company and each of its subsidiaries has filed all 
       necessary foreign, federal and state income, value-added, franchise, 
       telecommunications excise, sales and use and similar tax returns and 
       has paid all taxes shown as due thereon, and there is no tax 
       deficiency that has been, or to the knowledge of the Company might be, 
       asserted against the Company, any of its subsidiaries, or any of their 
       respective properties or assets that would or could be expected to 
       have a Material Adverse Effect; and

         (s)  The Company and its subsidiaries carry, or are covered by, 
       insurance in such amounts and covering such risks as is reasonable for 
       the conduct of their businesses and the value of their properties and 
       as is customary for companies engaged in similar businesses in similar 
       industries.

   3.  Upon the execution of the Pricing Agreement applicable to any 
Designated Securities and authorization by the Representatives of the release 
of such Designated Securities, the several Underwriters propose to offer such 
Designated Securities for sale upon the terms and conditions set forth in the 
Prospectus as amended or supplemented.

   4.  Designated Securities to be purchased by each Underwriter pursuant to 
the Pricing Agreement relating thereto, in the form specified in such Pricing 
Agreement, and in such authorized denominations and registered in such names 
as the Representatives may request upon at least forty-eight hours' prior 
notice to the Company, shall be delivered by or on behalf of the Company to 
the Representatives for the account of such Underwriter, against payment by 
such Underwriter or on its behalf of the purchase price therefor by certified 
or official bank check or checks, payable to the order of the Company in the 
funds specified in such Pricing Agreement, all in the manner and at the place 
and time and date specified in such Pricing Agreement or at such other place 
and time and date as the Representatives and the Company may agree upon in 
writing, such time and date being herein called the "Time of Delivery" for 
such Securities.

   5.  The Company agrees with each of the Underwriters of any Designated 
Securities:

         (a)  To prepare the Prospectus as amended or supplemented in 
       relation to the applicable Designated Securities in a form approved by 
       the Representatives and to file such Prospectus pursuant to Rule 
       424(b) under the Act not later than the Commission's close of business 
       on the second business day following the execution and delivery of the 
       Pricing Agreement relating to the applicable Designated Securities or, 
       if applicable, such earlier time as may be required by Rule 424(b); to 
       make no further amendment or any supplement to the Registration 
       Statement or Prospectus as 


                                      7



       amended or supplemented after the date of the Pricing Agreement relating
       to such Securities and prior to the Time of Delivery for such Securities
       which shall be disapproved by the Representatives for such Securities 
       promptly after reasonable notice thereof; to advise the Representatives 
       promptly of any such amendment or supplement after such Time of Delivery
       and furnish the Representatives with copies thereof; to file promptly 
       all reports and any definitive proxy or information statements required 
       to be filed by the Company with the Commission pursuant to Section 13(a),
       13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a 
       prospectus is required in connection with the offering or sale of such 
       Securities, and during such same period to advise the Representatives, 
       promptly after it receives notice thereof, of the time when any 
       amendment to the Registration Statement has been filed or becomes 
       effective or any supplement to the Prospectus or any amended 
       Prospectus has been filed with the Commission, of the issuance by the 
       Commission of any stop order or of any order preventing or suspending 
       the use of any prospectus relating to the Securities, of the 
       suspension of the qualification of such Securities for offering or 
       sale in any jurisdiction, of the initiation or threatening of any 
       proceeding for any such purpose, or of any request by the Commission 
       for the amending or supplementing of the Registration Statement or 
       Prospectus or for additional information; and, in the event of the 
       issuance of any such stop order or of any such order preventing or 
       suspending the use of any prospectus relating to the Securities or 
       suspending any such qualification, to promptly use its best efforts to 
       obtain the withdrawal of such order;

         (b)  Promptly from time to time to take such action as the 
       Representatives may reasonably request to qualify such Securities for 
       offering and sale under the securities laws of such jurisdictions as 
       the Representatives may request and to comply with such laws so as to 
       permit the continuance of sales and dealings therein in such 
       jurisdictions for as long as may be necessary to complete the 
       distribution of such Securities, provided that in connection therewith 
       the Company shall not be required to qualify as a foreign corporation 
       or to file a general consent to service of process in any jurisdiction;

         (c)  Prior to 10:00 a.m., New York City time, on the New York 
       Business Day next succeeding the date of each Pricing Agreement and 
       from time to time, to furnish the Underwriters with copies of the 
       Prospectus as amended or supplemented in New York City in such 
       quantities as the Representatives may from time to time reasonably 
       request, and, if the delivery of a prospectus is required at any time 
       in connection with the offering or sale of the Securities and if at 
       such time any event shall have occurred as a result of which the 
       Prospectus as then amended or supplemented would include an untrue 
       statement of a material fact or omit to state any material fact 
       necessary in order to make the statements therein, in the light of the 
       circumstances under which they were made when such Prospectus is 
       delivered, not misleading, or, if for any other reason it shall be 
       necessary during such same period to amend or supplement the 
       Prospectus or to file under the Exchange Act any document incorporated 
       by reference in the Prospectus in order to comply with the Act, the 
       Exchange Act or the Trust Indenture Act, to notify the Representatives 
       and upon their request to file such document and to prepare and 
       furnish without charge to each Underwriter and to any dealer in 
       securities as many copies as the Representatives may from time to time 
       reasonably request of an amended Prospectus or a supplement to the 
       Prospectus which will correct such statement or omission or effect 
       such compliance;

                                      8



         (d)  To make generally available to its securityholders as soon as 
       practicable, but in any event not later than eighteen months after the 
       effective date of the Registration Statement (as defined in Rule 
       158(c) under the Act), an earnings statement of the Company and its 
       subsidiaries (which need not be audited) complying with Section 11(a) 
       of the Act and the rules and regulations of the Commission thereunder 
       (including, at the option of the Company, Rule 158); 

         (e)  During the period beginning from the date of the Pricing 
       Agreement for such Designated Securities and continuing to and 
       including the later of (i) the termination of trading restrictions for 
       such Designated Securities, as notified to the Company by the 
       Representatives and (ii) the Time of Delivery for such Designated 
       Securities, not to offer, sell, contract to sell or otherwise dispose 
       of any debt securities of the Company which mature more than one year 
       after such Time of Delivery and which are substantially similar to 
       such Designated Securities, without the prior written consent of the 
       Representatives; 

         (f)  If the Company elects to rely upon Rule 462(b), the Company 
       shall file a Rule 462(b) Registration Statement with the Commission in 
       compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on 
       the date of this Agreement, and the Company shall at the time of 
       filing either pay to the Commission the filing fee for the Rule 462(b) 
       Registration Statement or give irrevocable instructions for the 
       payment of such fee pursuant to Rule 111(b) under the Act; and

         (g)  To use the net proceeds received by it from the sale of 
       Designated Securities pursuant to this Agreement in the manner 
       specified in the Prospectus, as amended or supplemented prior to the 
       Time of Delivery, under the caption "Use of Proceeds."

     6.  The Company covenants and agrees with the several Underwriters that 
the Company will pay or cause to be paid the following: (i) the fees, 
disbursements and expenses of the Company's counsel and accountants in 
connection with the registration of the Securities under the Act and all 
other expenses in connection with the preparation, printing and filing of the 
Registration Statement, any Preliminary Prospectus and the Prospectus and 
amendments and supplements thereto and the mailing and delivering of copies 
thereof to the Underwriters and dealers; (ii) the cost of printing or 
producing any Agreement among Underwriters, this Agreement, any Pricing 
Agreement, any Indenture, any Blue Sky and Legal Investment Memoranda, 
closing documents (including any compilations thereof) and any other 
documents in connection with the offering, purchase, sale and delivery of the 
Securities; (iii) all expenses in connection with the qualification of the 
Securities for offering and sale under state securities laws as provided in 
Section 5(b) hereof, including the reasonable fees and disbursements of 
counsel for the Underwriters in connection with such qualification and in 
connection with the Blue Sky and Legal Investment Surveys; (iv) any fees 
charged by securities rating services for rating the Securities; (v) any 
filing fees incident to, and the reasonable fees and disbursements of counsel 
for the Underwriters in connection with, any required review by the National 
Association of Securities Dealers, Inc. of the terms of the sale of the 
Securities; (vi) the cost of preparing the Securities; (vii) the fees and 
expenses of any Trustee and any agent of any Trustee and the fees and 
disbursements of counsel for any Trustee in connection with any Indenture and 
the Securities; and (viii) all other costs and expenses incident to the 
performance of its obligations hereunder which are not otherwise specifically 
provided for in this Section.  It is understood, however, that, except as 
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will 
pay all of their own costs 


                                      9



and expenses, including the fees of their counsel, transfer taxes on resale 
of any of the Securities by them, and any advertising expenses connected with 
any offers they may make.

     7.  The obligations of the Underwriters of any Designated Securities 
under the Pricing Agreement relating to such Designated Securities shall be 
subject, in the discretion of the Representatives, to the condition that all 
representations and warranties and other statements of the Company in or 
incorporated by reference in the Pricing Agreement relating to such 
Designated Securities are, at and as of the Time of Delivery for such 
Designated Securities, true and correct, the condition that the Company shall 
have performed all of its obligations hereunder theretofore to be performed, 
and the following additional conditions:

         (a)  The Prospectus as amended or supplemented in relation to the 
       applicable Designated Securities shall have been filed with the 
       Commission pursuant to Rule 424(b) within the applicable time period 
       prescribed for such filing by the rules and regulations under the Act 
       and in accordance with Section 5(a) hereof; if the Company has elected 
       to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall 
       have become effective by 10:00 P.M., Washington, D.C. time, on the 
       date of this Agreement; no stop order suspending the effectiveness of 
       the Registration Statement or any part thereof shall have been issued 
       and no proceeding for that purpose shall have been initiated or 
       threatened by the Commission; and all requests for additional 
       information on the part of the Commission shall have been complied 
       with to the Representatives' reasonable satisfaction;

         (b)  Counsel for the Underwriters shall have furnished to the 
       Representatives such opinion or opinions dated the Time of Delivery 
       for such Designated Securities, with respect to the incorporation of 
       the Company, the validity of the Indenture, the validity of the 
       Designated Securities being delivered at such Time of Delivery, the 
       Registration Statement, the Prospectus, and such other related matters 
       as the Representatives may reasonably request, and such counsel shall 
       have received such papers and information as they may reasonably 
       request to enable them to pass upon such matters;

         (c)  Counsel for the Company satisfactory to the Representatives 
       shall have furnished to the Representatives their written opinion, 
       dated the Time of Delivery for such Designated Securities, in the form 
       presented to the Representatives prior to the execution of this 
       Agreement and in form and substance satisfactory to the 
       Representatives, to the effect that:

              (i)   The Company has been duly incorporated and is validly 
            existing as a corporation in good standing under the laws of the 
            jurisdiction of its incorporation, with corporate power and 
            authority to own its properties and conduct its business as 
            described in the Prospectus as amended or supplemented;

              (ii)  The Company has an authorized capitalization as set forth 
            in the Prospectus as amended or supplemented and all of the 
            issued shares of capital stock of the Company have been duly and 
            validly authorized and issued and are fully paid and 
            non-assessable;

              (iii)  Each Significant Subsidiary of the Company has been duly 
            incorporated and is validly existing as a corporation in good 
            standing under the laws of its jurisdiction of incorporation, 
            with corporate power and authority to own its properties and 
            conduct its business as described in the Prospectus; and all of 
            the issued shares of capital stock of each such Significant 
            Subsidiary have been duly 


                                      10



            and validly authorized and issued, are fully paid and 
            non-assessable, and (except for directors' qualifying shares and 
            as set forth or incorporated by reference in the Registration 
            Statement) are owned directly or indirectly by the Company; 

              (iv) To the best of such counsel's knowledge and other than as 
            set forth in the Prospectus, there are no legal or governmental 
            proceedings pending to which the Company or any of its 
            subsidiaries is a party or of which any property of the Company 
            or any of its subsidiaries is the subject which, if determined 
            adversely to the Company or any of its subsidiaries, would 
            individually or in the aggregate have a material adverse effect 
            on the current or future consolidated financial position, 
            stockholders' equity or results of operations of the Company and 
            its subsidiaries; and, to the best of such counsel's knowledge, 
            no such proceedings are threatened or contemplated by 
            governmental authorities or threatened by others;

              (v)  This Agreement and the Pricing Agreement with respect to 
            the Designated Securities have been duly authorized, executed and 
            delivered by the Company;

              (vi)  The Designated Securities have been duly authorized, 
            executed, authenticated, issued and delivered and constitute 
            valid and legally binding obligations of the Company entitled to 
            the benefits provided by the Indenture; and the Designated 
            Securities and the Indenture conform in all material respects to 
            the descriptions thereof in the Prospectus as amended or 
            supplemented;

              (vii)  The Indenture has been duly authorized, executed and 
            delivered by the parties thereto and constitutes a valid and 
            legally binding instrument, enforceable in accordance with its 
            terms, subject, as to enforcement, to bankruptcy, insolvency, 
            reorganization and other laws of general applicability relating 
            to or affecting creditors' rights and to general equity 
            principles; and the Indenture has been duly qualified under the 
            Trust Indenture Act;

              (viii) The issue and sale of the Designated Securities and the 
            compliance by the Company with all of the provisions of the 
            Designated Securities, the Indenture, this Agreement and the 
            Pricing Agreement with respect to the Designated Securities and 
            the consummation of the transactions herein and therein 
            contemplated will not conflict with or result in a breach or 
            violation of any of the terms or provisions of, or constitute a 
            default under, any indenture, mortgage, deed of trust, loan 
            agreement or other agreement or instrument known to such counsel 
            to which the Company is a party or by which the Company is bound 
            or to which any of the property or assets of the Company is 
            subject, nor will such actions result in any violation of the 
            provisions of the Certificate of Incorporation or By-laws of the 
            Company or any statute or any order, rule or regulation known to 
            such counsel of any court or governmental agency or body having 
            jurisdiction over the Company or any of its properties;

              (ix) No consent, approval, authorization, order, filing, 
            registration or qualification of or with any such court or 
            governmental agency or body is required for the issue and sale of 
            the Designated Securities or the consummation by the Company of 
            the transactions contemplated by this Agreement or such Pricing 
            Agreement or the Indenture, except such as have been obtained 
            under the Act and the Trust Indenture Act and such consents, 
            approvals, authorizations, orders, filings, registrations or 
            qualifications as may be required under state 


                                      11



            securities or Blue Sky laws in connection with the purchase and 
            distribution of the Designated Securities by the Underwriters;

              (x)  To the best of such counsel's knowledge, neither the 
            Company nor any of its subsidiaries is in violation of its 
            By-laws or Certificate of Incorporation; 

              (xi)  The statements set forth in the Prospectus as amended or 
            supplemented under the captions "Description of Debt Securities," 
            "Description of Securities," "Description of Capital Stock," 
            "Description of Warrants" and "Description of Units of 
            Securities," insofar as they purport to constitute a summary of 
            the terms of such securities, and under the captions "Plan of 
            Distribution" and "Underwriting", insofar as they purport to 
            describe the provisions of the laws and documents referred to 
            therein, are accurate and fairly and correctly present in all 
            material respects the information required to be presented by the 
            Act or the rules and regulations of the Commission thereunder; 

              (xii)  The Company is not an "investment company" or an entity 
            "controlled" by an "investment company", as such terms are 
            defined in the Investment Company Act;

              (xiii)  The documents incorporated by reference in the 
            Prospectus as amended or supplemented (other than the financial 
            statements and related schedules therein, as to which such 
            counsel need express no opinion), when they became effective or 
            were filed with the Commission, as the case may be, complied as 
            to form in all material respects with the requirements of the Act 
            or the Exchange Act, as applicable, and the rules and regulations 
            of the Commission thereunder; and

              (xiv)  The Registration Statement and the Prospectus as amended 
            or supplemented and any further amendments and supplements 
            thereto made by the Company prior to the Time of Delivery for the 
            Designated Securities (other than the financial statements and 
            related schedules therein, as to which such counsel need express 
            no opinion) comply as to form in all material respects with the 
            requirements of the Act and the Trust Indenture Act and the rules 
            and regulations thereunder.

            Such counsel shall also advise the Underwriters that, although 
such counsel is not passing upon and assumes no responsibility or liability 
for the accuracy, completeness or fairness of the statements contained in the 
documents incorporated by reference in the Prospectus as amended or 
supplemented, they have no reason to believe that any such documents 
incorporated by reference (other than the financial statements and related 
schedules therein, as to which such counsel need express no opinion), when 
they became effective or were filed with the Commission, as the case may be, 
contained, in the case of a registration statement which became effective 
under the Act, an untrue statement of a material fact or omitted to state a 
material fact required to be stated therein or necessary to make the 
statements therein not misleading, or, in the case of other documents which 
were filed under the Act or the Exchange Act with the Commission, an untrue 
statement of a material fact or omitted to state a material fact necessary in 
order to make the statements therein, in the light of the circumstances under 
which they were made when such documents were so filed, not misleading.

              Such counsel shall also advise the Underwriters that, although 
such counsel is not passing upon and assumes no responsibility or liability 
for the accuracy, completeness or fairness of the statements contained in the 
Registration Statement or Prospectus as amended or supplemented, during the 
course of its representation of the Company in connection with 


                                      12



the preparation of the Registration Statement and the Prospectus as amended 
or supplemented, and on the basis of conferences with officers of the 
Company, examination of documents referred to in the Registration Statement 
and Prospectus as amended or supplemented and such other procedures as such 
counsel deemed appropriate, nothing has come to the attention of such counsel 
that causes such counsel to believe that as of its effective date, the 
Registration Statement or any further amendment thereto made by the Company 
prior to the Time of Delivery (other than the financial statements and 
related schedules therein, as to which such counsel need express no opinion) 
contained an untrue statement of a material fact or omitted to state a 
material fact required to be stated therein or necessary to make the 
statements therein not misleading or that, as of its date, the Prospectus as 
amended or supplemented prior to the Time of Delivery (other than the 
financial statements and related schedules therein, as to which such counsel 
need express no opinion) contained an untrue statement of a material fact or 
omitted to state a material fact necessary to make the statements therein, in 
the light of the circumstances under which they were made, not misleading or 
that, as of the Time of Delivery, either the Registration Statement or the 
Prospectus as amended or supplemented prior to the Time of Delivery (other 
than the financial statements and related schedules therein, as to which such 
counsel need express no opinion) contains an untrue statement of a material 
fact or omits to state a material fact necessary to make the statements 
therein, in light of the circumstances under which they were made, not 
misleading.

              In rendering the foregoing opinions, such counsel may rely (i) 
as to matters of law other than the law of the States of Delaware and 
Minnesota and federal law, upon the opinion or opinions of local counsel 
provided that the extent of such reliance is specified in such opinion and 
that such counsel shall state that such opinion or opinions of local counsel 
are satisfactory to them and that they believe they and you are justified in 
relying thereon and (ii) as to matters of fact, to the extent such counsel 
deems reasonable, upon certificates of officers of the Company and 
governmental authorities provided that the extent of such reliance is 
specified in such opinion; 

         (d)  The general counsel of the Company or other counsel for the 
       Company satisfactory to the Representatives shall have furnished to 
       the Representatives his written opinion, dated the Time of Delivery 
       for such Designated Securities, in the form presented to the 
       Representatives prior to the execution of this Agreement and in form 
       and substance satisfactory to the Representatives, to the effect that:

              (i)  Each Significant Subsidiary of the Company has been duly 
            incorporated and is validly existing as a corporation in good 
            standing under the laws of its jurisdiction of incorporation, 
            with corporate power and authority to own its properties and 
            conduct its business as described in the Prospectus; and all of 
            the issued shares of capital stock of each such Significant 
            Subsidiary have been duly and validly authorized and issued, are 
            fully paid and non-assessable, and (except for directors' 
            qualifying shares and as set forth or incorporated by reference 
            in the Registration Statement) are owned directly or indirectly 
            by the Company, free and clear of all liens, encumbrances, 
            equities or claims; 

              (ii) To the best of such counsel's knowledge and other than as 
            set forth in the Prospectus, there are no legal or governmental 
            proceedings pending to which the Company or any of its 
            subsidiaries is a party or of which any property of the Company 
            or any of its subsidiaries is the subject which, if determined 
            adversely to the Company or any of its subsidiaries, would 
            individually or in the aggregate have a material adverse effect 
            on the current or future consolidated financial position, 
            stockholders' equity or results of operations of the Company and its


                                      13



            subsidiaries; and, to the best of such counsel's knowledge, 
            no such proceedings are threatened or contemplated by 
            governmental authorities or threatened by others;

              (iii)  To the best of such counsel's knowledge, the Company 
            together with its subsidiaries owns and possesses all right, 
            title and interest in and to, or has duly licensed from third 
            parties a valid, enforceable right to use, all Patent and 
            Proprietary Rights currently or proposed to be employed by it in 
            connection with its business.  To the best of such counsel's 
            knowledge, neither the Company nor any of its subsidiaries has 
            received any notice of infringement or misappropriation of or 
            conflict with asserted rights of others with respect to any 
            Patent or Proprietary Rights, or of any facts which would render 
            any Patent or Proprietary Rights invalid or inadequate to protect 
            the interest of the Company or its subsidiaries therein, and 
            which asserted infringement, misappropriation or conflict or 
            invalidity or inadequacy, individually or in the aggregate, would 
            or could reasonably be expected to result in a Material Adverse 
            Effect; 

              (iv)  To the best of such counsel's knowledge, the Company and 
            each of its subsidiaries has filed all necessary federal and 
            state income, franchise, sales and use tax returns and has paid 
            all taxes shown as due thereon, and there is no tax deficiency 
            that has been, or to the best of such counsel's knowledge, might 
            be, asserted against the Company, any of its subsidiaries, or any 
            of their respective properties or assets that would or could be 
            expected to have a Material Adverse Effect;

              (v)  To the best of such counsel's knowledge, neither the 
            Company nor any of its subsidiaries is in violation of its 
            By-laws or Certificate of Incorporation or is in default in the 
            performance or observance of any material obligation, agreement, 
            covenant or condition contained in any contract, indenture, 
            mortgage, loan agreement, note, lease or other instrument to 
            which it is a party or by which it or any of its properties may 
            be bound;

              (vi) The documents incorporated by reference in the Prospectus 
            as amended or supplemented (other than the financial statements 
            and related schedules therein, as to which such counsel need 
            express no opinion), when they became effective or were filed 
            with the Commission, as the case may be, complied as to form in 
            all material respects with the requirements of the Act or the 
            Exchange Act, as applicable, and the rules and regulations of the 
            Commission thereunder; and

              (vii) The Registration Statement and the Prospectus as amended 
            or supplemented and any further amendments and supplements 
            thereto made by the Company prior to the Time of Delivery for the 
            Designated Securities (other than the financial statements and 
            related schedules therein, as to which such counsel need express 
            no opinion) comply as to form in all material respects with the 
            requirements of the Act and the Trust Indenture Act and the rules 
            and regulations thereunder.

            Such counsel shall also advise the Underwriters that, although 
such counsel is not passing upon and assumes no responsibility or liability 
for the accuracy, completeness or fairness of the statements contained in the 
documents incorporated by reference in the Prospectus as amended or 
supplemented, he has no reason to believe that any of such documents 
incorporated by reference (other than the financial statements and related 


                                      14



schedules therein, as to which such counsel need express no opinion), when 
they became effective or were filed with the Commission, as the case may be, 
contained, in the case of a registration statement which became effective 
under the Act, an untrue statement of a material fact or omitted to state a 
material fact required to be stated therein or necessary to make the 
statements therein not misleading, or, in the case of other documents which 
were filed under the Act or the Exchange Act with the Commission, an untrue 
statement of a material fact or omitted to state a material fact necessary in 
order to make the statements therein, in the light of the circumstances under 
which they were made when such documents were so filed, not misleading.

         Such counsel shall also advise the Underwriters that, although such 
counsel is not passing upon and assumes no responsibility or liability for 
the accuracy, completeness or fairness of the statements contained in the 
Registration Statement or Prospectus as amended or supplemented, during the 
course of its representation of the Company in connection with the 
preparation of the Registration Statement and the Prospectus as amended or 
supplemented, and on the basis of conferences with officers of the Company, 
examination of documents referred to in the Registration Statement and 
Prospectus as amended or supplemented and such other procedures as such 
counsel deemed appropriate, nothing has come to the attention of such counsel 
that causes such counsel to believe that as of its effective date, the 
Registration Statement or any further amendment thereto made by the Company 
prior to the Time of Delivery (other than the financial statements and 
related schedules therein, as to which such counsel need express no opinion) 
contained an untrue statement of a material fact or omitted to state a 
material fact required to be stated therein or necessary to make the 
statements therein not misleading or that, as of its date, the Prospectus as 
amended or supplemented prior to the Time of Delivery (other than the 
financial statements and related schedules therein, as to which such counsel 
need express no opinion) contained an untrue statement of a material fact or 
omitted to state a material fact necessary to make the statements therein, in 
the light of the circumstances under which they were made, not misleading or 
that, as of the Time of Delivery, either the Registration Statement or the 
Prospectus as amended or supplemented prior to the Time of Delivery (other 
than the financial statements and related schedules therein, as to which such 
counsel need express no opinion) contains an untrue statement of a material 
fact or omits to state a material fact necessary to make the statements 
therein, in light of the circumstances under which they were made, not 
misleading.

         In rendering the foregoing opinions, such counsel may rely (i) as to 
matters of law other than the law of the States of Delaware and Minnesota and 
federal law, upon the opinion or opinions of local counsel provided that the 
extent of such reliance is specified in such opinion and that such counsel 
shall state that such opinion or opinions of local counsel are satisfactory 
to him and that he believes that he and you are justified in relying thereon 
and (ii) as to matters of fact, to the extent such counsel deems reasonable, 
upon certificates of officers of the Company and governmental authorities 
provided that the extent of such reliance is specified in such opinion;

         (e)  On the date of the Pricing Agreement for such Designated 
       Securities at a time prior to the execution of the Pricing Agreement 
       with respect to such Designated Securities and at the Time of Delivery 
       for such Designated Securities, KPMG Peat Marwick LLP shall have 
       furnished to the Representatives a letter, dated the effective date of 
       the Registration Statement or the date of the most recent report filed 
       with the Commission containing financial statements of the Company and 
       incorporated by 


                                      15



       reference in the Registration Statement, if the date of such report is 
       later than such effective date, and a letter dated such Time of Delivery,
       respectively, in the form presented to the Representatives prior to the 
       execution of this Agreement and in form and substance satisfactory to 
       the Representatives, to the effect set forth in Annex II hereto;  

         (f)  (i) Neither the Company nor any of its subsidiaries shall have 
       sustained since the date of the latest audited financial statements 
       included or incorporated by reference in the Prospectus as amended or 
       supplemented prior to the date of the Pricing Agreement relating to 
       the Designated Securities any loss or interference with its business 
       from fire, explosion, flood or other calamity, whether or not covered 
       by insurance, or from any labor dispute or court or governmental 
       action, order or decree, otherwise than as set forth or contemplated 
       in the Prospectus as amended or supplemented prior to the date of the 
       Pricing Agreement relating to the Designated Securities, and (ii) 
       since the respective dates as of which information is given in the 
       Prospectus as amended or supplemented prior to the date of the Pricing 
       Agreement relating to the Designated Securities there shall not have 
       been any change in the capital stock or long-term debt of the Company 
       or any of its subsidiaries, or any change, or any development 
       involving a prospective change, in or affecting the general affairs, 
       management, financial position, stockholders' equity or results of 
       operations of the Company and its subsidiaries taken as a whole, 
       otherwise than as set forth or contemplated in the Prospectus as 
       amended or supplemented prior to the date of the Pricing Agreement 
       relating to the Designated Securities, the effect of which, in any 
       such case described in Clause (i) or (ii), is in the judgment of the 
       Representatives so material and adverse as to make it impracticable or 
       inadvisable to proceed with the public offering or the delivery of the 
       Designated Securities on the terms and in the manner contemplated in 
       the Prospectus as first amended or supplemented relating to the 
       Designated Securities;

         (g)  On or after the date of the Pricing Agreement relating to the 
       Designated Securities (i) no downgrading shall have occurred in the 
       rating accorded the Company's debt securities or preferred stock by 
       any "nationally recognized statistical rating organization", as that 
       term is defined by the Commission for purposes of Rule 436(g)(2) under 
       the Act, and (ii) no such organization shall have publicly announced 
       that it has under surveillance or review, with possible negative 
       implications, its rating of any of the Company's debt securities or 
       preferred stock; 

         (h)  On or after the date of the Pricing Agreement relating to the 
       Designated Securities there shall not have occurred any of the 
       following: (i) a suspension or material limitation in trading in 
       securities generally on the New York Stock Exchange or Nasdaq Stock 
       Market; (ii) a suspension or material limitation in trading in the 
       Company's securities on the New York Stock Exchange; (iii) a general 
       moratorium on commercial banking activities declared by either 
       Federal, New York or Illinois authorities; or (iv) the outbreak or 
       escalation of hostilities involving the United States or the 
       declaration by the United States of a national emergency or war, if 
       the effect of any such event specified in this Clause (iv) in the 
       judgment of the Representatives makes it impracticable or inadvisable 
       to proceed with the public offering or the delivery of the Designated 
       Securities on the terms and in the manner contemplated in the 
       Prospectus as first amended or supplemented relating to the Designated 
       Securities;

         (i)  The Company shall have furnished or caused to be furnished to the


                                      16



       Representatives at the Time of Delivery for the Designated 
       Securities a certificate or certificates of officers of the Company 
       satisfactory to the Representatives as to the accuracy of the 
       representations and warranties of the Company herein at and as of such 
       Time of Delivery, as to the performance by the Company of all of its 
       obligations hereunder to be performed at or prior to such Time of 
       Delivery, as to the matters set forth in the introductory paragraph of 
       this Section, subsection (e) of this Section and as to such other 
       matters as the Representatives may reasonably request; and

         (j)  The Company shall have complied with the provisions of Section 
       5(c) hereof with respect to the furnishing of prospectuses on the New 
       York Business Day next succeeding the date of such Pricing Agreement.

     8.  (a)  The Company will indemnify and hold harmless each Underwriter 
against any losses, claims, damages or liabilities, joint or several, to 
which such Underwriter may become subject, under the Act or otherwise, 
insofar as such losses, claims, damages or liabilities (or actions in respect 
thereof) arise out of or are based upon an untrue statement or alleged untrue 
statement of a material fact contained in any Preliminary Prospectus, any 
preliminary prospectus supplement, the Registration Statement, the Prospectus 
as amended or supplemented and any other prospectus relating to the 
Securities, or any amendment or supplement thereto, or arise out of or are 
based upon the omission or alleged omission to state therein a material fact 
required to be stated therein or necessary to make the statements therein not 
misleading, and will reimburse each Underwriter for any legal or other 
expenses reasonably incurred by such Underwriter in connection with 
investigating or defending any such action or claim as such expenses are 
incurred; PROVIDED, HOWEVER, that the Company shall not be liable in any such 
case to the extent that any such loss, claim, damage or liability arises out 
of or is based upon an untrue statement or alleged untrue statement or 
omission or alleged omission made in any Preliminary Prospectus, any 
preliminary prospectus supplement, the Registration Statement, the Prospectus 
as amended or supplemented and any other prospectus relating to the 
Securities, or any such amendment or supplement in reliance upon and in 
conformity with written information furnished to the Company by any 
Underwriter of Designated Securities through the Representatives expressly 
for use in the Prospectus as amended or supplemented relating to such 
Securities.

     (b)  Each Underwriter will indemnify and hold harmless the Company 
against any losses, claims, damages or liabilities to which the Company may 
become subject, under the Act or otherwise, insofar as such losses, claims, 
damages or liabilities (or actions in respect thereof) arise out of or are 
based upon an untrue statement or alleged untrue statement of a material fact 
contained in any Preliminary Prospectus, any preliminary prospectus 
supplement, the Registration Statement, the Prospectus as amended or 
supplemented and any other prospectus relating to the Securities, or any 
amendment or supplement thereto, or arise out of or are based upon the 
omission or alleged omission to state therein a material fact required to be 
stated therein or necessary to make the statements therein not misleading, in 
each case to the extent, but only to the extent, that such loss, claim, 
damage or liability arises out of or is based upon an untrue statement or 
alleged untrue statement or omission or alleged omission made in any 
Preliminary Prospectus, any preliminary prospectus supplement, the 
Registration Statement, the Prospectus as amended or supplemented and any 
other prospectus relating to the Securities, or any such amendment or 
supplement in reliance upon and in conformity with written information 
furnished to the Company by such Underwriter through the Representatives 
expressly for use therein; and will reimburse the Company for any legal or 
other expenses reasonably incurred by the Company in connection with 
investigating

                                      17



or defending any such action or claim as such expenses are incurred.

     (c)  Promptly after receipt by an indemnified party under subsection (a) 
or (b) above of notice of the commencement of any action, such indemnified 
party shall, if a claim in respect thereof is to be made against the 
indemnifying party under such subsection, notify the indemnifying party in 
writing of the commencement thereof; but the omission so to notify the 
indemnifying party shall not relieve it from any liability which it may have 
to any indemnified party otherwise than under such subsection.  In case any 
such action shall be brought against any indemnified party and it shall 
notify the indemnifying party of the commencement thereof, the indemnifying 
party shall be entitled to participate therein and, to the extent that it 
shall wish, jointly with any other indemnifying party similarly notified, to 
assume the defense thereof, with counsel satisfactory to such indemnified 
party (who shall not, except with the consent of the indemnified party, be 
counsel to the indemnifying party), and, after notice from the indemnifying 
party to such indemnified party of its election so to assume the defense 
thereof, the indemnifying party shall not be liable to such indemnified party 
under such subsection for any legal expenses of other counsel or any other 
expenses, in each case subsequently incurred by such indemnified party, in 
connection with the defense thereof other than reasonable costs of 
investigation.  No indemnifying party shall, without the written consent of 
the indemnified party, effect the settlement or compromise of, or consent to 
the entry of any judgment with respect to, any pending or threatened action 
or claim in respect of which indemnification or contribution may be sought 
hereunder (whether or not the indemnified party is an actual or potential 
party to such action or claim) unless such settlement, compromise or judgment 
(i) includes an unconditional release of the indemnified party from all 
liability arising out of such action or claim and (ii) does not include a 
statement as to or an admission of fault, culpability or a failure to act, by 
or on behalf of any indemnified party.

      (d)  If the indemnification provided for in this Section 8 is 
unavailable to or insufficient to hold harmless an indemnified party under 
subsection (a) or (b) above in respect of any losses, claims, damages or 
liabilities (or actions in respect thereof) referred to therein, then each 
indemnifying party shall contribute to the amount paid or payable by such 
indemnified party as a result of such losses, claims, damages or liabilities 
(or actions in respect thereof) in such proportion as is appropriate to 
reflect the relative benefits received by the Company on the one hand and the 
Underwriters of the Designated Securities on the other from the offering of 
the Designated Securities to which such loss, claim, damage or liability (or 
action in respect thereof) relates.  If, however, the allocation provided by 
the immediately preceding sentence is not permitted by applicable law or if 
the indemnified party failed to give the notice required under subsection (c) 
above, then each indemnifying party shall contribute to such amount paid or 
payable by such indemnified party in such proportion as is appropriate to 
reflect not only such relative benefits but also the relative fault of the 
Company on the one hand and the Underwriters of the Designated Securities on 
the other in connection with the statements or omissions which resulted in 
such losses, claims, damages or liabilities (or actions in respect thereof), 
as well as any other relevant equitable considerations.  The relative 
benefits received by the Company on the one hand and such Underwriters on the 
other shall be deemed to be in the same proportion as the total net proceeds 
from such offering (before deducting expenses) received by the Company bear 
to the total underwriting discounts and commissions received by such 
Underwriters.  The relative fault shall be determined by reference to, among 
other things, whether the untrue or alleged untrue statement of a material 
fact or the omission or alleged omission to state a material fact relates to 
information supplied by the Company on the one hand or such Underwriters on 
the other and the parties' relative intent, knowledge, 


                                      18



access to information and opportunity to correct or prevent such statement or 
omission.  The Company and the Underwriters agree that it would not be just 
and equitable if contribution pursuant to this subsection (d) were determined 
by PRO RATA allocation (even if the Underwriters were treated as one entity 
for such purpose) or by any other method of allocation which does not take 
account of the equitable considerations referred to above in this subsection 
(d).  The amount paid or payable by an indemnified party as a result of the 
losses, claims, damages or liabilities (or actions in respect thereof) 
referred to above in this subsection (d) shall be deemed to include any legal 
or other expenses reasonably incurred by such indemnified party in connection 
with investigating or defending any such action or claim. Notwithstanding the 
provisions of this subsection (d), no Underwriter shall be required to 
contribute any amount in excess of the amount by which the total price at 
which the applicable Designated Securities underwritten by it and distributed 
to the public were offered to the public exceeds the amount of any damages 
which such Underwriter has otherwise been required to pay by reason of such 
untrue or alleged untrue statement or omission or alleged omission.  No 
person guilty of fraudulent misrepresentation (within the meaning of Section 
11(f) of the Act) shall be entitled to contribution from any person who was 
not guilty of such fraudulent misrepresentation.  The obligations of the 
Underwriters of Designated Securities in this subsection (d) to contribute 
are several in proportion to their respective underwriting obligations with 
respect to such Securities and not joint.

     (e)  The obligations of the Company under this Section 8 shall be in 
addition to any liability which the Company may otherwise have and shall 
extend, upon the same terms and conditions, to each person, if any, who 
controls any Underwriter within the meaning of the Act; and the obligations 
of the Underwriters under this Section 8 shall be in addition to any 
liability which the respective Underwriters may otherwise have and shall 
extend, upon the same terms and conditions, to each officer and director of 
the Company and to each person, if any, who controls the Company within the 
meaning of the Act.

     9.  (a)  If any Underwriter shall default in its obligation to purchase 
the Designated Securities which it has agreed to purchase under the Pricing 
Agreement relating to such Designated Securities, the Representatives may in 
their discretion arrange for themselves or another party or other parties to 
purchase such Designated Securities on the terms contained herein.  If within 
thirty-six hours after such default by any Underwriter the Representatives do 
not arrange for the purchase of such Designated Securities, then the Company 
shall be entitled to a further period of thirty-six hours within which to 
procure another party or other parties satisfactory to the Representatives to 
purchase such Designated Securities on such terms.  In the event that, within 
the respective prescribed period, the Representatives notify the Company that 
they have so arranged for the purchase of such Designated Securities, or the 
Company notifies the Representatives that it has so arranged for the purchase 
of such Designated Securities, the Representatives or the Company shall have 
the right to postpone the Time of Delivery for such Designated Securities for 
a period of not more than seven days, in order to effect whatever changes may 
thereby be made necessary in the Registration Statement or the Prospectus as 
amended or supplemented, or in any other documents or arrangements, and the 
Company agrees to file promptly any amendments or supplements to the 
Registration Statement or the Prospectus which in the opinion of the 
Representatives may thereby be made necessary.  The term "Underwriter" as 
used in this Agreement shall include any person substituted under this 
Section with like effect as if such person had originally been a party to the 
Pricing Agreement with respect to such Designated Securities.

     (b)  If, after giving effect to any arrangements for the purchase of the 
Designated 


                                      19



Securities of a defaulting Underwriter or Underwriters by the Representatives 
and the Company as provided in subsection (a) above, the aggregate principal 
amount of such Designated Securities which remains unpurchased does not 
exceed one-eleventh of the aggregate principal amount of the Designated 
Securities, then the Company shall have the right to require each 
non-defaulting Underwriter to purchase the principal amount of Designated 
Securities which such Underwriter agreed to purchase under the Pricing 
Agreement relating to such Designated Securities and, in addition, to require 
each non-defaulting Underwriter to purchase its pro rata share (based on the 
principal amount of Designated Securities which such Underwriter agreed to 
purchase under such Pricing Agreement) of the Designated Securities of such 
defaulting Underwriter or Underwriters for which such arrangements have not 
been made; but nothing herein shall relieve a defaulting Underwriter from 
liability for its default.

     (c)  If, after giving effect to any arrangements for the purchase of the 
Designated Securities of a defaulting Underwriter or Underwriters by the 
Representatives and the Company as provided in subsection (a) above, the 
aggregate principal amount of Designated Securities which remains unpurchased 
exceeds one-eleventh of the aggregate principal amount of the Designated 
Securities, as referred to in subsection (b) above, or if the Company shall 
not exercise the right described in subsection (b) above to require 
non-defaulting Underwriters to purchase Designated Securities of a defaulting 
Underwriter or Underwriters, then the Pricing Agreement relating to such 
Designated Securities shall thereupon terminate, without liability on the 
part of any non-defaulting Underwriter or the Company, except for the 
expenses to be borne by the Company and the Underwriters as provided in 
Section 6 hereof and the indemnity and contribution agreements in Section 8 
hereof; but nothing herein shall relieve a defaulting Underwriter from 
liability for its default.

     10.  The respective indemnities, agreements, representations, warranties 
and other statements of the Company and the several Underwriters, as set 
forth in this Agreement or made by or on behalf of them, respectively, 
pursuant to this Agreement, shall remain in full force and effect, regardless 
of any investigation (or any statement as to the results thereof) made by or 
on behalf of any Underwriter or any controlling person of any Underwriter, or 
the Company, or any officer or director or controlling person of the Company, 
and shall survive delivery of and payment for the Securities.

     11.  If any Pricing Agreement shall be terminated pursuant to Section 9 
hereof, the Company shall not then be under any liability to any Underwriter 
with respect to the Designated Securities covered by such Pricing Agreement 
except as provided in Sections 6 and 8 hereof; but, if for any other reason 
Designated Securities are not delivered by or on behalf of the Company as 
provided herein, the Company will reimburse the Underwriters through the 
Representatives for all out-of-pocket expenses approved in writing by the 
Representatives, including fees and disbursements of counsel, reasonably 
incurred by the Underwriters in making preparations for the purchase, sale 
and delivery of such Designated Securities, but the Company shall then be 
under no further liability to any Underwriter with respect to such Designated 
Securities except as provided in Sections 6 and 8 hereof.

     12.  In all dealings hereunder, the Representatives of the Underwriters 
of Designated Securities shall act on behalf of each of such Underwriters, 
and the parties hereto shall be entitled to act and rely upon any statement, 
request, notice or agreement on behalf of any Underwriter made or given by 
such Representatives jointly or by such of the Representatives, if any, as 
may be designated for such purpose in the Pricing Agreement.

     All statements, requests, notices and agreements hereunder shall be in 
writing, and if to 


                                      20



the Underwriters shall be delivered or sent by mail, telex or facsimile 
transmission to the address of the Representatives as set forth in the 
Pricing Agreement; and if to the Company shall be delivered or sent by mail, 
telex or facsimile transmission to the address of the Company set forth in 
the Registration Statement: Attention: Secretary; provided, however, that any 
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered 
or sent by mail, telex or facsimile transmission to such Underwriter at its 
address set forth in its Underwriters' Questionnaire, or telex constituting 
such Questionnaire, which address will be supplied to the Company by the 
Representatives upon request.  Any such statements, requests, notices or 
agreements shall take effect upon receipt thereof.

     13.  This Agreement and each Pricing Agreement shall be binding upon, 
and inure solely to the benefit of, the Underwriters, the Company and, to the 
extent provided in Sections 8 and 10 hereof, the officers and directors of 
the Company and each person who controls the Company or any Underwriter, and 
their respective heirs, executors, administrators, successors and assigns, 
and no other person shall acquire or have any right under or by virtue of 
this Agreement or any such Pricing Agreement.  No purchaser of any of the 
Securities from any Underwriter shall be deemed a successor or assign by 
reason of such purchase.

     14.  Time shall be of the essence of each Pricing Agreement.  As used 
herein, "business day" shall mean any day when the Commission's office in 
Washington, D.C. is open for business.  As used herein, "Significant 
Subsidiaries" shall mean all direct and indirect subsidiaries of the Company 
as of the Time of Delivery other than any subsidiaries which, considered in 
the aggregate as a single subsidiary as of the end of the most recent fiscal 
year of the Company, would not constitute a significant subsidiary as defined 
in Rule 1-02 of Regulation S-X (or any successor thereto).  

     15.  THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND 
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     16.  This Agreement and each Pricing Agreement may be executed by any 
one or more of the parties hereto and thereto in any number of counterparts, 
each of which shall be deemed to be an original, but all such respective 
counterparts shall together constitute one and the same instrument.

                                         Very truly yours,

                                         THE TORO COMPANY


                                         By:
                                            .......................
                                            Name:
                                            Title:


1254484.8


                                      21



                                                                     ANNEX I

                             PRICING AGREEMENT

Goldman, Sachs & Co.,
[Names of Co-Representative(s)]
   As Representatives of the several
    Underwriters named in Schedule I hereto,
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004.

                                                  ..................., 199..

Ladies and Gentlemen:

     The Toro Company, a Delaware corporation (the "Company"), proposes, 
subject to the terms and conditions stated herein and in the Underwriting 
Agreement, dated June ...., 1997 (the "Underwriting Agreement"), to issue and 
sell to the Underwriters named in Schedule I hereto (the "Underwriters") the 
Securities specified in Schedule II hereto (the "Designated Securities").  
Each of the provisions of the Underwriting Agreement is incorporated herein 
by reference in its entirety, and shall be deemed to be a part of this 
Agreement to the same extent as if such provisions had been set forth in full 
herein; and each of the representations and warranties set forth therein 
shall be deemed to have been made at and as of the date of this Pricing 
Agreement, except that each representation and warranty which refers to the 
Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a 
representation or warranty as of the date of the Underwriting Agreement in 
relation to the Prospectus (as therein defined), and also a representation 
and warranty as of the date of this Pricing Agreement in relation to the 
Prospectus as amended or supplemented relating to the Designated Securities 
which are the subject of this Pricing Agreement.  Each reference to the 
Representatives herein and in the provisions of the Underwriting Agreement so 
incorporated by reference shall be deemed to refer to you.  Unless otherwise 
defined herein, terms defined in the Underwriting Agreement are used herein 
as therein defined.  The Representatives designated to act on behalf of the 
Representatives and on behalf of each of the Underwriters of the Designated 
Securities pursuant to Section 12 of the Underwriting Agreement and the 
address of the Representatives referred to in such Section 12 are set forth 
at the end of Schedule II hereto.

     An amendment to the Registration Statement, or a supplement to the 
Prospectus, as the case may be, relating to the Designated Securities, in the 
form heretofore delivered to you is now proposed to be filed with the 
Commission.

     Subject to the terms and conditions set forth herein and in the 
Underwriting Agreement incorporated herein by reference, the Company agrees 
to issue and sell to each of the Underwriters, and each of the Underwriters 
agrees, severally and not jointly, to purchase from the Company, at the time 
and place and at the purchase price to the Underwriters set forth in Schedule 
II hereto, the principal amount of Designated Securities set forth opposite 
the name of such Underwriter in Schedule I hereto.


   
     If the foregoing is in accordance with your understanding, please sign 
and return to us ___ [one for the Company and each of the Representatives plus
one for each counsel] counterparts hereof, and upon acceptance hereof by you, 
on behalf of each of the Underwriters, this letter and such acceptance hereof, 
including the provisions of the Underwriting Agreement incorporated herein by 
reference, shall constitute a binding agreement between each of the 
Underwriters and the Company.  It is understood that your acceptance of this 
letter on behalf of each of the Underwriters is or will be pursuant to the 
authority set forth in a form of Agreement among Underwriters, the form of 
which shall be submitted to the Company for examination upon request, but 
without warranty on the part of the Representatives as to the authority of 
the signers thereof.
    

                                       Very truly yours,

                                       THE TORO COMPANY 

                                       By:
                                          ----------------------------

                                          Name:
                                          Title:

Accepted as of the date hereof:

Goldman, Sachs & Co.
[Name(s) of Co-Representative(s)]

[By:
    -------------------------------
        (Goldman, Sachs & Co.)

    On behalf of each of the Underwriters


                                      22



                                  SCHEDULE I

                                                                  PRINCIPAL
                                                                  AMOUNT OF
                                                                  DESIGNATED
                                                                  SECURITIES
                                                                    TO BE
                   UNDERWRITER                                    PURCHASED
                   -----------                                    ---------
Goldman, Sachs & Co........................................        $
[Name(s) of Co-Representative(s)...........................        
[Names of other Underwriters]..............................        
                                                                   --------
   Total...................................................        $
                                                                   --------
                                                                   --------


                                      3



                                   SCHEDULE II


Title of Designated Securities:

Aggregate principal amount:

Price to Public:

Purchase Price by Underwriters:

Form of Designated Securities:

Specified funds for payment of purchase price:

Time of Delivery:

Indenture:
   Indenture dated .................., 1997 between the Company and 
   ..................., as Trustee

Maturity:  

Interest Rate:

Interest Payment Dates:

Redemption Provisions:

Sinking Fund Provisions:

Extendable provisions (if any):

Floating rate provisions (if any):

Defeasance provisions:


                                      4



Closing location for delivery of Designated Securities:


Additional Closing Conditions:


Names and addresses of Representatives:

   Designated Representatives:

   Address for Notices, etc.:


Other Terms:


                                      5



                                                                     ANNEX II


     Pursuant to Section 7(d) of the Underwriting Agreement, KPMG Peat Marwick 
LLP shall furnish letters to the Underwriters to the effect that:

         (i)  They are independent certified public accountants with respect 
       to the Company and its subsidiaries and with respect to the James 
       Hardie Irrigation Group within the meaning of the Act and the 
       applicable published rules and regulations thereunder;

   
         (ii) In their opinion, the financial statements and any 
       supplementary financial information and schedules of the Company and 
       the James Hardie Irrigation Group audited (and, if applicable, 
       financial forecasts and/or pro forma financial information) or examined 
       by them and included or incorporated by reference in the Registration 
       Statement or the Prospectus comply as to form in all material respects 
       with the applicable accounting requirements of the Act or the Exchange 
       Act, as applicable, and the related published rules and regulations 
       thereunder; and, if applicable, they have made a review in accordance 
       with standards established by the American Institute of Certified 
       Public Accountants of the consolidated interim financial statements, 
       selected financial data, pro forma financial information, financial 
       forecasts and/or condensed financial statements derived from audited 
       financial statements of the Company for the periods specified in such 
       letter, as indicated in their reports thereon, copies of which have 
       been separately furnished to the representatives of the Underwriters 
       (the "Representatives") such term to include an Underwriter or 
       Underwriters who act without any firm being designated as its or their 
       representatives; 
    

         (iii) They have made a review in accordance with standards 
       established by the American Institute of Certified Public Accountants 
       of the unaudited condensed consolidated statements of income, 
       consolidated balance sheets and consolidated statements of cash flows 
       included in the Prospectus and/or included in the Company's quarterly 
       report on Form 10-Q incorporated by reference into the Prospectus as 
       indicated in their reports thereon copies of which have been 
       separately furnished to the Representatives; and on the basis of 
       specified procedures including inquiries of officials of the Company 
       who have responsibility for financial and accounting matters regarding 
       whether the unaudited condensed consolidated financial statements 
       referred to in paragraph (vi)(A)(i) below comply as to form in all 
       material respects with the applicable accounting requirements of the 
       Act and the Exchange Act and the related published rules and 
       regulations, nothing came to their attention that caused them to 
       believe that (i) the unaudited condensed consolidated financial 
       statements do not comply as to form in all material respects with the 
       applicable accounting requirements of the Act and the Exchange Act and 
       the related published rules and regulations; or (ii) any material 
       modification should be made to the unaudited condensed consolidated 
       financial statements;

         (iv)  The unaudited selected financial information with respect to 
       the consolidated results of operations and financial position of the 
       Company for the five most recent fiscal years included in the 
       Prospectus and included or incorporated by reference in the Company's 
       Annual Report on Form 10-K for the most recent fiscal year agrees with 
       the corresponding amounts (after restatement where applicable) in the 
       audited consolidated financial statements for five such fiscal years 
       which were included or incorporated by reference in the Company's 
       Annual Reports on Form 10-K for such fiscal years;



         (v)   They have compared the information in the Prospectus under 
       selected captions with the disclosure requirements of Regulation S-K 
       and on the basis of limited procedures specified in such letter 
       nothing came to their attention as a result of the foregoing 
       procedures that caused them to believe that this information does not 
       conform in all material respects with the disclosure requirements of 
       Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;

   
         (vi)  On the basis of limited procedures, not constituting an 
       audit in accordance with generally accepted auditing standards, 
       consisting of a reading of the unaudited financial statements and 
       other information referred to below, a reading of the latest available 
       interim financial statements of the Company and its subsidiaries, 
       inspection of the minute books of the Company and its subsidiaries 
       since the date of the latest audited financial statements included or 
       incorporated by reference in the Prospectus, inquiries of officials of 
       the Company and its subsidiaries responsible for financial and 
       accounting matters and such other inquiries and procedures as may be 
       specified in such letter, nothing came to their attention that caused 
       them to believe that:
    

              (A)  (i) the unaudited condensed consolidated statements of 
            income, consolidated balance sheets and consolidated statements 
            of cash flows included in the Prospectus and/or included or 
            incorporated by reference in the Company's Quarterly Reports on 
            Form 10-Q incorporated by reference in the Prospectus do not 
            comply as to form in all material respects with the applicable 
            accounting requirements of the Exchange Act and the related 
            published rules and regulations, or (ii) any material 
            modifications should be made to the unaudited condensed 
            consolidated statements of income, consolidated balance sheets 
            and consolidated statements of cash flows included in the 
            Prospectus or included in the Company's Quarterly Reports on Form 
            10-Q incorporated by reference in the Prospectus for them to be 
            in conformity with generally accepted accounting principles;

              (B)  any other unaudited income statement data and balance 
            sheet items included in the Prospectus do not agree with the 
            corresponding items in the unaudited consolidated financial 
            statements from which such data and items were derived, and any 
            such unaudited data and items were not determined on a basis 
            substantially consistent with the basis for the corresponding 
            amounts in the audited consolidated financial statements included 
            or incorporated by reference in the Company's Annual Report on 
            Form 10-K for the most recent fiscal year;

              (C)  the unaudited financial statements which were not included 
            in the Prospectus but from which were derived the unaudited 
            condensed financial statements referred to in clause (A) and any 
            unaudited income statement data and balance sheet items included 
            in the Prospectus and referred to in Clause (B) were not 
            determined on a basis substantially consistent with the basis for 
            the audited financial statements included or incorporated by 
            reference in the Company's Annual Report on Form 10-K for the 
            most recent fiscal year;

              (D)  any unaudited pro forma consolidated condensed financial 
            statements included or incorporated by reference in the 
            Prospectus do not comply as to form in all material respects with 
            the applicable accounting requirements of the Act and the 
            published rules and regulations thereunder or the pro forma 
            adjustments 


                                      2



            have not been properly applied to the historical amounts in the 
            compilation of those statements;

              (E)  as of a specified date not more than five days prior to 
            the date of such letter, there have been any changes in the 
            consolidated capital stock (other than issuances of capital stock 
            upon exercise of options and stock appreciation rights, upon 
            earn-outs of performance shares and upon conversions of 
            convertible securities, in each case which were outstanding on 
            the date of the latest balance sheet included or incorporated by 
            reference in the Prospectus) or any increase in the consolidated 
            long-term debt of the Company and its subsidiaries, or any 
            decreases in consolidated net current assets or stockholders' 
            equity or other items specified by the Representatives, or any 
            increases in any items specified by the Representatives, in each 
            case as compared with amounts shown in the latest balance sheet 
            included or incorporated by reference in the Prospectus, except 
            in each case for changes, increases or decreases which the 
            Prospectus discloses have occurred or may occur or which are 
            described in such letter; and

              (F)  for the period from the date of the latest financial 
            statements included or incorporated by reference in the 
            Prospectus to the specified date referred to in Clause (E) there 
            were any decreases in consolidated net revenues or operating 
            profit or the total or per share amounts of consolidated net 
            income or other items specified by the Representatives, or any 
            increases in any items specified by the Representatives, in each 
            case as compared with the comparable period of the preceding year 
            and with any other period of corresponding length specified by 
            the Representatives, except in each case for increases or 
            decreases which the Prospectus discloses have occurred or may 
            occur or which are described in such letter; and

         (vii)  In addition to the audit referred to in their report(s) 
       included or incorporated by reference in the Prospectus and the 
       limited procedures, inspection of minute books, inquiries and other 
       procedures referred to in paragraphs (iii) and (vi) above, they have 
       carried out certain specified procedures, not constituting an audit in 
       accordance with generally accepted auditing standards, with respect to 
       certain amounts, percentages and financial information specified by 
       the Representatives which are derived from the general accounting 
       records of the Company and its subsidiaries, which appear in the 
       Prospectus (excluding documents incorporated by reference), or in Part 
       II of, or in exhibits and schedules to, the Registration Statement 
       specified by the Representatives or in documents incorporated by 
       reference in the Prospectus specified by the Representatives, and have 
       compared certain of such amounts, percentages and financial 
       information with the accounting records of the Company and its 
       subsidiaries and have found them to be in agreement.

     All references in this Annex II to the Prospectus shall be deemed to 
refer to the Prospectus (including the documents incorporated by reference 
therein) as defined in the Underwriting Agreement as of the date of the 
letter delivered on the date of the Pricing Agreement for purposes of such 
letter and to the Prospectus as amended or supplemented (including the 
documents incorporated by reference therein) in relation to the applicable 
Designated Securities for purposes of the letter delivered at the Time of 
Delivery for such Designated Securities.


                                      3




                                                                    EXHIBIT 12

                        THE TORO COMPANY AND SUBSIDIARIES

                Computation of Ratio of Earnings to Fixed Charges
                                   (unaudited)

                                 (in thousands)
Transition period Year ended July 31, ended Year ended ------------------------------------------- October 31, October 31, 1992 1993 1994 1995 1995 1996 - ------------------------------------------------------------------------- --------------------------- Earnings before income taxes $ (34,903) $21,355 $ 37,050 $61,112 $6,606 $60,180 Plus: Fixed charges (1) 21,253 19,142 15,989 14,892 3,266 16,728 - ------------------------------------------------------------------------------------------------------ Earnings available to cover fixed charges $ --(2) $40,497 $53,039 $76,004 $9,872 $76,908 - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ Ratio of earnings to fixed charges --(2) 2.12 3.32 5.10 3.02 4.60 - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------
(1) Fixed Charges consisted of the following:
Transition period Year ended July 31, ended Year ended ------------------------------------------- October 31, October 31, 1992 1993 1994 1995 1995 1996 - ------------------------------------------------------------------------- --------------------------- Interest expense $18,726 $17,150 $13,562 $11,902 $2,532 $13,590 Rentals (interest factor) 2,527 1,992 2,427 2,990 734 3,138 - ------------------------------------------------------------------------------------------------------ Total fixed charges $21,253 $19,142 $15,989 $14,892 $3,266 $16,728 - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------
(2) For fiscal year ended July 31, 1992, earnings were insufficient to cover fixed charges by $34,903,000. THE TORO COMPANY AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (unaudited) (in thousands)
Pro forma Three Months Ended Year ended Year ended Year ended Year ended Year ended Year ended ------------------------ October 30, October 29, October 28, October 31, October 31, October 31, February 2, January 31, 1992 1993 1994 1995 1996 1996 1996 1996 - ------------------------------------------------------------------------- ----------------------------------------------------- Earnings before income taxes $ (31,792) $24,868 $54,045 $53,881 $60,180 $50,286 $14,049 $4,117 Plus: Fixed charges (1) 20,730 18,405 15,273 14,944 16,728 26,246 4,632 3,689 - -------------------------------------------------------------------------------------------------------------------------------- Earnings available to cover fixed charges $ --(3) $43,273 $69,318 $68,825 $76,908 $76,532 18,681 7,806 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Ratio of earnings to fixed charges --(3) 2.35 4.54 4.61 4.60 2.92 4.03 2.12 - -------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------
(1) Fixed Charges consisted of the following:
Pro forma Three Months Ended Year ended Year ended Year ended Year ended Year ended Year ended ------------------------ October 30, October 29, October 28, October 31, October 31, October 31, February 2, January 31, 1992 1993 1994 1995 1996 1996 1996 1996 - ------------------------------------------------------------------------- ----------------------------------------------------- Interest expense $18,337 $16,304 $12,705 $11,954 $13,590 $22,735 $3,847 $2,969 Rentals (interest factor) 2,393 2,101 2,568 2,990 3,138 3,511 785 720 - --------------------------------------------------------------------------------------------------------------------------------- Total fixed charges $20,730 $18,405 $15,273 $14,944 $16,728 $26,246 4,632 3,689 - --------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------
(3) For fiscal year ended October 31, 1992, earnings were insufficient to cover fixed charges by $31,792,000.


                                                                 Exhibit 23(b)

                       INDEPENDENT AUDITORS' CONSENT



The Board of Directors
The Toro Company:

We consent to the use of our reports incorporated herein by reference and to 
the reference to our firm under the headings "Selected Historical and Pro 
Forma Financial and Other Data" and "Experts" in the prospectus.



                                          /s/ KPMG Peat Marwick LLP
                                              KPMG Peat Marwick LLP

Minneapolis, Minnesota
June 9, 1997



                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                               -----------------

                                   FORM T-1

                       Statement of Eligibility Under the
                   Trust Indenture Act of 1939 of a Corporation
                          Designated to Act as Trustee


                         FIRST TRUST NATIONAL ASSOCIATION
                (Exact name of Trustee as specified in its charter)

           United States                                   41-0257700
      (State of Incorporation)                          (I.R.S. Employer
                                                       Identification No.)

         First Trust Center
        180 East Fifth Street
         St. Paul, Minnesota                                 55101
  (Address of Principal Executive Offices)                 (Zip Code)



                                  THE TORO COMPANY
                (Exact name of Registrant as specified in its charter)

              Delaware                                     41-0580470
      (State of Incorporation)                          (I.R.S. Employer
                                                       Identification No.)



       8111 Lyndale Avenue South
         Bloomington, Minnesota                           55420-1196
    (Address of Principal Executive Offices)              (Zip Code)




                                  Debt Securities
                        (Title of the Indenture Securities)




                                    GENERAL

1.  GENERAL INFORMATION  Furnish the following information as to the Trustee.

    (a) Name and address of each examining or supervising authority to which 
        it is subject.
           Comptroller of the Currency
           Washington, D.C.

    (b) Whether it is authorized to exercise corporate trust powers.
           Yes

2.  AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS  If the obligor or any 
    underwriter for the obligor is an affiliate of the Trustee, describe each 
    such affiliation.
           None

    See Note following Item 16.

    Items 3-15 are not applicable because to the best of the Trustee's knowledge
    the obligor is not in default under any Indenture for which the Trustee acts
    as Trustee.

16. LIST OF EXHIBITS  List below all exhibits filed as a part of this 
    statement of eligibility and qualification.

    1. Copy of Articles of Association.*

    2. Copy of Certificate of Authority to Commence Business.*

    3. Authorization of the Trustee to exercise corporate trust powers
       (included in Exhibits 1 and 2; no separate instrument).*

    4. Copy of existing By-Laws.*

    5. Copy of each Indenture referred to in Item 4.  N/A.

    6. The consents of the Trustee required by Section 321(b) of the act.

    7. Copy of the latest report of condition of the Trustee published 
       pursuant to law or the requirements of its supervising or examining 
       authority is incorporated by reference to Registration Number 333-24029.

    * Incorporated by reference to Registration Number 22-27000.





                                  NOTE

    The answers to this statement insofar as such answers relate to what 
persons have been underwriters for any securities of the obligors within 
three years prior to the date of filing this statement, or what persons are 
owners of 10% or more of the voting securities of the obligors, or 
affiliates, are based upon information furnished to the Trustee by the 
obligors.  While the Trustee has no reason to doubt the accuracy of any such 
information, it cannot accept any responsibility therefor.

                                SIGNATURE

    Pursuant to the requirements of the Trust Indenture Act of 1939, the 
Trustee, First Trust National Association, an Association organized and 
existing under the laws of the United States, has duly caused this statement 
of eligibility and qualification to be signed on its behalf by the 
undersigned, thereunto duly authorized, and its seal to be hereunto affixed 
and attested, all in the City of Saint Paul and State of Minnesota on the 5th 
day of June, 1997.

                                FIRST TRUST NATIONAL ASSOCIATION
[SEAL]

                                 /s/ R. Prokosch
                                ------------------------
                                Richard H. Prokosch
                                Trust Officer



/s/ K. Barrett
- ---------------------
Kathe M. Barrett
Assistant Secretary





   
                                                       EXHIBIT 6
    

                                CONSENT

    In accordance with Section 321(b) of the Trust Indenture Act of 1939, the 
undersigned, FIRST TRUST NATIONAL ASSOCIATION hereby consents that reports of 
examination of the undersigned by Federal, State, Territorial or District 
authorities may be furnished by such authorities to the Securities and 
Exchange Commission upon its request therefor.

Dated:  June 5, 1997


                                FIRST TRUST NATIONAL ASSOCIATION

                                /s/ Richard H. Prokosch
                                ---------------------------------
                                Richard H. Prokosch
                                Trust Officer