THE TORO COMPANY
SUPPLEMENTAL RETIREMENT PLAN
JULY 27, 1998 RESTATEMENT
CONTENTS
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II. ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . 5
III. DEFERRED COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Deferral Election . . . . . . . . . . . . . . . . . . . . . 5
3.2 Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Company Credits . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Deferral of Certain 1995 Bonus Amounts. . . . . . . . . . . 6
IV. EARNINGS ON PARTICIPANT ACCOUNTS. . . . . . . . . . . . . . . . . . . 6
4.1 Earnings Credit . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Optional Earnings Credit. . . . . . . . . . . . . . . . . . 7
4.3 No Interest in Assets . . . . . . . . . . . . . . . . . . . 7
V. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Distribution Elections. . . . . . . . . . . . . . . . . . . 8
5.2 Form of Election; Absence of a Valid Election . . . . . . . 8
5.3 Early Distributions . . . . . . . . . . . . . . . . . . . . 8
5.4 Unforeseeable Emergency . . . . . . . . . . . . . . . . . . 9
5.5 Accelerated Distributions . . . . . . . . . . . . . . . . . 9
5.6 Distributions for Certain Tax Purposes. . . . . . . . . . . 9
5.6 Timing of Distributions . . . . . . . . . . . . . . . . . . 9
5.7 Status as General Creditor; Unfunded Plan . . . . . . . . .10
VI. ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . .10
6.1 Company's Authority . . . . . . . . . . . . . . . . . . . .10
6.2 Reliance. . . . . . . . . . . . . . . . . . . . . . . . . .10
6.3 Benefit Statements. . . . . . . . . . . . . . . . . . . . .10
6.4 Claims. . . . . . . . . . . . . . . . . . . . . . . . . . .11
VII. AMENDMENT OR TERMINATION. . . . . . . . . . . . . . . . . . . . . . .12
VIII. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . .13
8.1 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . .13
8.2 No Alienation . . . . . . . . . . . . . . . . . . . . . . .13
8.3 Unfunded Plan . . . . . . . . . . . . . . . . . . . . . . .13
8.4 No Guaranty . . . . . . . . . . . . . . . . . . . . . . . .14
8.5 No Right of Employment. . . . . . . . . . . . . . . . . . .14
8.6 Incompetency. . . . . . . . . . . . . . . . . . . . . . . .14
8.7 Corporate Changes . . . . . . . . . . . . . . . . . . . . .14
8.8 Addresses . . . . . . . . . . . . . . . . . . . . . . . . .14
8.9 Limitations on Liability. . . . . . . . . . . . . . . . . .15
8.10 Transfers to the Trust. . . . . . . . . . . . . . . . . . .15
8.11 Inspection. . . . . . . . . . . . . . . . . . . . . . . . .15
8.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . .16
THE TORO COMPANY
SUPPLEMENTAL RETIREMENT PLAN
JULY 27, 1998 RESTATEMENT
The Toro Company hereby amends and restates its Supplemental Retirement
Plan, most recently amended and restated effective as of January 1, 1996, which
has been maintained by The Toro Company primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees. This amendment and restatement is effective as of July 27, 1998.
I. DEFINITIONS
When used in this Plan document, the following terms have the meanings
indicated unless a different meaning is plainly required by the context.
"ASSISTANT SECRETARY" means the person serving as Assistant Corporate
Secretary of the Company.
"BENEFICIARY" means the person or persons selected by the Participant to
receive the benefits provided under this Plan in the event of the Participant's
death.
"CHANGE OF CONTROL" means:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of 15% or
more of either (A) the then-outstanding shares of Common
Stock of the Company (the "Outstanding Company Common
Stock") or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled
to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company, (B)
any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by
the Company, or (D) any acquisition
by any corporation pursuant to a transaction that complies
with clauses (A), (B) and (C) of subsection (iii) of this
definition; or
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or consolidation
of the Company or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition by the Company of assets or stock of another
entity (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then-outstanding shares of common stock
and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the
election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the
case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of
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the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 15% or more of, respectively, the
then-outstanding shares of common stock of the corporation
resulting from such Business Combination, or the combined
voting power of the then-outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination and (C) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation Committee of the Board of Directors of
the Company, or any successor committee.
"COMMON STOCK" means the Company's common stock, par value $1.00 per
share, and related preferred share purchase rights.
"COMPANY" means The Toro Company, a Delaware corporation.
"COMPENSATION" means all amounts received by a Participant from the
Company that are subject to federal income tax withholding: provided, that
(i) Compensation shall not include any amount received by an employee on account
of the grant or exercise of an option to purchase Common Stock of the Company,
and (ii) Compensation shall include an amount equal to any reductions in a
Participant's gross income as a result of salary reductions under Sections 125
or 401(k) or 402(a)(8) of the Code.
"DIRECTOR" means the person serving as Director of Compensation and
Benefits of the Company.
"ELIGIBILITY SERVICE" means eligibility service as defined in the Profit
Sharing Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"PARTICIPANT" means an eligible employee who has executed a Deferred
Compensation Agreement.
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"PLAN" means this Supplemental Retirement Plan, including any amendments
thereto.
"PLAN YEAR" means the calendar year.
"PROFIT SHARING PLAN" means The Toro Company Investment and Savings Plan
(the successor of the Profit Sharing Plan for Office Employees) or any successor
or replacement plan.
"SECTION 16 INSIDER" means a Participant who is, with respect to the
Company, subject to Section 16 of the Securities Exchange Act of 1934, as
amended.
"SUBSIDIARY" means any corporation that is a component member of the
controlled group of corporations of which the Company is the common parent.
Controlled group shall be determined by reference to Section 1563 of the Code
but including any corporation described in Section 1563(b)(2) thereof.
"TRUST" means the trust established or maintained by the Company that is
used in connection with this Plan to assist the Company in meeting its
obligations under the Plan.
"TRUSTEE" means the corporation or individual selected by the Company to
serve as Trustee for the Trust.
The singular form of any word shall include the plural and the masculine
gender shall include the feminine wherever necessary for the proper
interpretation of this Plan.
II. ELIGIBILITY AND PARTICIPATION
All management or highly compensated employees who are at the director
level or above with the Company, or with any Subsidiary of the Company to which
this Plan has been extended by the Board of Directors of the Company, are
eligible to become Participants.
An eligible employee will become a Participant upon submission of a
completed election form, in the form approved by the Committee, to the Director
or the Assistant Secretary.
Once an employee has become a Participant, his or her account under the
Plan will remain in effect until distributed as provided herein, even if for any
subsequent Plan Year or portion thereof the employee ceases to meet the
eligibility requirements of this Article II or ceases to be a Participant for
any other reason.
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III. DEFERRED COMPENSATION
3.1 DEFERRAL ELECTION
A Participant may elect to defer Compensation for a calendar year by
completing and submitting a deferral election on a form provided by the Company.
Such election must be submitted to the Director or the Assistant Secretary by
December 31 to be effective in the following year. An election shall remain in
effect until revoked or revised by the Participant by a written election
delivered to the Director or the Assistant Secretary. An election shall take
effect as of January 1 of the year following the year in which it is received.
A Participant shall not be eligible to defer Compensation for any
calendar year following the year in which he or she no longer satisfies the
eligibility requirements of this Plan, unless the Committee in its discretion
permits such a deferral.
3.2 ACCOUNTS
The Company shall establish and maintain an account for each Participant,
and shall credit such account with amounts deferred by the Participant pursuant
to Section 3.1 and the Participant's election.
3.3 COMPANY CREDITS
The Company shall credit a Participant's account as of December 31 each
year with an amount equal to the difference between (i) the amount that would
have been credited to the Participant's account under the Profit Sharing Plan
and the ESOP for the Plan Year had the Participant not made an election to defer
compensation for the year under Section 3.1 of this Plan and (ii) the amount
actually credited to the Participant's account under the Profit Sharing Plan and
the ESOP for the Plan Year. To prevent duplication of benefits, credits under
this Section 3.3 shall not be made with respect to any year or partial year in
which the Participant or any account of the Participant receives comparable
credits under the Supplemental Management Retirement Plan or any other Company
plan.
3.4 DEFERRAL OF CERTAIN 1995 BONUS AMOUNTS
Amounts credited to Participant accounts pursuant to this Section 3.4
prior to its amendment as of July 27, 1998, representing deferrals of bonuses
earned by Participants for the fiscal year ending October 31, 1995, shall
continue to be held pursuant to the terms and conditions of this Plan, together
with any other amounts credited to the Participant's account under the Plan.
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IV. EARNINGS ON PARTICIPANT ACCOUNTS
4.1 EARNINGS CREDIT
Amounts held in an account maintained for a Participant shall be credited
with interest at a rate and in a manner determined by the Committee to be
consistent with the average prime rate of interest charged by U. S. Bank,
National Association to its individual borrowers. Prior to a Change of Control
the method for determining the interest crediting rate may be changed at any
time, at the discretion of the Committee. After a Change of Control, the
Trustee shall have authority to change the method for determining the interest
crediting rate. Interest shall be credited as of the end of each quarter.
4.2 OPTIONAL EARNINGS CREDIT
If a Participant's age and years of Eligibility Service with the Company
equals or exceeds sixty (60), the Participant may request the Trustee in
writing, on a form approved by the Company, to invest a specified percentage of
his or her account in one or more of the investment vehicles available under the
Trust. A Participant may change his or her election as of the first day of
January and as of the first day of July, and more frequently if permitted by the
Committee, by delivering an election form to the Chief Financial Officer of the
Company at least thirty days prior to the effective date of the election. Prior
to a Change of Control, the investment vehicles made available to the
Participants shall be selected by the Chief Executive Officer of the Company or
by such Officer's designee. After a Change of Control, investment vehicles
shall be selected by the Trustee. Any expense incurred in connection with an
investment option shall be charged on a pro rata basis against the Participants'
accounts. The investment vehicles made available under the Trust shall include
at least one vehicle that provides a fixed rate of interest through investment
in fixed income mutual funds or common trust funds, U.S. Treasury bonds and
notes, certificates of deposit, annuity contracts, or such other similar
investments.
If the investment vehicles include a fund that invests exclusively or
primarily in the Company's Common Stock, Participants who are Section 16
Insiders may allocate amounts to or from such fund only in accordance with
Company policies on insider trading and in compliance with the rules for
"Discretionary Trading" as defined in Rule 16b-3 (or any successor provision)
under the Securities Exchange Act of 1934, as amended. Distributions from a
fund that invests exclusively or primarily in the Company's Common Stock shall
be made in Common Stock.
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If the Committee approves an election made pursuant to this Section, the
Participant's account will thereafter be credited with earnings or losses based
upon the earnings or losses attributable to the investments so elected; and the
Company shall not credit any portion of the account subject to such investment
election with interest, as described in Section 4.1.
4.3 NO INTEREST IN ASSETS
The Company may set aside or earmark funds or other assets to meet its
obligations under the Plan, but title to and ownership of such funds and assets
shall remain in the Company. Neither the Participant nor any beneficiary shall
have any ownership rights or any property interests in any of such funds or
other assets, or in any other assets of the Company, until they are distributed
in accordance with the Plan.
V. DISTRIBUTIONS
5.1 DISTRIBUTION ELECTIONS
Distributions under the Plan shall be made in accordance with the
Participant's election. Elections (both as to distributions and as to
deferrals) made prior to the July 27, 1998 Restatement of this Plan shall remain
in effect until changed by the Participant as provided in this Plan.
5.2 FORM OF ELECTION; ABSENCE OF A VALID ELECTION
Except as provided in Sections 5.3, 5.4, 5.5 and 5.6 hereof, the amount
of the Participant's deferred compensation account shall be distributed on the
Participant's retirement, resignation or termination from employment with the
Company, or on the disability or death of the Participant, whichever occurs
first. Distributions shall be made in accordance with the Participant's
distribution election most recently filed with the Director or Assistant
Secretary: provided, that any election filed two years or less before the date
of the Participant's retirement, resignation or termination of employment shall
be disregarded.
In the absence of a valid election, the Company shall pay the accrued
amount in forty (40) quarterly installments commencing after the Participant's
retirement, resignation or termination from employment with the Company, or on
the disability or death of the Participant, whichever occurs first.
Installments shall reflect earnings or losses on a monthly basis, and be paid on
an actuarially amortized and annually adjusted basis, or on a decreasing
fraction basis (1/40th, 1/39th, 1/38th, etc.), or on such other basis as elected
by the Company in its sole discretion, in order to provide
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reasonably level payments throughout the period. In the event of the
Participant's death before distribution is completed (or before any early
distribution under Section 5.3 hereof), the balance may be distributed in a
lump sum or on an installment basis as the Company may determine, either to
any designated beneficiary or to the estate or legal representative of the
Participant.
5.3 EARLY DISTRIBUTIONS
A Participant may irrevocably elect to receive a distribution of all or a
portion of the Participant's account prior to retirement, resignation or
termination of employment with the Company, but early distributions hereunder
shall not commence until after the Participant has attained age 55. The
election shall be made not later than two years prior to the Plan Year in which
the early distribution is to be made. Distributions under this Section shall be
paid in a lump sum. Any election under this Section is subject to Committee
approval.
5.4 UNFORESEEABLE EMERGENCY
A Participant who incurs an unforeseeable emergency may make a written
request to the Company for a hardship withdrawal from the Participant's account.
An unforeseeable emergency is a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant or
of a dependent (as defined in Section 152(a) of the Internal Revenue Code of
1986, as amended) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result or events beyond the control of the Participant. Withdrawals of
amounts because of an unforeseeable emergency are permitted to the extent
reasonably needed to satisfy the emergency need. This Section 5.3 shall be
interpreted in a manner consistent with Sections 1.457-2(h)(4) and 1.457(h)(5)
of the Treasury Regulations.
5.5 ACCELERATED DISTRIBUTIONS
Prior to a Change of Control, the Company shall have the right to make
distribution on an accelerated installment basis, including lump sum, or to
purchase an annuity contract for the Participant's benefit, in the event of
merger, reorganization, sale of assets, liquidation of the Company, or for such
other causes as the Company deems appropriate in its sole discretion. Any such
lump sum or annuity payment shall be the actuarial equivalent of the
distribution elected by the Participant, calculated using actuarial assumptions
consistent with those applied at the time under the Company's Retirement Plan
for Office and Hourly Employees, or any successor or replacement plan. Any
amounts remaining in the account during the period of any
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accelerated installment distribution shall continue to be credited with
earnings or losses as provided in the Plan.
5.6 DISTRIBUTIONS FOR CERTAIN TAX PURPOSES
If at any time a court or the Internal Revenue Service determines that
any amount in a Participant's account or in the Trust is includable in a
Participant's gross income and subject to tax, the Company shall make a lump sum
distribution to such Participant (but not in an amount greater than the value of
the Participant's account under the Plan at the time of such distribution) of an
amount equal to the amount determined to be so includable, and shall deduct a
like amount from the Participant's account under the Plan.
5.7 TIMING OF DISTRIBUTIONS
Except in the event of the Participant's death or disability, benefits
payable under this Plan shall be paid beginning in the first month of the
calendar year immediately following the calendar year in which the distributable
event occurs or, in the case of distributions pursuant to elections under
Section 5.3, in the first month of the year of distribution, as elected by the
Participant and approved by the Committee. In the event of a Participant's
death or disability, benefits shall be distributed beginning in the first month
following the month in which the Participant's death occurred or the
determination of disability is made.
5.8 STATUS AS GENERAL CREDITOR; UNFUNDED PLAN
To the extent that any person acquires the right to receive any
distribution under this Agreement, such rights shall be no greater than the
right of any unsecured general creditor of the Company. The Agreement shall at
all times be considered unfunded for tax purposes and for purposes of Title I of
the Employee Retirement Income Security Act of 1974, as amended. This Agreement
and all rights, interests, and benefits hereunder shall not be assigned,
transferred or pledged by the Participant and shall not be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge, or
other disposition of this Agreement, or of any such rights, interests and
benefits, and any levy of attachment or similar process thereupon, shall be null
and void and without effect.
VI. ADMINISTRATION OF THE PLAN
6.1 COMPANY'S AUTHORITY
The Plan shall be administered by the Company, which shall have the
authority, duty and power to interpret and construe the provisions of the Plan
as it deems appropriate. The Company shall have the duty and responsibility of
maintaining records,
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making the requisite calculations and dispersing the payments hereunder. The
Company's interpretations, determinations, regulations and calculations shall
be final and binding on all persons and parties concerned.
6.2 RELIANCE
The Company shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan.
6.3 BENEFIT STATEMENTS
The Company shall furnish individual statements of accrued benefits to
each Participant, or current Beneficiary, at least annually, in such form as
determined by the Company.
6.4 CLAIMS
The employee benefit plan procedures in this section are intended to
comply with Section 503 of ERISA, and Section 2560.503-1 of the Department of
Labor Regulations and pertain to claims by participants and beneficiaries
("claimants") for Plan benefits, consideration of such claims, and review of
claim denials. For purposes of these procedures, a "claim" is a request for a
benefit by a Participant or Beneficiary under the Plan or a Deferred
Compensation Agreement. A claim is filed when the requirements of these
procedures have been met.
(a) If a claim is wholly or partially denied, notice of the
decision, meeting the requirements of subsection (b) of these procedures, shall
be furnished to the claimant within a reasonable period of time after receipt of
the claim by the Company. If notice of the denial of a claim is not furnished
in accordance with this subsection (a) within a reasonable period of time, the
claim shall be deemed denied and the claimant shall be permitted to proceed to
the review stage described in subsection (c) of these procedures. For purposes
of this subsection (a), the period of time for notification to the claimant will
not exceed 90 days after receipt of the claim by the Company, unless special
circumstances require an extension of time for processing the claim. If such an
extension of time for processing is required, written notice of the extension
shall be furnished to the claimant prior to the termination of the initial
90-day period. In no event shall such extension exceed a period of 90 days from
the end of such initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Company
expects to render the final decision.
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(b) The Company shall provide to every claimant who is denied a
claim for benefits written notice setting forth in a manner calculated to be
understood by the claimant:
(i) the specific reason or reasons for the denial;
(ii) specific reference to pertinent provisions of the Plan or
Agreement on which the denial is based;
(iii) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary; and
(iv) appropriate information as to the steps to be taken if the
Participant or Beneficiary wishes to submit his or her
claim for review.
(c) If a claim is denied in whole or in part and if the
claimant is dissatisfied with the disposition of the claim, the claimant or his
or her duly authorized representative shall have a reasonable opportunity to
appeal the denied claim to the Company or to a person designated by the Company,
and shall have a full and fair review of the claim and its denial. Under this
review procedure, a claimant or his or her duly authorized representative may:
(i) request a review upon written application to the Company;
(ii) review pertinent documents; and
(iii) submit issues and comments in writing.
A claimant must file such a request for review of a denied claim within a
reasonable period of time, not to exceed 60 days, after receipt by the claimant
of written notification of denial of a claim.
(d) A decision by the Company shall be made promptly and shall
not ordinarily be made later than 60 days after the receipt by the Company of a
request for review, unless special circumstances (such as the need to hold a
hearing) require an extension of time for processing, in which case a decision
shall be rendered as soon as possible, but not later than 120 days after receipt
of a request for review. If an extension of time for review is required because
of special circumstances, written notice of the extension shall be furnished to
the claimant prior to the commencement of the extension. The decision on review
shall be in writing and shall include specific reasons for the decision, written
in a manner calculated to be understood by the claimant, as well as specific
references to the pertinent provisions of the Plan or
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Agreement on which the decision is based. The decision on review shall be
furnished to the claimant within the period of time described in this
subsection (d). If the decision on review is not furnished within such time,
the claim shall be deemed denied on review.
VII. AMENDMENT OR TERMINATION
The Company intends the Plan to be permanent but reserves the right to
amend or terminate the Plan at any time.
No amendment or termination of the Plan shall directly or indirectly
reduce the balance of any account described in Article III as of the effective
date of such amendment or termination. The Company shall not credit the
accounts of any Participant with any further deferrals after termination of the
Plan, but gains or losses will continue to be credited to the Participant's
account under the Plan until all benefits are distributed to the Participants or
to their Beneficiaries.
VIII. GENERAL PROVISIONS
8.1 TRUST
The Company has established a Trust which may be used to pay benefits
arising under the Plan and costs, charges and expenses relating thereto. To the
extent that the funds held in the Trust are insufficient to pay such benefits,
costs, charges and expenses, and except as provided in Section 4.2 relating to
investment option elections, the Company shall pay them.
8.2 NO ALIENATION
Neither the benefits payable hereunder nor the right to receive future
benefits under the Plan may be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process; no
interest or right to receive a benefit may be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.
8.3 UNFUNDED PLAN
The Plan shall at all times be considered entirely unfunded both for tax
purposes and for purposes of Title I of ERISA. Funds invested under this Plan,
including amounts held in the Trust, shall continue for all purposes to be part
of the general assets of the Company and available to the general creditors of
the Company in the event of the Company's bankruptcy (when the Company is
involved in a pending proceeding under the
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Federal Bankruptcy Code) or insolvency (when the Company is unable to pay its
debts as they mature). In the event of the Company's bankruptcy or
insolvency, the Company's Board of Directors and Chief Executive Officer
shall notify the Trustee in writing of such an occurrence within three
business days following the Company's becoming aware of such occurrence. No
Participant or any other person shall have any interests in any particular
assets of the Company by reason of the right to receive a benefit under the
Plan and to the extent the Participant or any other person acquires a right
to receive benefits under this Plan, such right shall be no greater than the
right of any general unsecured creditor of the Company. The Plan constitutes
a mere promise by the Company to make payments to the Participants in the
future.
8.4 NO GUARANTY
Nothing contained in the Plan shall constitute a guaranty by the Company
or any other person or entity that any funds in the Trust or the assets of the
Company will be sufficient to pay any benefit hereunder.
8.5 NO RIGHT OF EMPLOYMENT
No Participant shall have any right to a benefit under this Plan except
in accordance with the terms of the Plan. Establishment and continuance of the
Plan shall not be construed to give any Participant the right to be retained in
the service of the Company.
8.6 INCOMPETENCY
If any person entitled to a benefit payment under the Plan is declared
incompetent and a conservator or other person is legally charged with the care
of such person or of his or her estate is appointed, any benefits under the Plan
to which the person is entitled shall be paid to such conservator or other
person legally charged with the care of the person or his or her estate. Except
as provided above, when the Company determines that such person is unable to
manage his or her affairs, the Company may provide for such payment or any part
thereof to be made to any other person or institution then contributing toward
or providing for the care and maintenance of such person. Any such payment
shall be a payment for the account of such Person and a complete discharge of
any liability of the Company and the Plan therefore.
8.7 CORPORATE CHANGES
The Plan shall not be automatically terminated by a transfer or sale of
assets of the Company or by the merger or consolidation of the Company into or
with any other
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corporation or other entity, but the Plan shall continue after such sale,
merger or Consolidation only if and to the extent that the transferee,
purchaser or successor entity agrees to continue the Plan. In the event the
Plan is not continued by the transferee, purchaser or successor entity, then
the Plan shall terminate subject to the provisions of Article VII.
8.8 ADDRESSES
Each Participant shall keep the Company informed of his or her current
address and the current address of his or her spouse. The Company shall not be
obligated to search for any person. If the location of a Participant is not
made known to the Company within three (3) years after the date on which payment
of the Participant's benefits Payable under this Plan may first be made, payment
may be made as though the Participant had died at the end of the three-year
Period. If, within one additional year after such three year period has
elapsed, or, within three (3) years after the actual death of a Participant, the
Company is unable to locate any designated Beneficiary of the Participant, then
the Company shall have no further obligation to pay any benefit hereunder to
such Participant or designated Beneficiary and such benefits shall be
irrevocably forfeited.
8.9 LIMITATIONS ON LIABILITY
Notwithstanding any of the preceding provisions of the Plan, neither the
Company nor any individual acting as an employee or agent of the Company shall
be liable to any Participant, former Participant, or any other person for any
claim, loss, liability or expense incurred in connection with the Plan, unless
attributable to fraud or willful misconduct on the part of the Company or any
such employee or agent of the Company.
8.10 TRANSFERS TO THE TRUST
On the occurrence of a Change of Control or if a Participant elects to
direct the investment of amounts credited to his or her account pursuant to
Section 4.2, the Company shall transfer cash or property to the account or
accounts maintained in the name of each affected Participant or Participants for
this Plan under the Trust in an amount equal to the present value of all
accumulated or accrued benefits then payable to or on behalf of such Participant
or Participants under this Plan, plus any applicable fees. The Company may also
transfer cash or property to the accounts maintained for any Participant under
the Trust in an amount equal to the present value of all accumulated or accrued
benefits then payable under the Plan at any time in the sole discretion of the
Company. Thereafter, the Company may, and after a Change of Control it shall,
for each Plan Year, transfer cash or property no later than thirty (30) days
after the end of the Plan Year in which the initial transfer occurs, and
thereafter on each anniversary thereof, to such account or accounts maintained
for the affected Participant or Participants under the
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Trust an amount equal to the additional benefit accrued under the terms of
this Plan and the Deferred Compensation Agreements during and in relation to
the most recent Plan Year then ended. If a transfer occurs, the accounts of
the Participants shall be credited with interest, or earnings and losses in
accordance with Sections 4.1 and 4.2.
8.11 INSPECTION
Each Participant shall receive a copy of the Plan and the Company will
make available for inspection by any Participant or designated Beneficiary a
copy of any rules and regulations that are used by the Company in administering
the Plan.
8.13 GOVERNING LAW
To the extent that it is not governed by United States federal law, the
Plan shall be construed, administered and governed in all respects under and by
the applicable laws of the State of Delaware, without giving effect to
principles of conflict of laws.
Dated as of this 13th day of May 1999.
THE TORO COMPANY
By:/s/ Kendrick B. Melrose
--------------------------------------
Its Chairman, Chief Executive Officer
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