Form S-8 TORO CO

As filed with the Securities and Exchange Commission on December 22, 2016

Registration No. 333-                                     

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

THE TORO COMPANY

(Exact Name of Registrant as Specified in its Charter)

8111 Lyndale Avenue South

Bloomington, Minnesota 55420-1196

(Address of Principal Executive Offices) (Zip Code)

The Toro Company

Investment, Savings and Employee Stock Ownership Plan

(Full Title of the Plan)

Timothy P. Dordell

Vice President, Secretary and General Counsel

The Toro Company

8111 Lyndale Avenue South

Bloomington, Minnesota 55420-1196

(952) 888-8801

(Name and Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

Copies requested to:

Amy E. Culbert, Esq.

Fox Rothschild LLP

222 South Ninth Street, Suite 2000

Minneapolis, Minnesota 55402

(612) 607-7287

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

CALCULATION OF REGISTRATION FEE

(1)         Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the shares being registered hereunder include an indeterminate number of additional shares that may be issued to adjust the number of shares issued pursuant to The Toro Company Investment, Savings and Employee Stock Ownership Plan (the “Plan”) described herein as the result of any future stock split, stock dividend or similar adjustment of the outstanding common stock, par value $1.00 per share (“Common Stock”), of the Registrant.

(2)         Estimated solely for the purpose of calculating the amount of the registration fee and calculated pursuant to Rule 457(c) and Rule 457(h) under the Securities Act on the basis of the average of the high and low sales prices of the Common Stock, as reported by the New York Stock Exchange on December 15, 2016.

(3)         In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this Registration Statement also covers an indeterminate amount of interests to be offered or sold pursuant to the Plan. Pursuant to Rule 457(h)(3), no registration fee is required to be paid.

STATEMENT UNDER GENERAL INSTRUCTION E—
REGISTRATION OF ADDITIONAL SECURITIES

This Registration Statement is filed by The Toro Company (the “Registrant”) pursuant to General Instruction E of Form S-8 and relates to the Registrant’s earlier Registration Statements on Form S-8, as follows:

·                  Registration Statement on Form S-8 (No. 033-59563) filed with the Securities and Exchange Commission (the “Commission”) on May 24, 1995, as modified by Registration Statement on Form S-8 (No. 333-11860) filed with the Commission on June 30, 1999;

·                  Registration Statement on Form S-8 (No. 333-100004) filed with the Commission on September 23, 2002, including Post-Effective Amendment No. 1 filed with the Commission on June 2, 2003; and

·                  Registration Statement on Form S-8 (No. 333-119504) filed with the Commission on October 4, 2004.

Under these earlier Registration Statements, the Registrant registered a total of 32,000,000 shares of its common stock, par value $1.00 per share (the “Common Stock”), to be offered and sold in connection with The Toro Company Investment, Savings and Employee Stock Ownership Plan (the “Plan”), taking into account adjustments for two-for-one stock splits effected on April 12, 2005, June 29, 2012 and September 16, 2016. The contents of these earlier Registration Statements (No. 033-59563, No. 333-11860, No. 333-100004 and No. 333-119504) are incorporated by reference in this Registration Statement.

On December 6, 2016, the Board of Directors of the Registrant approved an amendment to the Plan that increased the number of shares of Common Stock authorized for issuance under the Plan from 32,000,000 to 40,000,000, subject to adjustment to reflect changes in the corporate or capital structure of the Registrant, including stock splits, stock dividends or similar transactions.

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Item 1.  Plan Information.*

Item 2.  Registrant Information and Employee Annual Information.*

*                                         As permitted under Rule 428 under the Securities Act of 1933, as amended (the “Securities Act”) and the Note to Part I of Form S-8, this Registration Statement omits the information specified in Part I of this Registration Statement on Form S-8.

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PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference.

The rules of the Commission allow the Registrant to incorporate by reference information into this Registration Statement.  This means that the Registrant may disclose important information to you by referring you to another document.

The following documents previously filed by the Registrant and the Plan with the Commission are incorporated by reference into this Registration Statement:

(a)                                 The Registrant’s Annual Report on Form 10-K for the fiscal year ended October 31, 2016 (File No. 1-8649);

(b)                                 The Registrant’s Current Report on Form 8-K filed on December 2, 2016 (File No. 1-8649);

(c)                                  The Plan’s Annual Report on Form 11-K for the fiscal year ended December 31, 2015 (File No. 1-8649); and

(d)                                 The description of the Registrant’s Common Stock contained in the Registrant’s Registration Statements filed with the Commission pursuant to Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”), including any amendments or reports filed for the purpose of updating such descriptions (File No. 1-8649).

In addition, all documents filed with the Commission by the Registrant or the Plan (other than portions of such documents which are furnished and not filed) pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all such securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the time of filing of such documents.

Any statement contained in the documents incorporated or deemed to be incorporated by reference in this Registration Statement shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is incorporated or deemed to be incorporated by reference in this Registration Statement 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 Registration Statement.

Item 4.  Description of Securities.

Not applicable.

Item 5.  Interests of Named Experts and Counsel.

The opinion of counsel as to the legality of the securities being registered, which is Exhibit 5.1 to this Registration Statement, is rendered by Timothy P. Dordell, Vice President, Secretary and General Counsel of the Registrant.  Mr. Dordell owns or has rights to acquire an aggregate of less than 0.5% of the Registrant’s outstanding Common Stock.

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Item 6.  Indemnification of Directors and Officers.

Subsection (a) of Section 145 of the General Corporation Law of the State of Delaware (the “DGCL”) empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that the person is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if the person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

Subsection (b) of Section 145 of the DGCL empowers a corporation to indemnify any person who was or is a party or threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person acted in any of the capacities set forth above, against expenses actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if such person acted under similar standards, except that no indemnification may be made in respect of any claim, issue or matter as to which such person has been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought determines that, despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses which the court deems proper.

Section 145 of the DGCL further provides that, to the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) or in defense of any claim, issue or matter therein, such person will be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith; that indemnification provided for by Section 145 of the DGCL will not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that the scope of such mandatory indemnification extends to directors, officers, employees or agents of a constituent corporation absorbed in a consolidation or merger and persons serving in that capacity at the request of the constituent corporation for another.  Section 145 of the DGCL also empowers the corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation against any liability asserted against and incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability under Section 145, including liability under the Securities Act.

Article X of the Registrant’s Restated Certificate of Incorporation mandates indemnification of a director or officer of the 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 DGCL against expenses, liability and loss and authorizes the Board to express such rights in written contracts.

Article X of the Registrant’s Restated Certificate of Incorporation provides, in accordance with Section 102(b)(7) of the DGCL, for the elimination of the personal liability of a director to the Registrant or its shareholders for monetary damages for breach of fiduciary duty as a director under certain circumstances.

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The above discussion of the Registrant’s Restated Certificate of Incorporation and of Sections 102(b)(7) and 145 of the DGCL is not intended to be exhaustive and is qualified in its entirety by the Restated Certificate of Incorporation and the DGCL.

The Registrant has entered into indemnification agreements with each of its non-employee directors pursuant to which the Registrant has agreed to indemnify each such director to the fullest extent permitted by law against any expenses, judgments, fines, penalties and amounts paid or owing that arise out of events or occurrences related to such director’s status, capacities and activities with the Registrant.

The Registrant also maintains liability insurance policies which provide for indemnification of a director or officer of the 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 7.  Exemption from Registration Claimed.

Not applicable.

Item 8.  Exhibits.

The Registrant undertakes that it will submit or has submitted the Plan and any amendment thereto to the Internal Revenue Service (“IRS”) in a timely manner and has made or will make all changes required by the IRS in order to qualify the Plan.

The following exhibits are filed with or incorporated by reference into this Registration Statement:

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Item 9.  Undertakings.

(a)           The undersigned Registrant hereby undertakes as follows:

(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;

(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 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and

(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 Registration Statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission

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by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement.

(2)           That, for the purpose of determining any liability under the Securities Act, 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, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) 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.

(c)           Insofar as indemnification for liabilities arising under the Securities Act 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 Commission such indemnification is against public policy as expressed in the Securities 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 been 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 Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

The Registrant. Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bloomington, State of Minnesota, on December 22, 2016.

Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

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The Plan. Pursuant to the requirements of the Securities Act, the trustees (or other persons who administer the employee benefit plan) have duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bloomington, State of Minnesota, on December 22, 2016.

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EXHIBIT INDEX

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Exhibits 5.1 and 23.1

[The Toro Company Letterhead]

December 22, 2016

The Toro Company

8111 Lyndale Avenue South

Bloomington, Minnesota 55420

Re:          Registration Statement on Form S-8 for The Toro Company Investment, Savings and

Employee Stock Ownership Plan

Ladies and Gentlemen:

I am the Vice President, Secretary and General Counsel of The Toro Company (the “Company”).  In connection with the Registration Statement on Form S-8 filed by the Company with the Securities and Exchange Commission relating to an aggregate of up to 8,000,000 shares of common stock, $1.00 par value per share (the “Common Stock”), of the Company, to be issued in connection with The Toro Company Investment, Savings and Employee Stock Ownership Plan (the “Plan”), please be advised that as counsel to the Company, upon examination of such corporate documents and records as I have deemed necessary or appropriate for the purpose of rendering this opinion, it is my opinion that the shares of Common Stock being offered by the Company, when issued in accordance with proper corporate authorizations, will be legally issued, fully paid and non-assessable. The shares of Common Stock issued pursuant to the Plan may be previously issued and outstanding shares acquired by the Plan in the open market, newly issued shares issued to the Plan by the Company, or shares issued to the Plan out of treasury stock of the Company.

The foregoing opinion is limited to the Federal laws of the United States and the General Corporation Law of the State of Delaware (including the statutory provisions, all applicable provisions of the Delaware Constitution and reported judicial decisions interpreting the foregoing), and I am expressing no opinion as to the effect of the laws of any other jurisdiction.

I hereby consent to the filing of this opinion as an exhibit to the above-captioned Registration Statement, and to the reference to my name under the heading “Interests of Named Experts and Counsel” contained in the Registration Statement.  In giving such consent, I do not hereby admit that I am in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended.

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

The Board of Directors
The Toro Company:

We consent to the incorporation by reference in the registration statement on Form S-8 filed on December 22, 2016 pertaining to The Toro Company Investment, Savings and Employee Stock Ownership Plan of (a) our report dated December 22, 2016 with respect to the consolidated balance sheets of The Toro Company and subsidiaries as of October 31, 2016 and 2015, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three year period ended October 31, 2016, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of October 31, 2016, which report appears in the October 31, 2016 annual report on Form 10-K of The Toro Company and (b) our report dated June 27, 2016, with respect to the statements of net assets available for benefits of The Toro Company Investment, Savings, and Employee Stock Ownership Plan as of December 31, 2015 and 2014, the related statements of changes in net assets available for benefits for the years then ended, and the supplemental Schedule H, line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2015, which report appears in the December 31, 2015 annual report on Form 11-K of The Toro Company Investment, Savings, and Employee Stock Ownership Plan.

/s/ KPMG LLP

Minneapolis, Minnesota

December 22, 2016

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, each being a member of the Board of Directors of The Toro Company, a Delaware corporation, do hereby make, nominate and appoint each of RICHARD M. OLSON AND TIMOTHY P. DORDELL, signing singly, to be his or her attorney-in-fact, with full power and authority to sign his or her name to a Registration Statement on Form S-8 relating to The Toro Company Investment, Savings and Employee Stock Ownership Plan (the “Registration Statement”), and any and all additional amendments thereto (including without limitation additional post-effective amendments to register or de-register shares), provided that the Registration Statement, in final form, be approved by said attorney-in-fact; and his name, when thus signed, shall have the same force and effect as though I had manually signed said document or documents.

IN WITNESS WHEREOF, I have hereunto affixed my signature this 6th day of December, 2016.

Signature

Exhibit 99.1

THE TORO COMPANY

INVESTMENT, SAVINGS AND

EMPLOYEE STOCK OWNERSHIP PLAN

(2016 Restatement)

Prepared by Timothy R. Quinn

(612) 607-7581

Fox Rothschild LLP

TABLE OF CONTENTS

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THE TORO COMPANY
INVESTMENT, SAVINGS AND EMPLOYEE STOCK OWNERSHIP PLAN

The Toro Company, a Delaware corporation, pursuant to the power of amendment reserved to it in Section 11.1 of The Toro Company Investment, Savings and Employee Stock Ownership Plan, which was last restated effective as of January 1, 2012, and delegated to its Chief Executive Officer or such officer’s delegate, hereby amends and restates that Plan, effective as of January 1, 2016, except that certain provisions may be effective on other dates as specified in the particular provision.  The effective dates of the various changes to the Plan that were made pursuant to prior versions of the Plan shall be as specified in those versions.  The trust agreement for the Plan is found in a separate document.

The Plan is a single plan that consists of two parts, including a profit sharing part and a stock bonus part.  The stock bonus part is an employee stock ownership plan within the meaning of Section 4975 of the Code.  The assets of the stock bonus part are reflected in the ESOP Accounts.  Those assets are held under the Trust, which is designed to invest them primarily in Toro Common Stock.

ARTICLE I. 
Definitions and Interpretation

Section 1.1.  Definitions.  The terms defined in this section when used in the Plan with initial capital letters have the following meanings unless the context indicates that other meanings are intended.

401(k) Contribution Agreement.  “401(k) Contribution Agreement” means an agreement on a form provided by the Administrator or Administrator’s delegate or information provided by another method made available by the Administrator pursuant to which a Covered Employee may elect to have the compensation payable to the Covered Employee by the Covered Employee’s Participating Employer reduced and paid as 401(k) Contributions to the Plan by such Participating Employer.

401(k) Contributions.  A Contributing Participant’s “401(k) Contributions” are contributions described in Section 4.3.  Roth 401(k) Contributions are treated as 401(k) Contributions to the extent provided in Section 4.16.

401(k) Contributions Account.  “401(k) Contributions Account” means an Account described in Section 6.1(a)(2).

Account.  “Account” means an account maintained for a Participant pursuant to Section 6.1.

Administrator.  The “Administrator” shall be Toro unless the Chief Executive Officer of Toro designates another person or persons to be the Administrator pursuant to the provisions of Section 8.2.  Toro shall also be considered the Administrator if the person or persons so designated cease to be the Administrator.  The Administrator shall be a named fiduciary for purposes of ERISA and this Plan.

After-Tax Contributions.  “After-Tax Contributions” means contributions made prior to 2012 and described in Section 4.4.

After-Tax Contributions Account.  “After-Tax Contributions Account” means an Account described in Section 6.1(a)(3).

Alternate Payee.  The term “Alternate Payee” means any spouse, former spouse, child, or other dependent of a Participant who is recognized by a Domestic Relations Order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to such Participant.

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Annuity Starting Date.  The “Annuity Starting Date” is the first day of the first period for which an amount is paid as an annuity or any other form.

Beneficiary.  The terms “Beneficiary” or “Beneficiaries” mean any person or persons who, upon the death of a Participant, are entitled to receive the distribution of all or a part of such Participant’s Vested Share.  Under reasonable rules to be developed by the Administrator, a Participant may designate a person or persons, natural or artificial (such as an estate, trust or tax exempt entity), as a Beneficiary or Beneficiaries.  Any designation of a Beneficiary by name that is accompanied by a description of relationship or only by statement of relationship to the Participant is effective only to designate the person or persons standing in such relationship to the Participant at the Participant’s death.  Further, any designation by the Participant of the Participant’s spouse as Beneficiary that is not accompanied by such a description or statement of relationship shall become void upon dissolution of the Participant’s marriage with that spouse.  A Beneficiary shall receive only such portion of a Participant’s Vested Share as the Participant shall designate.  In the event no person is designated as a Beneficiary or in the event all such persons predecease the Participant, then the Participant’s Beneficiary shall be the person or persons surviving the Participant in the first of the following classes in which there is a survivor, share and share alike:

(1)           The Participant’s spouse.

(2)           The Participant’s children, except that if any of the Participant’s children predecease the Participant but leave issue surviving the Participant, such issue shall take, by right of representation, the share their parent would have taken if living.

(3)           The Participant’s parents.

(4)           The Participant’s brothers and sisters.

(5)           The Participant’s estate.

The Participant may change Beneficiaries from time to time in the manner set forth in rules adopted by the Administrator.  No Beneficiary shall have any rights under the Plan and Trust until benefits actually become payable under the Plan to such Beneficiary.

Board of Directors.  The term “Board of Directors” shall mean the Board of Directors of the corporation referred to but when used with reference to a partnership or sole proprietorship, it shall mean, respectively, the managing partner or partners (the persons with authority to make decisions for the partnership) or the sole proprietor, or when used with respect to a limited liability corporation or partnership, it shall mean that entity’s managing body.

Break in Service.  A “Break in Service” is an Eligibility Computation Period after an Employee’s initial Eligibility Computation Period during which the Employee has completed no more than 500 Hours of Service for a Participating Employer or Related Employer.

Catch-up Contributions.  “Catch-up Contributions” means the contributions made by a Participating Employer pursuant to Section 4.15.

Catch-up Contributions Account.  “Catch-up Contributions Account” means the Account described in Section 6.l(a)(9).

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Claims Reviewer.  The “Claims Reviewer” shall be such person who or organizational unit that customarily handles employee benefit matters relating to the Plan as the Administrator shall designate.

Code.  “Code” means the Internal Revenue Code of 1986, as it is amended from time to time.

Compensation.

(1)           “Compensation” means all wages of an Employee received from an Employer that are subject to federal income tax withholding, determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed.  Compensation includes remuneration of an Employee received from a Participating Employer while the Employee is a non-resident alien even if that remuneration is not considered earned income (within the meaning of Section 911(d)(2) of the Code) that constitutes income from sources within the United States (within the meaning of Section 861(a)(3) of the Code).  However, in no event shall Compensation include any amount subject to federal income tax withholding on account of the grant or exercise of an option to purchase stock of a Participating Employer, on account of the grant or exercise of rights relating to equity interests in a Participating Employer or because restricted stock of a Participating Employer or other equity relating to a Participating Employer either becomes freely transferable or is no longer subject to a substantial risk of forfeiture.  Similarly, Compensation will not include any amount of remuneration of such a non-resident alien due to such a grant or exercise of an option.  Also, Compensation shall not include amounts paid to an Employee by the Employee’s Participating Employer when the Employee is in a unit of Employees of such Employer that is described in Section 3.1(b).  Further, Compensation shall not include any amounts contributed by a Participating Employer to any plan which meets the requirements of Section 401(a) or 404(a)(2) of the Code and, after 2006, shall not include moving expenses, reimbursements or other expense allowances, fringe benefits (cash or non-cash), and any distributions under a nonqualified deferred compensation plan or agreement.  In addition, Compensation shall not include any amounts received by an Employee prior to the date the Employee becomes a Covered Employee or while the Employee is not otherwise a Covered Employee.  Further, after 2006, Compensation shall not include financial counseling and tax preparation payments to Highly Compensated Employees.  However, Compensation shall include any salary reductions made by the Employee’s Participating Employer that are not includible in the gross income of the Employee under Sections 125 or 402(e)(3) of the Code.  Compensation shall also include elective amounts that are not includible in the gross income of the employee by reason of Section 132(f)(4) of the Code.

(2)           The maximum amount of Compensation for each Participant taken into account under the Plan for any year shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the Code ($265,000 in 2016).  The cost of living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which the Compensation is determined beginning in such calendar year.

(3)           Notwithstanding the preceding provisions of this definition, in the case of a short Plan Year, due to a change in the Plan Year, the limitation described in paragraph (2) above shall be proportionately reduced by a fraction, the numerator of which shall be the number of days in the short Plan Year and the denominator of which shall be three hundred sixty-five (365).

Certain payments described above made within 2½ months after a severance from employment (within the meaning of Section 401(k)(2)(B)(i)(I) of the Code) will not fail to be included in Compensation.  This includes payments of regular compensation to a Participant for services during regular hours,

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compensation for services outside the Participant’s regular working hours (such as overtime and shift differential), commissions, bonuses, or other similar compensation.  Payments for accrued bona fide sick, vacation, or other leave will also be included, but only if the Participant would have been able to use the leave if employment had continued.  Other payments within such a period, such as severance pay, unfunded nonqualified deferred compensation, or parachute payments within the meaning of Section 280G(b)(2) of the Code are not included in Compensation.

Contributing Participant.  A “Contributing Participant” is a person who has met the requirements of Sections 3.2 and 3.3 and has not ceased to be a Contributing Participant under Sections 3.4 or 3.7 or any other section of the Plan.  A person who has ceased to be a Contributing Participant shall again become a Contributing Participant as provided in Section 3.5 or Section 3.8.

Covered Employee.  A “Covered Employee” is a person who at one time met the requirements of Sections 3.1 and 3.2 and who has not thereafter died or ceased to be a Covered Employee as provided in Section 3.6.  A person who has ceased to be a Covered Employee shall again become a Covered Employee as provided in Section 3.8.

Disability.  “Disability” means that an individual is (1) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expect to result in death or can be expected to last for a continuous period of not less than 12 months; (2) receiving income replacement benefits for a period of not less than 3 months under an accident or health plan of a Participating Employer or Related Employer because of any medically determinable physical or mental impairment that can be expect to result in death or can be expected to last for a continuous period of not less than 12 months; (3) determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board; or (4) determined to be disabled in accordance with a Participating Employer’s or Related Employer’s long term disability plan.

Domestic Relations Order.  The term “Domestic Relations Order” means any judgment, decree or order (including approval of a property settlement agreement) which:

(1)           relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a Participant, and

(2)           is made pursuant to a State domestic relations law (including a community property law).

Effective Date of the Prior Plan.  The “Effective Date of the Prior Plan” is the date on which a Prior Plan is effective.  The Toro Company Profit-Sharing Plan for Office Employees was effective on August 31, 1952.  The Toro Company Profit-Sharing Plan for Windom Factory Employees was effective on August 1, 1959.  The Toro Company Matching Stock Plan was effective on August 1, 1988.  The Toro Company Profit-Sharing Plan for Minneapolis Factory Employees was effective on September 1, 1952.  The Toro Company Profit-Sharing Plan for Hourly Employees was effective on August 1, 1968.  Each of the plans described in the prior sentences were merged as of August 1, 1995 to be The Toro Company Investment and Savings Plan.  The Toro Company Employee Stock Ownership Plan was effective on August 1, 1985.  The Toro Company Investment and Savings Plan and The Toro Company Employee Stock Ownership Plan were merged as of January 1, 2002 to become this Plan.

Effective Date of this Restatement.  The “Effective Date of this Restatement” is January 1, 2016, except that certain provisions may be effective on other dates as specified in the particular provision.

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Eligibility Computation Period.  An Employee’s initial “Eligibility Computation Period” shall be the twelve consecutive month period commencing with the date such Employee first performs an Hour of Service for a Participating Employer or Related Employer.  The Employee’s subsequent “Eligibility Computation Periods” shall be the twelve consecutive month periods commencing on the anniversaries of such date.  However, if such Employee incurs a Break in Service before such Employee completes the one year of Eligibility Service required by Section 3.1, then for purposes of this definition the date the Employee first performs an Hour of Service for a Participating or Related Employer after such break shall be deemed to be the date the Employee first performs an Hour of Service for a Participating or Related Employer.

Eligibility Service.

(1)           General Rule.  An Employee shall be deemed to have completed a year of “Eligibility Service” for each Eligibility Computation Period during which the Employee is credited with at least 1,000 Hours of Service for a Participating or Related Employer.

(2)           Exception:  Predecessor Employer.  In determining Eligibility Service, service (as an Employee or self-employed person) with a Predecessor Employer shall be treated as employment with a Participating Employer; however, if an Employer has been designated as a Predecessor Employer as provided in Section 3.1(b)(2), then no more service than specified pursuant to Section 3.1(b)(2) shall be treated in that manner.

Employee.  An “Employee” is a natural person employed in the service of an Employer as a common law employee, including such a natural person who is an officer or director of that Employer.

Employer.  “Employer” means the employer of the Employee with respect to whom the term is used.

Employer Contribution Account.  “Employer Contribution Account” means the Account described in Section 6.1(a)(1).  The Account includes those Accounts formerly known as the “Toro Investment Fund Contribution Account” and the “Diversification Account”.

Encumbered Toro Common Stock.  “Encumbered Toro Common Stock” means Toro Common Stock held in the ESOP Toro Common Stock Suspense Account.

ERISA.  “ERISA” is the Employee Retirement Income Security Act of 1974, as it now exists or as it may hereafter be amended.

ESOP Accounts.  The portion of any Account of a Participant that is invested in Toro Common Stock is an “ESOP Account.”

ESOP Contributions.  “ESOP Contributions” are contributions made by a Participating Employer pursuant to Section 4.2.

ESOP General Account.  “ESOP General Account” means an Account maintained for the benefit of a Participant to which the Administrator (or the Trustee at the direction of the Administrator) shall credit the Participating Employer’s cash contributions described under Section 4.2(a).

ESOP Toro Common Stock Account.  “ESOP Toro Common Stock Account” means an Account described in Section 6.1(a)(5).

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ESOP Toro Common Stock Suspense Account.  “ESOP Toro Common Stock Suspense Account” means the suspense account described in Section 5.1(e) and established by the Trustee to hold all Toro Common Stock acquired by the Trustee with the proceeds of an Exempt Loan which is exempt from the prohibited transaction provisions of ERISA as provided in Section 4975(d)(3) of the Code.

Exempt Loan.  “Exempt Loan” means an indebtedness of the Plan incurred to purchase Toro Common Stock and which is exempt from the prohibited transaction provisions of ERISA as provided in Section 4975(d)(3) of the Code.

Forfeiture Event.  A Participant shall experience a “Forfeiture Event” when the Participant experiences the earlier of (1) five consecutive One-Year Breaks in Service or (2) the distribution of the entire Vested Share of the Participant (if a Participant is not Vested in any Account when the Participant incurs a Termination of Service, the Participant shall be deemed to have such a distribution upon that Termination of Service).

Hardship.  A Participant shall be considered to have a “Hardship” only if the Participant has an immediate and heavy financial need and a distribution from the Plan is necessary to satisfy such financial need.  The Administrator or its delegate shall determine whether the Participant has a Hardship by applying the objective standards set forth in the following provisions of this definition:

(1)           A distribution will be deemed to be made on account of an immediate and heavy financial need if the distribution is made as a result of any of the following circumstances:

(A)          Expenses for (or necessary to obtain) medical care that would be deductible under Section 213(d) of the Code (determined without regard to whether the expenses exceed 7.5% of adjusted gross income);

(B)          The payment of tuition, related educational fees, and room and board expenses, for up to the next 12 months of post-secondary education for the Participant, or the Participant’s spouse, children or dependents (as defined in Section 152 of the Code without regard to Sections 152(b)(1), 152(b)(2) and 152(d)(1)(B) of the Code);

(C)          Costs directly related to the purchase of a principal residence for the Participant (excluding mortgage payments);

(D)          Payments needed to prevent either the eviction of the Participant from the Participant’s principal residence or the foreclosure on the mortgage of that residence;

(E)           Payments for burial or funeral expenses for the Participant’s deceased parent, spouse, children or dependents (as defined in Section 152 of the Code and without regard to Section 152(d)(1)(B) of the Code);

(F)           Expenses for the repair of damage to the Participant’s principal residence that would qualify for the casualty deduction under Section 165 of the Code (determined without regard to whether the expenses exceed 10% of adjusted gross income);

(G)          expenses of a designated Beneficiary of the Participant for payment types described in Subparagraph (1)(A), (B) and (E); or

(H)          Any other circumstances that are added to the list of such circumstances by the Internal Revenue Service.

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(2)           A distribution will be deemed to be necessary to satisfy an immediate and heavy financial need if all of the following requirements are satisfied:

(A)          The amount distributed may not exceed the expenses incurred in connection with the immediate and heavy financial need (the amount of an immediate and heavy financial need may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution);

(B)          Prior to receiving the hardship distribution, the Participant must receive all currently available distributions (including distributions of ESOP dividends under Section 404(k) of the Code, but not Hardship distributions) and all non-taxable (at the time of the loan) loans that may be available under the Plan and all other plans maintained by the Participant’s Participating Employer or any Related Employer; and

(C)          Upon receiving the hardship distribution, the Participant’s 401(k) and after-tax contributions shall be suspended for 6 months under this Plan and all other plans maintained by the Participant’s Participating Employer or a Related Employer.

“Other plans” for purposes of this Paragraph (2) shall have the meaning given to it under applicable Regulations and thus shall include qualified and nonqualified plans and stock option, stock purchase and similar plans.

If an event would constitute a financial need under the above provisions if it occurred with respect to the Participant’s spouse or dependent, such event shall constitute such a financial need with respect to the Participant’s Beneficiary.

Highly Compensated Employee.

(1)           A “Highly Compensated Employee” of a Participating Employer for a Plan Year is such individual who:

(A)          is a five percent owner (the definition in Section 416 of the Code shall apply) of the Participating Employer or at least one of its Related Employers during that Plan Year or the prior Plan Year; or

(B)          received earnings from the Participating Employer and its Related Employers in excess of $80,000 during the prior Plan Year.

The term “earnings” for purposes of this paragraph shall have the meaning given that term in Section 5.3(a)(2).

The $80,000 amount will be adjusted pursuant to Section 414(q)(1) of the Code (it is $120,000 for 2016).

(2)           For purposes of making the determinations under this definition, Employees who are nonresident aliens and who do not receive earned income (within the meaning of Section 911(d)(2) of the Code) from the Participating Employer or any of its Related Employers which constitutes income from services within the United States (within the meaning of Section 861(a)(3) of the Code) shall not be treated as Employees of those Employers.

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Hour of Service.

(1)           General Rule.

(A)          An “Hour of Service” is each hour for which an Employee is, directly or indirectly, paid (or entitled to payment) by an Employer for any reason including each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by said Employer.  A back pay Hour of Service shall be allocated to the period or periods to which the award or agreement pertains unless the Employee has otherwise received credit for an Hour of Service for the same period.

(B)          Any hour for which the Employee is being directly or indirectly paid at more than the Employee’s regular rate of pay shall be counted as one Hour of Service.

(C)          The Hours of Service of an Employee who is paid by the Employer for reasons other than for the performance of duties shall be determined in accordance with Sections 2530.200b-2(b) and (c) of the Department of Labor Regulations.  However, no more than 501 Hours of Service shall be credited to an Employee for any single continuous period during which the Employee performs no duties, no Hours of Service shall be credited to an Employee for a payment made or due under a plan maintained solely for the purpose of complying with workmen’s compensation, unemployment compensation or disability insurance laws, no Hours of Service shall be credited for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the Employee, and an Hour of Service shall not be credited to an Employee under this subparagraph (C) if it has already been credited to such Employee pursuant to another provision of this definition.

(D)          For purposes of determining Hours of Service before August 1, 1995, such hours shall be determined under the Prior Plan in which the Participant participated.  For purposes of determining Hours of Service before the Effective Date of the Prior Plan, or in the case of a Participating Employer (or Related Employer of that Participating Employer) in such Prior Plan other than Toro, the later of the Effective Date of the Prior Plan, the date ERISA became applicable to the Prior Plan of such Participating Employer, or the date as of which the Employer becomes a Participating Employer in such Prior Plan, the Employer may use whatever records are reasonably available to the Employer and may make such calculations as are necessary to determine the approximate number of such Hours of Service.

(2)           Exception:  Federal Law.  If a law of the United States (including any law relating to credit for time spent in military service) or any rule or regulation duly issued thereunder so requires, Hours of Service shall be added to the total calculated under the prior provisions of this definition and if such law, rule or regulation so permits, an Hour of Service shall be subtracted from said total.

(3)           Exception:  Break in Service.  For Plan Years beginning on or after January l, 1985, in the case of each individual who is absent from service with an Employer for any period by reason of the pregnancy of the individual, by reason of the birth of a child of the individual, by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or for purposes of caring for such child for a period beginning immediately following birth or placement, the Plan shall treat as Hours of Service, solely for purposes of determining whether a Break in Service has occurred, the following hours:

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(A)          The Hours of Service which otherwise would normally have been credited to such individual but for such absence, or

(B)          In any case in which the Plan is unable to determine the hours described in Subsection (A) above, eight hours of service per normal work day of absence, except that the total number of hours treated as Hours of Service under this clause by reason of any such pregnancy or placement shall not exceed 501 hours.  Said hours shall be treated as Hours of Service only in the year in which the absence from work begins, if a Participant would be prevented from incurring such a Break in Service in such year solely because the period of absence is treated as Hours of Service under this subsection (3), or in any other case, in the immediately following year.  For purposes of this subsection (3), the term “year” means the period used in determining that Break in Service.  No credit will be given under this subsection (3) unless the individual furnishes to the Administrator or its delegate such timely information as the Administrator may reasonably require to establish that the absence from work is for reasons described in this subsection (3) and the number of days for which there was such an absence.

(4)           Exception:  Employees who are not Compensated by the Hour.  If an Employee is paid on other than an hourly basis, the Employee shall receive credit at the rate of 45 Hours of Service for each week during which the Employee completed an Hour of Service for the Employer.

(5)           Clarification:  Related Employer.  For purpose of determining an individual’s Hours of Service with an Employer that is a Related Employer, only Hours of Service credited while that Employer is a Related Employer shall be taken into account.

(6)           Clarification: Overlapping Period.  In the case of Hours of Service to be credited to an Employee under this definition for a period that overlaps two computation periods used in determining service under the Plan, Hours of Service may be credited to either the first or second computation period, or may be credited pro rata to each such computation period, as determined by the Administrator in a consistent non-discriminatory manner.

Investment Account.  “Investment Account” means that portion of the Trust Fund, initially determined under Section 10.3 (and all subsequent increases and decreases thereof), which is to be invested under the direction of an Investment Adviser.

Investment Adviser.  “Investment Adviser” means any person or persons, organization, partnership or corporation appointed as provided in Section 10.1.  The Investment Adviser shall either be registered as an investment adviser under the Investment Advisers Act of 1940; or it shall be a bank as defined in said Act; or it shall be an insurance company qualified under the laws of one or more states (one of which shall be Minnesota) to perform services consisting of the management, acquisition or disposition of any assets of the Plan.

Investment Fund.  The Trust Fund may be divided into one or more “Investment Funds” as the Administrator may determine pursuant to Section 9.4.

Investment Option Date.  “Investment Option Date” means each Valuation Date during a Plan Year designated by the Administrator as of which Participants may make the election provided for in Section 9.5.

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Investment Option Period.  “Investment Option Period” means a period of time beginning on the day immediately following an Investment Option Date and ending upon the next subsequent Investment Option Date as of which the Participant elects to make an election provided for in Section 9.5.

Matching Contributions.  “Matching Contributions” are contributions made by a Participating Employer pursuant to Section 4.5.

Matching Contributions Account.  “Matching Contributions Account” means an Account described in Section 6.1(a)(4).

Non-Contributing Participant.  A “Non-Contributing Participant” is a Covered Employee who is not a Contributing Participant.

Normal Retirement Date.  The “Normal Retirement Date” of a Participant is the date the Participant attains sixty-five years of age.

One-Year Break in Service.  “One-Year Break in Service” means a Plan Year during which an Employee completes no Hours of Service for a Participating Employer or Related Employer of that Participating Employer.

Participant.  A “Participant” is a person who is a Contributing Participant or Non-Contributing Participant or any other person who is entitled to an immediate or deferred benefit under the Plan by reason of having been a Contributing Participant or Non-Contributing Participant.

Participating Employer.  “Participating Employer” means each of Toro and any other Employer that has adopted the Plan pursuant to the provisions of Article II and is maintaining it in effect.

Plan.  “Plan” means “The Toro Company Investment, Savings and Employee Stock Ownership Plan” as stated in this instrument and as it may hereafter be amended from time to time.

Plan Year.  “Plan Year” means the calendar year.  The records of the Plan shall be kept upon the Plan Year.

Predecessor Employer.  A “Predecessor Employer” is an Employer which formerly employed Employees of a Participating Employer and service with which is credited for purposes of eligibility to become a Covered Employee as provided in Section 3.1, and includes any Employer named as a Predecessor Employer pursuant to Section 3.1(b)(2).  Effective on and after January 1, 2001, “Predecessor Employer” shall also include any Employer from which a Participating Employer or Related Employer purchases assets if Employees of the Employer whose assets are purchased become Employees of a Participating Employer or Related Employer on account of that purchase.  The Administrator shall determine whether or not an Employer is a Predecessor Employer.

Predecessor Plan.  “Predecessor Plan” means the payroll stock ownership plan (originally referred to as The Toro Company Employee Stock Ownership Plan) which was maintained by Toro prior to the merger of that plan into The Toro Company Employee Stock Ownership Plan which merged into this Plan.

Prior Plan.  If this Plan is adopted by a Participating Employer as an amendment or continuation of another plan, as indicated in a resolution of an Employer adopting the Plan pursuant to Section 2.2, or merged into this Plan, then the amended, continued or merged plan as it existed immediately before the

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amendment or continuation shall be a “Prior Plan.”  In addition, each of the following plans shall be considered a “Prior Plan”:

(1)           The Toro Company Profit-Sharing Plan for Office Employees;

(2)           The Toro Company Profit-Sharing Plan for Hourly Employees;

(3)           The Toro Company Profit-Sharing Plan for Windom Factory Employees;

(4)           The Toro Company Profit-Sharing Plan for Minneapolis Factory Employees;

(5)           The Toro Company Matching Stock Plan;

(6)           The Toro Company Employee Stock Ownership Plan; and

(7)           The Toro Company Investment and Savings Plan.

Qualified Domestic Relations Order.

(1)           General Rule.  The term “Qualified Domestic Relations Order” means a Domestic Relations Order:

(A)          which creates or recognizes the existence of an Alternate Payee’s right to, or assigns to an Alternate Payee the right to, receive all or a portion of the benefits payable with respect to a Participant under the Plan, and

(B)          with respect to which the requirements described in the remainder of this definition are met.

(2)           Specification of Facts.  A Domestic Relations Order shall be a Qualified Domestic Relations Order only if the order clearly specifies:

(A)          the name and last known mailing address (if any) of the Participant and the name and mailing address of each Alternate Payee covered by the order,

(B)          the amount or percentage of the Participant’s benefits to be paid by the Plan to each such Alternate Payee, or the manner in which such amount or percentage is to be determined,

(C)          the number of payments or period to which such order applies, and

(D)          each plan to which such order applies.

(3)           Further Requirements.  A Domestic Relations Order shall be considered a Qualified Domestic Relations Order only if such order:

(A)          does not require the Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan,

(B)          does not require the Plan to provide increased benefits, and

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(C)          does not require payment of benefits to an Alternate Payee which are required to be paid to another Alternate Payee under another order previously determined to be a Qualified Domestic Relations Order.

(4)           Exception for Payments After Order.  A Domestic Relations Order shall not be treated as failing to meet the requirements of subparagraph (3)(A) above solely because such order requires that payment of benefits be made to an Alternate Payee:

(A)          before the Participant has incurred a Termination of Service,

(B)          as if the Participant had incurred a Termination of Service on the date on which such payment is to begin under such order, and

(C)          in any form in which such benefits may be paid under the Plan to the Participant (other than in the Qualified Joint and Survivor Annuity Form with respect to the Alternate Payee and Alternate Payee’s subsequent spouse).

(5)           Orders Prior to January l, 1985.  Generally, a Domestic Relations Order cannot be a Qualified Domestic Relations Order until January l, 1985.  However, in the case of a Domestic Relations Order entered before such date, the Administrator:

(A)          shall treat such order as a Qualified Domestic Relations Order if such Administrator is paying benefits pursuant to such order on such date, and

(B)          may treat any other such order entered before such date as a Qualified Domestic Relations Order even if such order does not meet the requirements set forth above.

Qualified Employee.  The determination of who is a “Qualified Employee” of a Participating Employer for a Plan Year shall be made as of the last day of such Plan Year and shall mean an Employee who:

(1)           was a Covered Employee on at least one day of said Plan Year;

(2)           had at least 1,000 Hours of Service for any combination of Participating Employers during said Plan Year while the Employee was not excluded from eligibility under Section 3.1(b) or immediately prior to becoming a Covered Employee during that Plan Year was covered by another plan qualified under Section 401(a) of the Code which was maintained by Toro or a Related Employer; and

(3)           was an Employee of a Participating Employer or Related Employer as of the last day of said Plan Year.

Notwithstanding the preceding provisions of this definition, in the case of a short Plan Year, due to a change in Toro’s fiscal year, to be a Qualified Employee for the short fiscal year, an Employee need not have completed said 1,000 Hours of Service, but the Employee must have completed a number of Hours of Service equal to 1,000 multiplied by the ratio of the number of days in the short Plan Year to 365.  Also, notwithstanding the preceding provisions of this definition, if a Covered Employee who has previously met the requirements to be a Qualified Employee for a Plan Year dies during the Plan Year or incurs a Termination of Service during the Plan Year after having reached age 62, the Employee shall be

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considered a Qualified Employee of the Employee’s Participating Employer as of the last day of such Plan Year.

If the Plan does not meet the minimum coverage requirements under Section 410(b)(1)(B) of the Code (the “70% test”) for a Plan Year on account of a requirement that an individual must be an Employee of a Participating Employer or Related Employer as of the last day of that Plan Year, that requirement shall be modified by changing the specific requirement to be that the individual must be an Employee of such an Employer on or after an earlier day in the Plan Year.  That earlier day shall be the day nearest the last day of the Plan Year which when used in such specific requirement permits the satisfaction of such minimum coverage requirements.  Each Participant who satisfies the requirements of this definition as so modified for a particular Plan Year shall be a Qualified Employee for that Plan Year.  Such determination shall be made for each Plan Year before Toro Contributions have been completed.  If such an earlier day has been determined for a Plan Year, each Participant who becomes a Qualified Employee for that Plan Year shall be treated like all other Qualified Employees for that Plan Year with respect to allocations of Toro contributions made for that Plan Year.

Notwithstanding the preceding provisions of this definition if, as a result of an organizational restructuring by a Covered Employee’s Participating Employer and the elimination of the Covered Employee’s position, the Covered Employee incurs a Termination of Service during the last three months of a Plan Year, the requirement that an individual must be an Employee of a Participating Employer or a Related Employer as of the last day of that Plan Year to be a Qualified Employee shall not apply to such Covered Employee for that Plan Year.  However, if that exception does not meet the antidiscrimination requirements of Section 410 and Section 401(a)(4) of the Code for a Plan Year, Highly Compensated Employees shall be eliminated from the group of Covered Employees who qualify for that exception in the order of their compensation ranking for the Plan Year (highest to lowest) until those requirements are met.

Qualified Matching Contributions Account.  “Qualified Matching Contributions Account” means an Account maintained for a Participant pursuant to Section 6.1(a)(10).

Qualified Nonelective Contributions Account.  “Qualified Nonelective Contributions Account” means an Account maintained for a Participant pursuant to Section 6.1(a)(11).

Regulations.  “Regulations” means regulations issued by the Department of Treasury, the Department of Labor, or the Securities and Exchange Commission.

Related Employer.  A “Related Employer” is an Employer, other than a Participating Employer, which is part of a group of corporations or other business organizations with a Participating Employer that is treated as one Employer for purposes of antidiscrimination tests described in Section 414 of the Code as determined by applying tests established under Section 414 of the Code, modified for purposes of Section 415 of the Code only by Section 415(h) of the Code.  Under those rules, foreign subsidiaries may be considered to be Related Employers.

Rollover Contributions.  “Rollover Contributions” are contributions made by an Employee pursuant to Section 4.6.

Rollover Contributions Account.  “Rollover Contributions Account” means an Account described in Section 6.1(a)(7).

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Roth 401(k) Contributions.  “Roth 401(k) Contributions” means the contributions made on behalf of a Contributing Participant by the Contributing Participant’s Participating Employer pursuant to Section 4.16.

Roth 401(k) Contributions Account.  “Roth 401(k) Contributions Account” means the Account described in Section 6.l(a)(12).

Shareholder.  Shareholder” means any Participant or former Participant or Beneficiary (or such person’s legally appointed representative) who has received a distribution of Toro Common Stock pursuant to the Plan.

Social Security Taxable Wage Base.  The “Social Security Taxable Wage Base” for a calendar year is the maximum amount of remuneration which constitutes “wages” for that year for purposes of Section 3121(a)(1) of the Code.

Termination of Employment.  A “Termination of Employment” of an Employee of an Employer shall occur whenever the Employee’s status as an Employee of such Employer ceases for any reason other than the Employee’s death.  An Employee who does not return to work for such Employer on or before the expiration of an authorized leave of absence from such Employer shall be deemed to have incurred a Termination of Employment when such leave ends.

Termination of Service.  A “Termination of Service” of an individual shall occur whenever the individual has ceased to be an Employee of all Participating Employers or Related Employers.  A “Termination of Service” shall also occur with respect to Employees of a Participating Employer or Related Employer who cease to be employed by a Participating Employer or Related Employer on account of a sale of the assets or stock of that Employer, provided that the subsequent or continuing Employer of those Employees doesn’t maintain the Plan and Plan assets are not transferred to a plan maintained by that subsequent or continuing Employer.

Toro.  “Toro” means The Toro Company, a Delaware corporation, or any successor thereof.

Toro Common Stock.  “Toro Common Stock” means the common stock of Toro or any successor company thereto.

Toro Common Stock Value.  “Toro Common Stock Value” means either (1) if Toro Common Stock is traded on a national securities exchange, the price of Toro Common Stock prevailing on that exchange, or (2) if it is not traded on such an exchange, the fair market value of the Toro Common Stock as determined in good faith by the Administrator and based on all relevant factors for determining the fair market value of securities.  Such fair market value shall be determined as of each Valuation Date.  The fair market value of any Toro Common Stock shall be determined by the Administrator; however, the Administrator may seek and be guided by an appraisal thereof made by an independent reputable appraiser selected by the Administrator and also by any Regulations promulgated pursuant to ERISA Section 3(18).  All valuations of Toro Common Stock acquired after December 31, 1986 that are not publicly traded must be made by an independent appraiser who meets requirements similar to those imposed under Section 170(a)(1) of the Code.

Toro Investment Fund Contributions.  “Toro Investment Fund Contributions” are contributions made by a Participating Employer pursuant to Section 4.1.

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Trust.  “Trust” means “The Toro Company Investment, Savings and Employee Stock Ownership Plan Trust” as it may be amended from time to time, the terms of which are stated in the Trust Agreement.

Trust Agreement.  “Trust Agreement” means a trust agreement described in Section 9.1 between Toro and the Trustee.

Trustee.  The “Trustee” is the natural or artificial person appointed and acting from time to time as Trustee of the Trust.  As of the Effective Date of this Restatement, Fidelity Management Trust Company is the Trustee.  No person shall serve as Trustee in violation of Section 411 of ERISA.

Trust Fund.  The “Trust Fund” includes all property, cash and assets of every kind received or receivable and held by the Trustee pursuant to the terms of the Trust Agreement.

Trust Fund Share.  The “Trust Fund Share” of a Participant or the Participant’s Beneficiary shall be equal to the total of:

(1)           the fair market value of the Participant’s or Beneficiary’s Accounts determined as of the Valuation Date coincident with or last preceding the event which gives rise to the necessity for determining said total; plus

(2)           the amount of any contributions to the Plan credited to the Participant’s or Beneficiary’s Accounts after said Valuation Date and up to said event; plus

(3)           all contributions which have been remitted to the Trustee and which have not been allocated to the Participant’s Accounts up to such event, but which are fully allocable to the Participant; plus

(4)           all contributions held by a Participating Employer under a payroll deduction program with respect to this Plan; plus

(5)           All other contributions made subsequent to such event which are allocated to the Participant’s Accounts after such event; less

(6)           all distributions from the Plan made to the Participant or on the Participant’s behalf from said Valuation Date up to said event.

Notwithstanding the preceding provisions of this definition, if as of said Valuation Date any portion of any of a Participant’s Accounts have been invested in an Investment Fund and if the change in value of such portion is readily determinable at any time without a valuation of said Investment Fund, such portion shall be excluded when determining the fair market value of the applicable Account as of said Valuation Date.  However, the amount receivable by the Participant from said Investment Fund with respect to that portion, as of the date the Participant’s Trust Fund Share is computed, shall be added to the Participant’s Trust Fund Share.

Valuation Date.  A “Valuation Date” is any date as of which the value of the assets held in the Trust Fund is to be determined.  A Valuation Date shall occur upon any date designated by the Administrator and communicated to the Trustee and other appropriate parties which date must be selected in a uniform manner and must not result in any discrimination in favor of Highly Compensated Employees of a Participating Employer.  If business is not normally transacted on the pertinent day, then the Valuation Date shall be the most recent day upon which business was normally transacted.  Until

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modified by the Administrator (by direction to the record keeper for the Plan and communications to Participants), Valuation Date shall include each business day on which the New York Stock Exchange is open for business.

Valuation Period.  A “Valuation Period” is a period of time beginning on the day immediately following a Valuation Date and ending upon the next subsequent Valuation Date.

Vested.  “Vested” means nonforfeitable, that is, a claim which is unconditional and legally enforceable against the Plan obtained by a Participant or the Participant’s Beneficiary to that part of an immediate or deferred benefit under the Plan.

Vested Share.  “Vested Share” means the Vested portion of a Participant’s Trust Fund Share as determined under Article VI.

Vesting and Withdrawal Limitations.  “Vesting and Withdrawal Limitations” means with respect to assets allocated to a Participant’s Account that those assets are fully Vested and may not be withdrawn prior to the Participant’s Termination of Service.

Vesting Service.  “Vesting Service” means an Employee’s period of service with Toro or a Related Employer measured in full years.  An Employee shall receive credit for one full year of Vesting Service for each Plan Year beginning on or after August 1, 1988, in which the Employee had at least one Hour of Service for Toro or a Related Employer.  Since there was a short Plan Year that occurred beginning August 1, 1995, and ending December 31, 1995, Employees received credit for Vesting Service in accordance with the previous provisions of this definition, for the one year period beginning on August 1, 1995, and for Plan Years beginning on and after January  1, 1996.  Effective on and after January 1, 2001, “Vesting Service” shall also include an Employee’s period of service with a Predecessor Employer determined in the same manner as under the prior provisions of this definition.

Voluntary Contributions Account.  “Voluntary Contributions Account” means an Account described in Section 6.1(a)(8).

Section 1.2.  Gender and Number.  Wherever appropriate, the masculine gender, as used herein, may be read as the feminine gender or as the neuter gender, and the neuter gender may be read as the masculine gender or as the feminine gender.  The singular may be read as the plural, and the plural may be read as the singular.

Section 1.3.  Applicable Law, Statute of Limitations.  The Plan is intended to be construed, and all rights and duties are to be governed, in accordance with the laws of the State of Minnesota, except as preempted by ERISA.  Those laws shall also apply when determining the existence of a relationship between two individuals; however, effective as of June 26, 2013, for purposes of this Plan, two individuals shall be treated as married if the couple is lawfully married under the laws of one of the following jurisdictions:  one of the 50 States, the District of Columbia, a U.S. territory or a foreign jurisdiction.  If two individuals have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under the laws of such a jurisdiction that is not denominated as a marriage under the laws of that jurisdiction, then such formal relationship shall not be considered to be a marriage for purposes of this Plan.

Unless ERISA specifically provides otherwise, no civil action arising out of, or relating to, this Plan or Trust, including a civil action authorized by Section 502(a) of ERISA, may be commenced by a Participant or Beneficiary after the earlier of:

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(a)           three years after the occurrence of the facts or circumstances that give rise to, or form the basis for such action; or

(b)           one year from the date the plaintiff had actual knowledge of the facts or circumstances that give rise to, or form the basis for, such action,

except that in the case of fraud or concealment, such action may be commenced not later than three years after the date of discovery of the facts or circumstances that give rise to, or form the basis for, such action.

Section 1.4.  Merger and Consolidation.  In the event of any merger or consolidation of the Plan or Trust with any other plan or trust or the transfer of assets or liabilities of the Trust to any other plan or trust, each Participant shall (if such plan or trust should then be terminated) receive a benefit immediately after the merger, consolidation, or transfer which is not less than the benefit the Participant would have been entitled to receive immediately before the merger, consolidation, or transfer (if the Plan or Trust had terminated on the day immediately preceding the effective date of such merger, consolidation, or transfer) based on the Participant’s employment and remuneration on such preceding day.

Section 1.5.  Rule of Construction.  Toro intends the Plan and Trust to qualify under the provisions of ERISA, including Section 401(a) of the Code as amended by ERISA, or of any comparable section of any future legislation that amends, supplements, or supersedes such section and/or ERISA, and all provisions of the Plan are to be construed and applied in a manner that is consistent therewith.

ARTICLE II. 
Participating Employers

Section 2.1.  Eligibility.  In order to be eligible to adopt the Plan, an Employer must be designated as eligible by the Administrator in writing which designation must be delivered to such Employer.  The designation may specify the date as of which such Employer’s participation may become effective, the terms and conditions, if any, under which and the extent to which employment with and remuneration from such Employer, its predecessors and/or affiliates shall be taken into account under the Plan, and may also specify the divisions, plants or other units of Employees of such Employer whose members are eligible to become Covered Employees.

Section 2.2.  Commencement of Participation.  An eligible Employer may adopt the Plan by resolution duly adopted by its Board of Directors, as evidenced by a copy thereof certified by its secretary or assistant secretary (or other authorized person) and delivered to Toro.  Upon such delivery of the certified copy of that resolution, the Employer shall become a Participating Employer effective upon the later of the date specified in that resolution or the designation referred to in the prior section.  If no date is specified in such resolution or designation, the eligible Employer shall become a Participating Employer as of the first day of the first Plan Year subsequent to the date on which such resolution has been duly adopted and such designation has been adopted.

Section 2.3.  Recordkeeping and Reporting.  Each Participating Employer shall furnish to the Administrator or its delegate the information with respect to each of its Employees necessary to enable the Administrator or its delegate to maintain records sufficient to determine the benefits due to or which may become due to such Employees and to give those Employees the reports required by law.

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ARTICLE III. 
Eligibility and Participation

Section 3.1.  Eligibility Requirements.

(a)           Except as otherwise provided in Section 3.1(b), each Employee of a Participating Employer who simultaneously meets all of the following requirements may become a Covered Employee:

(1)           The Employee has completed thirty (30) consecutive days of employment with a Participating Employer, Related Employer, or Predecessor Employer (limitations on crediting service with a Predecessor Employer described in Paragraph (3) of the definition of Eligibility Service shall apply) or one year of Eligibility Service.

(2)           The Employee is employed is a division, plant or other classification of Employees with respect to which the Employee’s Participating Employer has adopted the Plan.

(b)           The following provisions are exceptions to the eligibility provisions of Section 3.1(a):

(1)           If an Employee is in a unit of Employees of a Participating Employer covered by a collective bargaining agreement which does not provide that Employees in the unit shall be covered by the Plan and if there is evidence that retirement benefits were the subject of good faith bargaining between the representatives of such unit and such Employer, the Employee shall not be eligible to become a Covered Employee.  Notwithstanding the prior sentence, Employees who are covered by the collective bargaining agreement between Toro and Local No. 1291 of The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and who are excluded from participation in The Toro Company Plymouth Union Employees’ Pension Plan and The Toro Company Profit-Sharing Plan for Plymouth Union Employees (while it is a separate plan from this Plan) on and after January 1, 2015 shall not be excluded from becoming a Covered Employee on account of that coverage.  However, any such Employee who is classified as a casual employee by the Employee’s Participating Employer shall not be eligible to become a Covered Employee.

(2)           If a division, plant or other unit of business is acquired by a Participating Employer or a Related Employer by purchase, merger, consolidation or other means of acquisition, an Employee in the acquired division, plant or other unit of business shall not be eligible to become a Covered Employee, as long as the Employee remains employed by such division, plant or other unit of business, even if the division, plant, or other unit of business is transferred to a Participating Employer other than the Employer that made such acquisition, either in connection with the acquisition or thereafter, unless a provision of the Plan provides otherwise or the Administrator, or an officer of Toro or delegate described in Section 11.2, designates as eligible to participate in the Plan the class of Employees to which the Employee belongs.  That designation shall be reflected on Exhibit A — Participation and Recognition of Other Service, which may be modified under Section 11.2.  Such exhibit shall express the terms and conditions under and the extent to which employment with and remuneration from such division, plant or other unit of business shall be taken into account under the Plan, and those terms and conditions shall apply to such Employee until subsequently modified under the terms of the Plan.

(3)           If the written designation of the Administrator under which an Employee’s Employer is designated as eligible to become a Participating Employer specifies the divisions, plants or other units of Employees of such Employer whose members are eligible to become Covered Employees, the Employee must be employed in such a unit of Employees of such

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Employer to be eligible to become a Covered Employee, unless the Employee is also employed by another Participating Employer and is not otherwise excluded from eligibility to be a Covered Employee.

(4)           If an individual is classified by a Participating Employer as an independent contractor, as evidenced by its intentional decision to not withhold tax from the individual’s compensation, then even if the individual actually is an Employee of the Participating Employer during the period of the classification, the individual may not become a Covered Employee of that Participating Employer.  Further, if an individual who is working for a company providing goods or services (including temporary employee services) to a Participating Employer is not regarded by the Participating Employer as its Employee, as evidenced by its intentional decision to either not pay the person’s compensation or not withhold taxes from the individual’s compensation, then even if the individual eventually is deemed to be an Employee of the Participating Employer, such individual may not become a Covered Employee of that Participating Employer.

(5)           A leased employee described in Section 14.4 of the Plan shall not be eligible to become a Covered Employee.

(6)           If an Employee of a Participating Employer is classified by the Participating Employer as a temporary employee or an intern, the individual may not become a Covered Employee of that Participating Employer while the individual is covered by that classification, unless the Employee has completed a year of Eligibility Service.

A temporary employee who made 401(k) Contributions on or before October 1, 2004 prior to completing one-year of Eligibility Service will be deemed to have satisfied the eligibility requirements of this Section 3.1 but only for the purposes of making 401(k) Contributions.  The requirements in Article IV and this Section 3.1(b)(6) continue to apply with respect to any and all other contributions.

Section 3.2.  Admittance as Covered Employee and Participant.

(a)           Each Employee of a Participating Employer who immediately before the Effective Date of this Restatement was a Participant in the Plan shall be a Participant as of that date.  In addition, each such Employee who on said date is not excluded from eligibility under Section 3.1(b) shall be a Covered Employee on said date.  Also, if an Employee meets such requirements, except that the Employee is excluded from eligibility under Section 3.1(b), the Employee shall become a Covered Employee as of the first day on which the Employee performs an Hour of Service for a Participating Employer and is not excluded from eligibility under Section 3.1(b) (this shall not be earlier than the Entry Date on which the Employee would have become a Covered Employee but for such exclusion).

(b)           Each Employee who first meets the requirements of Section 3.1 shall automatically become a Covered Employee and a Participant on the payday for the first full payroll period after the Employee meets those requirements.  However, if an Employee meets such requirements, except that the Employee incurs a Termination of Service (without returning to employment) before such day, the Employee shall become a Covered Employee as of the first day after that payday on which the Employee first performs an Hour of Service for a Participating Employer and is not excluded from eligibility under Section 3.1(b).  Also, if an Employee meets such requirements on account of satisfying the one year of Eligibility Service requirement, the date for such entry into the Plan shall not be later than the first day of the Plan Year following the date such requirements are satisfied.

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Section 3.3.  Requirements to Become a Contributing Participant.

(a)           Each Employee who becomes a Covered Employee may become a Contributing Participant.  However, except as provided in Section 3.3(b), to become a Contributing Participant, each Covered Employee must apply to participate in the Plan in writing or by another method required or made available by the Administrator.  The application will include any information required by the Administrator such as an acceptance of the terms of the Plan, a 401(k) Contribution Agreement, an agreement to make After-Tax Contributions, a designation of the percentage of the Employee’s Compensation which the Employee wishes to have contributed to the Plan on the Employee’s behalf, an authorization of payroll deductions of such contributions and such other information as the Administrator may reasonably require for the proper administration of the Plan.  A Covered Employee shall become a Contributing Participant as of the beginning of the Covered Employee’s first payroll period which follows the 30th day after the date of such application (or such earlier payroll period as the Administrator shall permit in a uniform and nondiscriminatory manner) or for such later payroll period as shall be provided in the application.

(b)           Each Employee who is an Employee of a Participating Employer and first becomes a Covered Employee shall automatically become a Contributing Participant, unless the Employee elects not to participate in the Plan by completing the forms required by the Administrator or by another method made available by the Administrator.  Upon explanation of the terms of the Plan by the Administrator or its delegate (consistent with applicable guidance and requirements), unless an affirmative action is taken by the Covered Employee, the Employee will be deemed to have agreed with the terms of the Plan, agreed to make 401(k) Contributions, designated the percentage of the Employee’s Compensation as provided in Section 4.3(a)(1) of the Plan, and authorized the payroll deductions of such contributions.  If the Employee desires to change the percentage of the Employee’s Compensation designated as 401(k) Contributions, desires to make After-Tax Contributions, or elects not to participate in the Plan, the Employee shall complete the forms or take such other action as is reasonably required by the Administrator.  A Covered Employee shall become a Contributing Participant as of the date such Employee becomes a Covered Employee, unless the Employee elects not to participate in the Plan.

(c)           At least annually, before each Plan Year, the Administrator or its delegate shall notify the Employee who was deemed a Contributing Participant under Section 3.3(b) of the 401(k) Contribution percentage designated in Section 4.3(a)(1) and the Employee’s right to change the percentage (consistent with applicable guidance and requirements).

Section 3.4.  Withdrawal as Contributing Participant.  A Participant may withdraw as a Contributing Participant for a payroll period by revoking the Participant’s authorization of payroll deductions to make 401(k) Contributions and After-Tax Contributions on the Participant’s behalf.  A Participant who desires to withdraw as a Contributing Participant shall provide a notice of withdrawal by a method required or made available by the Administrator, at least thirty days (or such shorter period of days as the Administrator shall permit in a uniform and nondiscriminatory manner) before such payroll period.

Section 3.5.  Return as Contributing Participant After Withdrawal.  A Participant who has withdrawn as a Contributing Participant as described in Section 3.4 may not again become a Contributing Participant until the first payday of the Covered Employee’s Participating Employer which follows the payday for which the withdrawal was effective.

Section 3.6.  Termination as Covered Employee.  An Employee shall cease to be a Covered Employee upon the Employee’s Termination of Employment by all Participating Employers, upon the Employee’s death, upon becoming covered by one of the exceptions under Section 3.1(b) or upon the

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termination of the Plan.  Such Employee shall be deemed to continue to be a Covered Employee for purposes of contributions to the Plan made with respect to Compensation payable to such Employee after the Employee’s Termination of Service.

Section 3.7.  Termination as Contributing Participant.  An Employee shall cease to be a Contributing Participant upon the Employee’s withdrawal as a Contributing Participant as described in Section 3.4 or the Employee’s termination as a Covered Employee under Section 3.6, or on account of termination of the Plan.  Such Employee shall be deemed to continue to be a Contributing Participant for purposes of contributions to the Plan made with respect to Compensation payable to such Employee after the Employee’s Termination of Service.

Section 3.8.  Return as Covered Employee and Contributing Participant after Termination as Covered Employee.  An Employee who has ceased to be a Covered Employee shall again become a Covered Employee as of the first day after that occurrence on which such Employee first performs an Hour of Service for a Participating Employer and is not excluded from eligibility under Section 3.1(b).  Such Employee shall again become a Contributing Participant as provided in Section 3.3 or, if such Employee had withdrawn as a Contributing Participant prior to Termination of Service, at such later date as is provided under Section 3.5.  For purposes of determining that date, an Employee who has ceased to be a Covered Employee shall be deemed to have withdrawn as a Contributing Participant.

Section 3.9.  Limitation Respecting Employment.  Neither the fact of the establishment of the Plan and Trust nor the fact that an Employee has become a Covered Employee or Contributing Participant shall give to any person any right to continued employment; neither shall either fact limit the right of a Participating Employer to discharge or to deal otherwise with an Employee without regard to the effect such treatment may have upon the Employee’s rights under the Plan.

Section 3.10.  Termination as Participant.  After there shall have been distributed to or for the benefit of a Participant or such Participant’s Beneficiary the entire portion of such Participant’s Vested Share to which the Participant is entitled, such person shall cease to be a Participant.

ARTICLE IV.
Contributions

Section 4.1.  Toro Investment Fund Contributions.

(a)                                 For each Plan Year, each Participating Employer shall contribute to the Plan on behalf of its Qualified Employees for that year an amount of cash, Toro Common Stock or other property (Toro Common Stock shall be valued at its Toro Common Stock Value and other property shall be valued at its fair market value) determined by Toro’s Chief Executive Officer or such officer’s delegate.  Such officer or delegate may determine to make no such contribution for a Plan Year.

(b)                                 All contributions under this section shall be designated as Toro Investment Fund Contributions.

Section 4.2.  ESOP Contribution.

(a)                                 For each Plan Year, each Participating Employer shall contribute to the Plan on behalf of its Qualified Employees for that year an amount of cash, Toro Common Stock or other property (Toro Common Stock shall be valued at its Toro Common Stock Value and other property shall be valued at its fair market value) determined by Toro’s Chief Executive Officer or that officer’s delegate.  Such officer or delegate may determine to make no such contribution for a Plan Year.

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(b)                                 If an Exempt Loan is outstanding, then a Participating Employer may contribute to the Plan for each Plan Year such additional amount (beyond that made under Section 4.2(a)) of cash, Toro Common Stock or other property (Toro Common Stock shall be valued at its Toro Common Stock Value and other property shall be valued at its fair market value) as may be determined by Toro’s Chief Executive Officer or that officer’s delegate.  In determining the amount of a Participating Employer’s ESOP Contribution for a Plan Year, Toro’s Chief Executive Officer or that officer’s delegate may take into consideration the contribution which is sufficient to permit the Trustee to make any principal and interest payments on the outstanding Exempt Loan.  Further, in determining the amount of such ESOP Contribution, Toro’s Chief Executive Officer or that officer’s delegate may take into consideration the maximum amount deductible by the Participating Employer for Federal income tax purposes under Section 404(a)(3) of the Code or Section 404(a)(9) of the Code as applicable.

Section 4.3.  401(k) Contributions.

(a)                                 401(k) Contributions are contributions to the Plan which are made out of a Contributing Participant’s Compensation and are treated for federal income tax purposes as a contribution made by the Participant’s Participating Employer.  The following provisions relate to automatic enrollment and automatic escalation:

(1)                                 An Employee who becomes a Contributing Participant under Section 3.3(b), shall be deemed to have elected to have 401(k) Contributions made on the Covered Employee’s behalf in the amount of four percent (4%) of the Covered Employee’s Compensation.  In the event the Covered Employee makes an affirmative election to make 401(k) Contributions before the date such Employee becomes a Contributing Participant, the affirmative election shall supersede the deemed election.  In the event the Covered Employee makes an election not to have 401(k) Contributions made on the Covered Employee’s behalf before the date such Employee becomes a Contributing Participant, such election shall supersede the deemed election.

(2)                                 At least annually, before each Plan Year, the Administrator or its delegate must notify the Employee who was deemed to become a Contributing Participant under Section 3.3(b) of the 401(k) Contribution percentage as designated in Section 4.3(a)(1) and the Employee’s right to change the percentage.

(3)                                 An Employee who is employed with Toro Manufacturing LLC, and who was an Employee of a Participating Employer and a Contributing Participant on July 31, 2002, shall be deemed to have elected to have 401(k) Contributions made in the amount as specified in the 401(k) Contribution Agreement in effect for such Employee as of July 31, 2002.  Such rate of 401(k) Contributions shall remain in effect until the rate is modified as otherwise provided in this Section 4.3.

(4)                                 The following annual 401(k) Contribution rate escalation provisions shall be effective on and after the first day of a Plan Year specified as provided in Subsection (4)(C):

(A)                               The escalation provisions of this Subsection (a)(4) have both automatic and elective elements.  A Contributing Participant who is described in Subsection (a)(2) above and has not elected to not be covered by that provision or has not selected a different rate of 401(k) Contributions shall be covered by the automatic escalation element.  Under that element, the rate of 401(k) Contributions for that Contributing Participant will be increased by one percent (1%) each year after Subsection (a)(2) first applies to the Contributing Participant with the year beginning on the effective day referred to above being the first such year.  The rate increase will begin on the first

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payday on or after the first day of that year for which the necessary advanced processing is completed.  That automatic rate increase will be limited so that it won’t produce a rate of 401(k) Contributions above ten percent (10%) for such a Contributing Participant.

(B)                               A Contributing Participant who is not a Highly Compensated Employee may elect to have the Contributing Participant’s rate of 401(k) Contributions increased annually in multiples of one percent (1%) and may set a target rate that will be the maximum rate of 401(k) Contributions that such increases can produce.  That target rate may not exceed twenty-five percent (25%).  Each annual increase will begin with the first payday on or after January 1 of the year of the increase for which the necessary advanced processing is completed on or after that January 1.  The first such year will be the year referred to above.  Such an election will be effective for a year only if the election is made at least one month before January 1 of that year.  An increase under this Subsection (B) will only be implemented if the Participant is a Covered Employee and not a Highly Compensated Employee at the time that the annual increase is scheduled to be implemented.

(C)                               This Subsection (4) is only effective if an officer of Toro or delegate described in Section 11.2 signs a document in amendment form that specifies that this section is to be effective as of a specific first day of a Plan Year and this Subsection (4) will be effective as of that date, which shall not be before the first day of the Plan Year which follows the date that such document is so signed.

(5)                                 One time 401(k) Contribution rate escalation provisions shall be effective as specified in Subsection (5)(C). They are as follows:

(A)                               A Contributing Participant whose rate of Before Tax Contributions is greater than zero percent (0%) but less than ten percent (10%), who does not elect on or prior to the effective date so specified to not have the one time rate escalation described in this Subsection (a)(5) apply to that Participant, and who is a Covered Employee and not a Highly Compensated Employee on that date will have the rate of Before Tax Contributions for that Contributing Participant increased by one percent (1%) beginning with that Participant’s first payday on or after that effective date.

(B)                               A Contributing Participant for whom the increase described in Subsection (a)(5)(A) above is implemented will be covered by the provisions of Subsection (a)(4)(A) above unless the Contributing Participant makes a different election under another provision of the Plan.

(C)                               This Subsection 5 is only effective if an officer of Toro or delegate described in Section 11.2 signs a document in amendment form that specifies that this Subsection (5) is to be effective as of a specific date during a Plan Year and this Subsection (5) will be effective as of that date, which shall not be before the date that such document is so signed.  Such an officer may implement this Subsection (5) more than once.

(6)                                 Notice will be provided to each such Contributing Participant concerning an escalation described in the preceding provisions of this Subsection (a) and the right to elect, during at least a 30 day period ending on the first applicable payday that an escalation is to be effective, to not have that escalation apply to such Contributing Participant.

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(b)                                 A Contributing Participant’s Participating Employer shall contribute on behalf of the Contributing Participant the amount specified by the Contributing Participant to be made to the Plan as 401(k) Contributions.

(c)                                  An Employee may cause the Employee’s Participating Employer to cease to make 401(k) Contributions on the Employee’s behalf for a Plan Year by withdrawing from the Employee’s status as a Contributing Participant as provided in Section 3.4.  Such status withdrawal shall be effective as of such date as may be provided under rules established by the Administrator; however, unless the Administrator determines otherwise, such withdrawal will be effective as of the first payday after the status withdrawal on which it is administratively feasible to make the changes.

(d)                                 401(k) Contributions during a Plan Year shall be made and limited as follows:

(1)                                 For a Contributing Participant whose Compensation, on an annualized basis, at the beginning of a calendar quarter is not above the level used to determine Highly Compensated Employees for that Plan Year, the Contributing Participant may make 401(k) Contributions in one percent (1%) increments of from a minimum of one percent (1%) to a maximum of twenty-five percent (25%) of Compensation; provided, however, that the sum of the Participant’s 401(k) Contributions and After-Tax Contributions for any payroll period may not exceed twenty-five percent (25%) of the Participant’s Compensation for such period.

(2)                                 If a Participant is not covered by Section 4.3(d)(1) at the beginning of a calendar quarter, the Participant may make 401(k) Contributions in one percent (1%) increments of from a minimum of one percent (1%) to a maximum set by the Administrator that is no greater than is permitted under Section 4.3(d)(1) or Section 5.3.

(e)                                  A Contributing Participant may modify the rate of 401(k) Contributions at any time by fulfilling the requirements of this section.  The rate change shall be effective as of the first payday after the Administrator or its delegate has processed the request.  Any modification in the rate of 401(k) Contributions shall be elected by providing to the Administrator or its delegate a new 401(k) Contribution Agreement by a method required or made available by the Administrator.  Such agreement shall be provided to the Administrator or its delegate at least 30 days (or such shorter period of days as the Administrator may permit in a uniform and nondiscriminatory manner) before the payday as of which it is to be effective.

(f)                                   A Participant’s 401(k) Contributions for any calendar year, when aggregated with any other elective deferrals as defined under Section 402(g) of the Code which are made to any other plan maintained by a Participating or Related Employer on behalf of the Participant, may not exceed $11,000 ($18,000 for 2016), as adjusted by the Secretary of Treasury pursuant to Section 402(g) to reflect increases in the cost of living, except that Catch-up Contributions described in Section 4.15 shall not be taken into account for that calculation to the extent permitted by that section and Section 414(v) of the Code.  If that limit is exceeded, the portion of the excess amount attributable to this Plan, adjusted for earnings or losses as provided in Section 4.3(h), shall be distributed to the Participant not later than April 15 of the calendar year immediately following the calendar year in which the contributions were made.

(g)                                  If a Participant’s elective deferrals, as defined in Section 402(g) of the Code, for any calendar year exceed the limit described in Subsection (f), and this limit is exceeded as a result of aggregation with any such elective deferrals made to plans other than plans maintained by a Participating or Related Employer, the Participant may notify the Administrator or its delegate and request a distribution from this Plan.  In calculating the amount to be distributed pursuant to the Participant’s request, the Participant’s excess 401(k) contributions shall be reduced by any contributions previously

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distributed or recharacterized pursuant to Section 4.7 hereof with respect to the Participant for the Plan Year beginning with or within such calendar year.  If the Administrator or its delegate receives proper notice from the Participant that the limit in this subsection (g) has been exceeded for a calendar year, the Administrator or its delegate shall direct the Trustee to distribute the appropriate 401(k) contributions, adjusted for any net earnings or losses, in accordance with paragraph (1) or (2) below:

(1)                                 If 401(k) Contributions are distributed to a Participant during the calendar year in which such contributions were made, the following conditions must be satisfied:

(A)                               The Participant and the Plan must designate the distribution as excess 401(k) contributions, and

(B)                               The distribution must be made after the date on which the excess 401(k) contributions were made to the Plan.

(2)                                 If excess 401(k) Contributions are distributed following the calendar year in which the contributions were made, the following conditions must be satisfied:

(A)                               the Participant must notify the Administrator or its delegate, not later than March 15 of the calendar year following the calendar year in which the contributions were made, that the limit in Section 4.3(f) has been exceeded, and

(B)                               the Administrator or its delegate, upon receipt of the notice from the Participant, shall direct the Trustees to make the appropriate distributions no later than the April 15th immediately following receipt of the notice.

(h)                                 (1)  The net earnings or losses allocable to the Participant’s excess 401(k) Contributions for the calendar year pursuant to this Section 4.3 shall be determined in accordance with any reasonable method for computing the income or losses allocable to such excess deferrals provided the method does not violate Section 401(a)(4) of the Code and is used consistently for all Participants and for all corrective distributions under the Plan for the applicable Plan Year and is used for allocating income to Participant Accounts.  However, the net earnings or losses allocable to such excess deferrals for the calendar year may be determined by multiplying the earnings or losses for the calendar year allocable to the Participant’s 401(k) Contributions by a fraction with respect to which:

(A)                               the numerator is the amount of such excess contributions made by the Participant for the calendar year, and

(B)                               the denominator is the sum of (i) the portions of the account balance of the Participant attributable to 401(k) Contributions as of the beginning of the calendar and (ii) the Participant’s 401(k) Contributions for the calendar year.

(2)                                 If the distribution of the Participant’s excess 401(k) Contributions is made after the end of the calendar year, the net earnings or losses allocable to the Participant’s excess 401(k) Contributions for the period between the end of the year and the distribution date will be disregarded.

(3)                                 Notwithstanding the prior provisions of this subsection (h), the net earnings or losses of, or value of, the Participant’s 401(k) Contributions Account attributable to 401(k)

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Contributions that have not been made for a calendar year shall not be taken into account in making the determination described in this subsection (h).

(i)                                     Matching Contributions made on behalf of a Participant (and earnings or losses attributable to those contributions determined by the Administrator or its delegate in a manner consistent with the prior provisions of subsection (h)) shall be forfeited if the contributions to which they relate are 401(k) Contributions distributed under the prior provisions of this section and shall be used as soon as administratively feasible to reduce subsequent Matching Contributions by the Participant’s Participating Employer.

(j)                                    401(k) Contributions made on behalf of a Participant must be paid to a Trustee and credited to the Participant’s 401(k) Contributions Account as soon as reasonably practicable, but not after the fifteenth business day of the calendar month following the month the contributions would have otherwise been payable to the Participant in cash.

(k)                                 The rate of 401(k) Contributions may be limited by the Administrator in order to comply with the applicable deductibility limits, limits under Section 415 of the Code, and the nondiscrimination tests in Section 4.7.

Section 4.4.  After-Tax Contributions.  After-Tax Contributions shall not be permitted after 2011.

Section 4.5.  Matching Contributions.  Subject to any applicable limitation in the Plan, each Participating Employer may make a Matching Contribution for each Plan Year on behalf of each Participant employed by it who makes 401(k) Contributions for any pay day.  The Matching Contribution from such Employer for such a Contributing Participant shall be determined by Toro’s Chief Executive Officer or that officer’s delegate and shall be equal to a percentage set by that officer or delegate of the Participant’s 401(k) Contributions for the Plan Year (excluding any such contributions that have been withdrawn during that Plan Year) that are made on or after that day, and will not exceed any maximum percentage set by that officer or delegate of the Participant’s Compensation for any paydays with respect to which such contributions are made.  Such percentages shall be set by that officer or delegate as of any time for any future period.  As of January 1, 2009, the Matching Contribution percentage is 50% and the maximum Matching Contribution amount is 2% of the Participant’s Compensation for any payday with respect to which such contributions are made.  Subject to any applicable limitation in the Plan, if, as of the end of the Plan Year, the aggregate amount of Matching Contributions made on behalf of a Participant is less than the specified percentage of the applicable portion of the Participant’s Compensation for the Plan Year, the Participating Employer will make an additional Matching Contribution on behalf of the Participant in an amount equal to the difference.  For that purpose, if the annual dollar limit on 401(k) Contributions applies to a Participant on any payday to prevent such contributions for that payday, the Participant’s Compensation for that payday will be taken into account in determining that applicable portion of the Participant’s Compensation for the Plan Year.  Further, if different percentages were in effect for different portions of a Plan Year, those additional contributions shall be calculated separately for each such portion of the Plan Year.

Matching Contributions will not be made with respect to Catch-up Contributions.

Matching Contributions may be made in cash or in Toro Common Stock.

Section 4.6.  Rollovers From Qualified Plans.  If allowed by the Administrator and subject to such terms and conditions as may be established from time to time by the Administrator, a Participant may contribute assets distributed from the Participant’s interest in a plan qualified under Section 401(a) or 403(a) to the Trust Fund by delivery of such contribution to a Trustee and such contribution shall be

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considered to be a Rollover Contribution; provided that such Employee submits a written certification (the certification may be provided electronically if permitted by applicable guidance), satisfactory to the Administrator and Trustee, that the contribution of the assets will satisfy applicable Code and regulatory requirements which prevent taxation of those assets in the event such a contribution is made.

Such rollover may also be made through an individual retirement plan qualified under Section 408 of the Code where the individual retirement plan was used as a conduit from the prior plan if the transfer is made in accordance with the statutory and regulatory rules referred to in the prior paragraph and if such individual retirement plan did not include any personal contributions or earnings thereon the Participant may have made to the Individual Retirement Account.

If allowed by the Administrator and subject to such terms and conditions as may be established from time to time by the Administrator, an Employee of a Participating Employer may cause a direct rollover of the type described in Section 7.12 to be made from a qualified trust described in Section 401(a) of the Code to the Plan and such transfer shall be treated as a Rollover Contribution.

Any Rollover Contributions Account is subject to the Plan provisions governing distributions.

Any Rollover Contributions will be initially contributed to the Rollover Contribution Account. Any subsequent investment of Rollover Contributions will be consistent with the terms of Sections 9.4 and 9.5.

Section 4.7.  Non-discrimination Tests.

Non-discrimination requirements described in Sections 401(k) and 401(m) of the Code must be met by satisfying the tests and related provisions described in this section.

(a)                                 The following terms defined in this subsection (a) when used in this section in italics have the following meanings unless the context indicate that other meaning are intended:

(1)                                 The term “actual contribution percentage” means, for any specified group in the Plan of an employer, the average of the ratios, calculated (to the nearest 0.01%) separately for each Participant in the group, of the amount of employee contributions paid out of compensation from that employer by each Participant and matching contributions which are made by that employer on behalf of each Participant for a Plan Year to each Participant’s compensation from the Participant’s employer for the Plan Year.

Employee contributions and matching contribution to the Plan, and certain converted contributions, will be taken into account for a given Plan Year, or applicable year for determining the actual contribution percentage for eligible non-highly compensated employees of that employer, as provided in Treasury Regulation Section 1.401(m)-2(a)(4).

Employee contributions and matching contributions described in Treasury Regulation Section 1.401(m)-2(a)(5) shall not be taken into account for purposes of determining the actual contribution percentage.

The actual contribution percentage for non-highly compensated employees of such employer which is to be used under the contribution percentage test for a Plan Year shall be determined using either the “current year testing method” or the “prior year testing method.”  The current year testing method shall be used, unless the Administrator changes to the prior year testing method pursuant to provisions of this definition and applicable regulations.  For purposes of this

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section, the “testing year” is the Plan Year for which the actual contribution percentage for highly compensated employees is being tested; the “prior year” is the Plan Year immediately preceding the testing year.  If the Plan uses data from the testing year in determining the actual contribution percentage for non-highly compensated employees, it is using the “current year testing method;” if the Plan uses data from the prior year in determining the actual contribution percentage for non-highly compensated employees, it is using the “prior year testing method.”

If a different testing method is used for determining the actual deferral percentage for the same specified group, then the following cannot be used: (1) the recharacterization method of corrections described in Treasury Regulation Section 1.401(k)-2(b)(3), (2) the rules of Treasury Regulation Section 1.401(m)-2(a)(6)(ii) regarding taking elective contributions into account under the contribution percentage test, or (3) the rules of Treasury Regulation Section 1.401(k)-2(a)(6)(v) regarding taking qualified matching contributions into account under the deferral percentage test (rather than the contribution percentage test).

Additional rules relating to the prior year testing method and the current year testing method are described in Treasury Regulation Section 1.401(m)-2(c).

(2)                                 The term “actual deferral percentage” means, for any specified group in a cash or deferred compensation arrangement of the Plan, the average of the ratios, calculated (to the nearest 0.01%) separately for each Participant in the group, of the amount of elective contributions made to the Plan by the Participant’s employer on behalf of each Participant for a Plan Year to each Participant’s compensation from the Participant’s employer for the Plan Year.

For purposes of determining the actual deferral percentage, each Employee who is eligible under the terms of the Plan to have contributions made on the Employee’s behalf is treated as a Participant.  The actual deferral percentage of an eligible employee who makes no elective contribution is zero.

An elective contribution to the Plan will be taken into account for a given Plan Year, or applicable year for purposes of determining the actual deferral percentage for eligible non-highly compensated employees of such employer, only if each of the requirements listed in Treasury Regulation Section 1.401(k)-2(a)(4)(i) are satisfied.  The requirements of the remainder of Treasury Regulation Section 1.401(k)-2(a)(4) may also have to be satisfied.

Elective contributions described in Treasury Regulation Section 1.401(k)-2(a)(5) may not be taken into account for purposes of determining the actual deferral percentage.

The actual deferral percentage for non-highly compensated employees of such employer which is to be used under the deferral percentage test for a Plan Year shall be determined using either the “current year testing method” or the “prior year testing method.” The current year testing method shall be used, unless the Administrator changes to the prior year testing method pursuant to provisions of this definition and applicable regulations.  For purposes of this section, the “testing year” is the Plan Year for which the actual deferral percentage for highly compensated employees is being tested; the “prior year” is the Plan Year immediately preceding the testing year.  If the plan uses data from the testing year in determining the actual deferral percentage for non-highly compensated employees, it is using the “current year testing method;” if the plan uses data from the prior year in determining the actual deferral percentage for non-highly compensated employees, it is using the “prior year testing method.”

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If a different testing method is used for determining the actual contribution percentage for the same specified group, then the following cannot be used: (1) the recharacterization method of corrections described in Treasury Regulation Section 1.401(k)-2(b)(3), (2) the rules of Treasury Regulation Section 1.401(m)-2(a)(6)(ii) regarding taking elective contributions into account under the contribution percentage test, or (3) the rules of Treasury Regulation Section 1.401(a)(6)(v) regarding taking qualified matching contributions into account under the deferral percentage test (rather than the contribution percentage test).

Additional rules relating to the prior year testing method and the current year testing method are described in Treasury Regulation Section 1.401(k)-2(c).

(3)                                 The term “alternative contribution percentage test” means a test which is satisfied if the actual contribution percentage for the highly compensated group of an employer does not exceed the lesser of:

(A)                                 the actual contribution percentage for the non-highly compensated group of that employer plus two percentage points, or

(B)                                 the actual contribution percentage for the non-highly compensated group of that employer multiplied by two.

(4)                                 The term “alternative deferral percentage test” means a test which is satisfied for a cash or deferred arrangement in the Plan if the actual deferral percentage for the highly compensated group in that arrangement does not exceed the lesser of:

(A)                                 the actual deferral percentage for the non-highly compensated group in that arrangement plus two percentage points, or

(B)                                 the actual deferral percentage for the non-highly compensated group in that arrangement multiplied by two.

(5)                                 The term “cash or deferred arrangement” means an arrangement under which an eligible employee may make a cash or deferred election with respect to contributions to, or accruals or other benefits under, a plan that is intended to satisfy the requirement of Section 401(a) of the Code and does not include any arrangement excluded under Treasury Regulation Section 1.401(k)-1(1)(2)(i).

(6)                                 The term “cash or deferred election” means an election (or modification of an earlier election) by an Employee to have the Employee’s employer either:

(A)                                 provide an amount to the Employee in the form of cash or some other taxable benefit that is not currently available, or

(B)                                 contribute an amount to the Plan (or provide an accrual or other benefit) thereby deferring receipt of compensation.

A cash or deferred election will only be made with respect to an amount that is not currently available to the Employee on the date of election.  Further, a cash or deferred election will only be made with respect to amounts that would have (but for the cash or deferred election) become currently available after the later of the date on which the employer adopts the cash or deferred arrangement or the date on which the arrangement first becomes effective.

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A cash or deferred election does not include a one-time irrevocable election upon the Employee’s commencement of employment or first becoming an eligible employee.

(7)                                 The term “compensation” means, for purposes of this section, an eligible employee’s compensation as defined in Section 414(s) of the Code (alternatively, the Administrator may elect to use a definition of compensation described in the Regulations under Section 414(s) of the Code) for the entire Plan Year for which the determination is being made; provided, however, that at the election of the Administrator, compensation as defined herein for a Plan Year shall be computed on the basis of the portion of the Plan Year during which the Employee was an eligible employee.

(8)                                 The term “contribution percentage test” means a test applied on a Plan Year basis to determine whether the Plan or each disaggregated portion of the Plan (described in Section 4.7(i)(5)) meets the requirements of Section 401(m) of the Code.  The contribution percentage test may be met by either satisfying the general contribution percentage test or the alternative contribution percentage test with respect to the Plan or any disaggregated portion of the Plan.

The Plan will not fail to satisfy the contribution percentage test merely because all of the eligible employees under the Plan for a Plan Year are highly compensated employees.

(9)                                 The “deferral percentage test” is a test applied on a Plan Year basis to determine whether a cash or deferred arrangement of the Plan meets the requirements of Section 401(k) of the Code.  That test may be met by either satisfying the general deferral percentage test or the alternative deferral percentage test.

The Plan will not fail to satisfy the deferral percentage test merely because all of the eligible employees under the Plan for a Plan Year are highly compensated employees.

(10)                          The term “elective contribution” means any contribution made by an employer to a cash or deferred arrangement on behalf of and at the election of an Employee.

Elective contributions will be treated as employer contributions for purposes of Sections 401(a), 401(k), 402(a), 404, 409, 411, 412, 415, 416, and 417 of the Code.

(11)                          The term “elective deferral” means the sum of the following:

(A)                                 Any elective contribution to any cash or deferred arrangement to the extent it is not includible in the Participant’s gross income for the taxable year of contribution;

(B)                                 Any employer contribution to a simplified employee pension as defined in Section 408(k) of the Code to the extent not includible in the Participant’s gross income for the taxable year of contribution;

(C)                                 Any employer contribution to an annuity contract under Section 403(b) of the Code under a salary reduction agreement to the extent not includible in the Participant’s gross income for the taxable year of contribution (other than one-time irrevocable elections described in the last paragraph of Section 402(g)(3) of the Code);

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(D)                                 Any employee contribution designated as deductible under a trust described in Section 501(c)(18) of the Code for the taxable year of contribution; plus

(E)                                  Any employer contribution to a SIMPLE IRA Plan described in Section 408(p) of the Code, pursuant to a Participant’s election to defer under that plan.

(12)                          The term “eligible employee” means an Employee who is directly or indirectly eligible to make a cash or deferred election under the Plan for all or a portion of the Plan Year.  An Employee who is unable to make a cash or deferred election because the Employee has not contributed to another plan is also an eligible employee.  An Employee who would be eligible to make elective contributions but for a suspension due to a distribution, a loan, or an election not to participate in the Plan, is treated as an eligible employee for purposes of Sections 401(k)(3) and 401(m) of the Code for a Plan Year even though the Employee may not make a cash or deferred election due to the suspension.  Also, an Employee will not fail to be treated as an eligible employee merely because the employee may receive no additional annual additions because of Section 415(c)(1) of the Code.

(13)                          The term “employee contribution” means any contribution made by an Employee to any plan maintained by the Employee’s employer out of compensation from that employer which is other than an elective contribution and which is designated or treated at the time of contribution as an after-tax contribution.  The term includes contributions described in Treasury Regulation Section 1.401(m)-1(a) (3)(i), such as amounts attributable to excess contributions which are recharacterized as employee contributions.  The term employee contribution does not include contributions described in Treasury Regulation Section 1.401(m)-1(a) (3)(ii).

(14)                          The term “employer” means an employer within the meaning if Treasury Regulation Section 1.410(b)-9.

(15)                          The term “excess aggregate contribution” means, for each member of the highly compensated group, the amount of employee contributions and matching contributions (including any qualified nonelective contributions and elective contributions which are treated as matching contributions) which exceeds the maximum contribution which could be made if the contribution percentage test were to be satisfied.  This will be determined by computing the amount by which the employee contributions and matching contributions of such members must be reduced in order to lower their actual contribution percentages sufficiently to pass that contribution percentage test.  That computation will be made by first lowering the actual contribution percentage of such member or members with the highest actual contribution percentage to a point not less than the level of such member or members with the next highest actual contribution percentage.  This will be repeated until sufficient total reductions have occurred to achieve the desired reduction.  The amount by which the contributions of each such member must be reduced to achieve those actual contribution percentage reductions will be the excess aggregate contribution for each such member.

(16)                          The term “excess contribution” means, for each member of the highly compensated group, the amount of elective contributions (including any qualified nonelective contributions and qualified matching contributions which are treated as elective contributions) which exceeds the maximum contribution which could be made if the actual deferral percentage test were to be satisfied.  This will be determined by computing the amount by which the elective contributions of such members must be reduced in order to lower their actual deferral percentages sufficiently to pass that deferral percentage test.  That computation will be made by first lowering the actual deferral percentage of such member or members with the highest actual

31

deferral percentage to a point not less than the level of such member or members with the next highest actual deferral percentage.  This will be repeated until sufficient total reductions have occurred to achieve the desired reduction.  The amount by which the elective contributions of each such member must be reduced to achieve those actual deferral percentage reductions will be the excess contribution for each such member.

(17)                          The term “excess deferral” means, for a given calendar year, that amount by which each Participant’s total elective deferrals under all plans of all employers exceed the dollar limit in effect under Section 402(g) of the Code for the calendar year, except that Catch-up Contributions shall not be taken into account for that calculation to the extent permitted by Section 4.15 of the Plan and Section 414(v) of the Code.

(18)                          The “general contribution percentage test” is satisfied for the Plan if the actual contribution percentage for the Plan’s highly compensated group does not exceed 125% of the actual contribution percentage for the non-highly compensated group.

(19)                          The “general deferral percentage test” is satisfied for a cash or deferred arrangement in the Plan if the actual deferral percentage for the highly compensated group in that arrangement does not exceed 125% of the actual deferral percentage for the non-highly compensated group in that arrangement.

(20)                          The term “highly compensated employee” has the meaning provided in Section 414(q) of the Code.

(21)                          The term “highly compensated group” means all Employees of an employer who are highly compensated employees of that employer.

(22)                          The term “matching contribution” means any contribution made by an employer to any plan maintained by such employer which is based on an elective contribution or an employee contribution together with any forfeiture allocated to the Participant’s Account on the basis of elective contributions, employee contributions or matching contributions.

(23)                          The term “nonelective contribution” means any employer contribution, other than a matching contribution, which meets all of the following requirements:

(A)                                 Such nonelective contribution is allocated to a Participant’s Account as of a date within the Plan Year to which it relates;

(B)                                 Such allocation is not contingent upon the Employee’s participation in the Plan or performance of services on any date after the allocation date;

(C)                                 Such nonelective contribution is actually paid to the Trust no later than 12 months after the end of the Plan Year to which the nonelective contribution relates; and

(D)                                 The Employee may not elect to have the nonelective contribution paid in cash in lieu of being contributed to the Plan.

(24)                          The term “non-highly compensated employee” means an Employee who is not a highly compensated employee.

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(25)                          The term “non-highly compensated group” means all non-highly compensated employees of an employer.

(26)                          The term “plan” has the meaning given to it under Treasury Regulation Section 1.401(k)-1(b)(4).

(27)                          The term “qualified matching contribution” means a matching contribution which is 100% Vested and may be withdrawn or distributed only under the conditions described in Treasury Regulation 1.401(k)-1(d).  Those conditions must continue to apply after a transfer out of the Plan described in Section 14.3.  A Participating Employer may designate a Matching Contribution as a qualified matching contribution pursuant to this section.

(28)                          The term “qualified nonelective contribution” means a nonelective contribution which is 100% Vested and may be withdrawn or distributed only under the conditions described in Treasury Regulation 1.401(k)-1(d).  Those conditions must continue to apply after a transfer out of the Plan described in Section 14.3.

(29)                          The term “successor plan” means a plan in which 50% or more of the eligible employees for the first plan year (the first year in which the plan provides for elective contributions) were eligible employees under a qualified cash or deferred arrangement (or section 401(m) plan, as applicable) maintained by a Participating Employer in the prior year.

(b)                                 The deferral percentage test shall be applied to the Plan as follows:

(1)                                 All elective contributions under a cash or deferred arrangement of the Plan, including any elective contributions which are treated as employee contributions or matching contributions with respect to the contribution percentage test, must satisfy the deferral percentage test.  Furthermore, any elective contributions under a cash or deferred arrangement of the Plan which are not treated as employee contributions or matching contributions with respect to the contribution percentage test must satisfy the deferral percentage test.  The Administrator will determine as soon as administratively feasible after the end of the Plan Year whether the deferral percentage test has been satisfied.  If the deferral percentage test is not satisfied, an employer that made that contribution may elect to make an additional contribution to the Plan on account of the non-highly compensated group in that arrangement which will be allocated to Qualified Nonelective Contributions Accounts of that group.  The additional contribution will be treated as a qualified nonelective contribution and as an elective contribution under Section 4.7(g).  Such contribution will be allocated as of the last day of the Plan Year in equal portions to all individuals who were in the non-highly compensated group for that year and who were Covered Employees as of the last day of that Plan Year.

(2)                                 If the deferral percentage test is not satisfied because such employer does not make such nonelective contributions or is not satisfied after the employer makes any nonelective contributions, the Administrator may recharacterize all or any portion of the excess contributions of the highly compensated group in that arrangement as employee contributions if employee contributions are otherwise allowed by the Plan.  The recharacterization shall occur in a sequence described in Subsection (d) below.  If a recharacterization takes place, the Administrator or its delegate will notify all affected Participants and the Internal Revenue Service of the amount recharacterized no later than the 15th day of the third month following the end of the Plan Year in which the excess contribution was made.  Excess contributions which are recharacterized will be includible in a Participant’s gross income on the earliest date any elective contribution made on behalf of the Participant during the Plan Year would have been received by the Participant had

33

the Participant elected to receive the amount in cash.  Recharacterized excess contributions will continue to be treated as employer contributions that are elective contributions for all other purposes under the Code, including Sections 401(a) (other than 401(a)(4) and 401(m)), 404, 409, 411, 412, 415, 416, 417 and 401(k)(2) of the Code.  With respect to the Plan Year for which the excess contribution was made, the Administrator or its delegate will treat the recharacterized amount as an employee contribution for purposes of the deferral percentage test and the contribution percentage test and for purposes of determining whether the Plan meets the requirements of Section 401(a)(4) of the Code, but not for any other purposes under this Plan.  Therefore, recharacterized amounts will remain subject to the nonforfeiture requirements and distribution limitations which apply to elective contributions.

(3)                                 If the deferral percentage test is not satisfied using one of the options described above in Subsection (b)(1) or (b)(2), then after the close of the Plan Year in which the excess contribution arose but within 12 months after the close of that Plan Year, the Administrator or its delegate will distribute or cause to be distributed an amount equal to the remaining excess contributions, together with allocable income, to Participants in the highly compensated group participating in that arrangement (following the sequence described in Subsection (d) below) to the extent necessary to be deemed to have satisfied the deferral percentage test.  Failure to do so may cause the Plan to not satisfy the requirements of Section 401(a)(4) of the Code for the Plan Year for which the excess contribution was made and for all subsequent Plan Years for which the excess contribution remains uncorrected.  Failure to correct the excess contributions within 2½ months after the close of the Plan Year may result in a ten percent (10%) excise tax on the employer.

(4)                                 The amount of excess contribution to be distributed to a highly compensated employee for a Plan Year will be reduced by any excess deferrals previously distributed to that Employee under the Plan for the calendar year ending with or within the Plan Year in accordance with Section 402(g)(2) of the Code.

(5)                                 Excess contributions will be treated as employer contributions for purposes of Sections 404 and 415 of the Code even if distributed from the Plan.

(c)                                  The contribution percentage test shall be applied to the Plan as follows:

(1)                                 Employee contributions and matching contributions made by an employer to the Plan, disregarding any matching contributions which are treated as elective contributions with respect to the deferral percentage test, must satisfy the contribution percentage test.  The Administrator will determine as soon as administratively feasible after the end of the Plan Year whether the contribution percentage test has been satisfied.  If the contribution percentage test is not satisfied, that employer may elect to make an additional contribution to the Plan for the benefit of the non-highly compensated group of that employer which will be allocated to Qualified Nonelective Contributions Accounts.  The additional contribution will be treated as a qualified nonelective contribution and as a matching contribution under Section 4.7(h).  Such contribution will be allocated as of the last day of the Plan Year in equal portions to all individuals who were in that non-highly compensated group for that year and who were Covered Employees as of the last day of that Plan Year.  Notwithstanding the prior provisions of this paragraph, the portion of an additional contribution that may be taken into account for purposes of the contribution percentage test shall be limited as provided in Section 1.401(m)-2(a)(6) of Treasury Regulations.

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(2)                                 If that contribution percentage test is not satisfied using the option described above in Subsection (c)(1), then after the close of the Plan Year in which the excess aggregate contribution for that employer’s highly compensated group arose but within 12 months after the close of that Plan Year, the Administrator or its delegate will distribute or cause to be distributed (or forfeit, to the extent not Vested) an amount equal to those excess aggregate contributions, together with allocable income, to Participants in that highly compensated group (following the sequence described is Subsection (d) below) to the extent necessary to be deemed to have satisfied that contribution percentage test.  Failure to do so may cause the Plan to not satisfy the requirements of Section 401(a)(4) of the Code for the Plan Year for which the excess aggregate contribution was made and for all subsequent Plan Years for which the excess aggregate contribution remains uncorrected.  Failure to correct the excess aggregate contributions within 2 ½ months after the close of the Plan Year may result in a ten percent (10%) excise tax on the employer.

(3)                                 The determination of any excess aggregate contributions will be made after the recharacterization of any excess contributions as employee contributions.

(4)                                 Excess aggregate contributions that are matching contributions, including forfeited matching contributions, will be treated as employer contributions for purposes of Sections 404 and 415 of the Code even if they are distributed from the Plan.

(5)                                 Forfeited matching contributions that are reallocated to the Accounts of other Participants are treated as annual additions under Section 415 of the Code for the Participant whose Accounts they are reallocated to and for the Participants from whose Accounts they are forfeited.

(d)                                 Excess amounts shall be reduced as follows:

(1)                                 The total excess contributions or total excess aggregate contributions will be reduced to zero in order to satisfy the deferral percentage test or contribution percentage test.  This will be done by first lowering the elective contribution or the employee contributions and matching contribution (“relevant contribution”) of the Participant(s) with the highest relevant contribution to a point not less than the level of the Participant(s) with the next highest relevant contribution.  If further overall reductions are required to achieve that desired reduction, each of the above Participants’ (or groups of Participants’) relevant contribution will be lowered to a point not less than the level of the affected Participant(s) with the next highest relevant contribution, and so on continuing until sufficient total reductions have occurred to achieve the desired reduction to zero total excess contributions or total excess aggregate contributions.

(2)                                 For purposes of this Subsection (d), the amount of such contributions taken into account under this section with respect to a highly compensated employee who is an eligible employee (as used in Treasury Regulation 1.401(k)-1) in more than one plan of an employer covered by this section is determined by taking into account all contributions otherwise taken into account with respect to such highly compensated employee under any of those plans of the employer during the Plan Year as being made under the Plan.  However, the amount of excess contributions apportioned for the Plan Year with respect to any highly compensated employee must not exceed the amount of contributions actually contributed to the Plan for the highly compensated employee for the Plan Year.

(3)                                 The amount by which any elective contribution would otherwise be reduced under the preceding provisions of this Subsection (d) shall be reduced by any unused Catch-up

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Contributions of each such highly compensated employee (as provided in Treasury Regulation Section 1.414(v)-1(d)(2)).

(e)                                  Reduction priorities and forfeitures or distributions of matching contributions shall be determined as follows:

(1)                                 The Administrator will determine the method and order of correcting excess contributions and excess aggregate contributions.  The method of correcting excess contributions and excess aggregate contributions must meet the requirements of Section 401(a)(4) of the Code.  The determination of whether a rate of matching contributions discriminates under Section 401(a)(4) of the Code will be made after making any corrective distributions of excess deferrals, excess contributions and excess aggregate contributions.

(2)                                 Excess aggregate contributions (and any attributable income) will be corrected first, by distributing any excess employee contributions (and any attributable income); then by distributing Vested excess matching contributions (and any attributable income); and finally, by forfeiting non-vested matching contributions (and any attributable income).  The Plan will not distribute employee contributions while the matching contributions based upon those employee contributions remain allocated.

(3)                                 Excess aggregate contributions which are matching contributions made on behalf of a Participant (and earnings or losses attributable to those contributions determined by Administrator or its delegate in a manner consistent with the provisions of Subsection (f) below) which are not Vested shall be forfeited and such contributions (and such earnings) which are Vested shall be distributed.  Amounts forfeited pursuant to this paragraph shall be used as soon as administratively feasible to reduce subsequent Matching Contributions or Company Retirement Contributions by the Participant’s Participating Employer.  Amounts which are to be distributed pursuant to this paragraph shall be distributed as provided above for excess aggregate contributions.

(f)                                   Income on excess contributions shall be determined as follows:

(1)                                 The income allocable to any excess contribution or excess aggregate contribution to a given Account for a Plan Year is equal to the sum of the allocable gain or loss for the Plan Year and, to the extent such contributions are or will be credited with gain or loss for any gap period (the period subsequent to the Plan Year and up to either the date of distribution or as much as 7 days before distribution) if the Account were to be distributed, the allocable gain or loss during that period.  The Plan may use any reasonable method for computing the income allocable to such contributions, provided that the method does not violate Section 401(a)(4) of the Code, is used consistently for all Participants and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan for allocating income to Participant’s Accounts, including alternative or safe harbor allocation methods described in Treasury Regulation Section 1.401(k)-2(b)(2)(iv) and Treasury Regulation Section 1.401(m)-2(b)(2)(iv).  The income allocable to excess contributions or excess aggregated contributions is equal to the allocable gain or loss through the end of the Plan Year.

(2)                                 Income includes all earnings and appreciation, including interest, dividends, rents, royalties, gains from the sale of property, and appreciation in the value of stocks, bonds, annuity and life insurance contracts and other property, regardless of whether the appreciation has been realized.

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(g)                                  The Administrator may, in its discretion, treat all or any portion of qualified nonelective contributions or qualified matching contributions or both, whether to this Plan or to any other qualified plan that is maintained by a Participating Employer or its Related Employers, as elective contributions for purposes of satisfying the deferral percentage test for a Plan Year, or applicable year for determining the actual deferral percentage for eligible non-highly compensated employees of that employer, if the contributions meet all of the requirements of Treasury Regulation Section 1.401(k)-2(a)(6).

(h)                                 The Administrator may, in its discretion, treat all or any portion of qualified nonelective contributions or elective contributions or both, whether to this Plan or to any other qualified plan which has the same Plan Year and is maintained by a Participating Employer or its Related Employers, as matching contributions for purposes of satisfying the contribution percentage test for a Plan Year or applicable year for determining the actual deferral percentage for eligible non-highly compensated employees if the contributions meet all of the requirements of Treasury Regulation Section 1.401(m)-2(a)(6).

(i)                                     The following rules shall apply with respect to aggregation of plans and disaggregation of cash or deferred arrangements and certain contributions under the Plan:

(1)                                 If a Participating Employer or any of its Related Employers sponsors one or more other plans which include a cash or deferred arrangement, such Participating Employer may elect to treat any two or more of such plans as an aggregated single plan for purposes of satisfying Sections 401(a)(4), 401(k) and 410(b) of the Code.  The cash or deferred arrangements included in such aggregated plans will be treated as a single cash or deferred arrangement for purposes of this Section.  However, only those plans that have the same plan year may be so aggregated.

(2)                                 If a Participating Employer or any of its Related Employer sponsors one or more other plans to which employee contributions or matching contributions are made, such Participating Employer may elect to treat any two or more of such plans as an aggregated single plan for purposes of satisfying Sections 401(a)(4), 401(m) and 410(b) of the Code.  However, only those plans that have the same plan year may be so aggregated.

(3)                                 Any such aggregation must be made in accordance with Treasury Regulation Sections 1.401(k)-1(b)(4) and 1.401(m)-1(b)(4).  For example, aggregation may only occur if a single testing method is used for all cash or deferred arrangements under the aggregated plans.

(4)                                 Plans that could be aggregated under Section 410(b) of the Code but that are not actually aggregated for a Plan Year for purposes of Section 410(b) of the Code may not be aggregated for purposes of Sections 401(k) and 401(m) of the Code.

(5)                                 If a cash or deferred arrangement under or employee contributions or matching contributions included in the Plan (or a portion of the Plan treated as a separate plan under Treasury Regulation Section 1.410(b)-7(b)) are mandatorily disaggregated under the rules of Section 410(b) (as modified by Treasury Regulation Section 1.401(k)-1(b)(4)), the cash or deferred arrangement and the matching contributions and employee contributions must be disaggregated in a consistent manner for purposes of this Section 4.7.

(6)                                 Notwithstanding Treasury Regulation Section 1.410(b)-7(d)(2), the employee stock ownership plan and profit sharing plan portions of this Plan are permitted to be aggregated for purposes of this section (as provided in Treasury Regulation Section 1.401(k)-1(b)(4)(v)(A)).

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(j)                                    Consistent with Section 410(b)(4)(B) of the Code, the Administrator may elect (and communicate to its recordkeeper its intention) to separately satisfy the requirement of Section 410(b) of the Code for Employees of an employer who have not met the minimum age and service requirements described in Section 410(a) of the Code.  If such election is made, the Administrator may in applying the tests described in this section exclude from consideration all Covered Employees of the employer (other than highly compensated employees of the employer) who have not met such minimum age and service requirements.

(k)                                 Notwithstanding the prior provisions of this section, Section 4.7(c) shall not apply to Employees under a collectively bargained portion of this Plan (as described in Treasury Regulation Section 1.401(m)-2(b)(2)).  Further, Section 4.7(b) and the subsequent subsections of this section prior to this subsection shall apply separately to Employees under such a collectively bargained portion of this Plan.

Section 4.8.  Payroll Deduction of Contributions.  401(k) Contributions and After-Tax Contributions shall be made in the form of payroll deductions.  The Administrator shall establish uniform and nondiscriminatory rules regarding such payroll deductions.

Section 4.9.  Time for Payment of Contributions.

(a)                                 All 401(k) Contributions or After-Tax Contributions withheld as of a payday pursuant to Section 4.8 shall be transmitted by the applicable Employer to the Administrator or, pursuant to the direction of the Administrator, directly to the Trustee in time to reach the Trustee within any time limit required by applicable Code or ERISA provision or Regulations.

(b)                                 Toro Investment Fund Contributions, ESOP Contributions and Matching Contributions made for a Plan Year by a Participating Employer shall be paid to the Trustee no later than the date, including any extension thereof, provided by law for the filing of the Participating Employer’s federal income tax return for its fiscal year in which that Plan Year ends.  Matching Contributions may be made monthly based on 401(k) Contributions and After-Tax Contributions made throughout the Plan Year.

Section 4.10.  Valuation of ESOP Toro Common Stock Contributions.  The value of any contributions made to the Plan in Toro Common Stock shall be equal to the Toro Common Stock Value of such stock determined as of the date of contribution.

Section 4.11.  Advance Contributions.  In the event that a contribution is made during a Valuation Period prior to the Valuation Date which ends that period, the Administrator may direct the Trustee to hold such advance contributions as part of a separate Investment Fund or Funds until said Valuation Date.  The changes in value of such separate funds shall not be allocated against the Trust Fund as a whole but shall be attributable to the amount of the contribution which is to be allocated as of said Valuation Date or a previous Valuation Date.  If any such contribution is not to be allocated until a later Valuation Date, then such contribution shall continue to be held as a separate Investment Fund until the Valuation Date as of which it is to be allocated and the change in value of such separate fund shall not be allocated against the Trust Fund as a whole but shall be attributed to the contribution which is to be allocated as of said Valuation Date.

Section 4.12.  Correcting Contribution.  If an erroneous failure to allocate amounts to or an erroneous forfeiture of a Participant’s Account has occurred in a prior Plan Year, the Participant’s Participating Employer may, at its election, and in lieu of reallocating the earlier contribution or forfeiture, make a correcting contribution for the Account of such Participant in accordance with the Employee Plans Compliance Resolution System provided in Revenue Procedure 13-12 (or any successor

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procedure or related guidance), or its successor system of correction programs for sponsors of retirement plans.  The correcting contribution may include an amount attributable to actual investment gains attributable to amounts to which the contribution relates.

Section 4.13.  Contributions Conditioned Upon Deductibility.  A Participating Employer’s contributions made under this Plan shall be conditioned upon deductibility under the provisions of the Code for each fiscal year of the Participating Employer.  In the event an Employer makes a contribution to the Plan which is not deductible, such contribution will be returned to such Employer pursuant to Section 14.2(b)(1).

Section 4.14.  Special Contribution for New Participants.  The Covered Employee’s Participating Employer shall contribute one share of Toro Common Stock or cash sufficient to purchase one share of Toro Common Stock to the Trust on behalf of that Covered Employee for the Plan Year in which the Employee becomes a Covered Employee.  If a Covered Employee has more than one Participating Employer, only the Participating Employer from which the Covered Employee receives the greatest Compensation during such Plan Year will make such contribution.  Such contribution shall not be made if the limitations described in Section 5.3 will be exceeded.  Such contribution will be made to the ESOP Toro Common Stock Account.  Effective on and after May 1, 2009, Toro shall determine in its sole discretion whether Participating Employers will make such a contribution for a Plan Year on behalf of Employees who become Covered Employees on and after that date.

Section 4.15.  Catch-up Contributions.

(a)                                 Catch-up Contributions may be made to the Plan in accordance with the provisions of this section.

(b)                                 Catch-up Contributions will be made in accordance with, and subject to the limitations of, Section 414(v) of the Code and applicable Regulations.  Catch-up Contributions are elective deferrals (“elective deferrals” for purposes of this section means an elective deferral with the meaning of Section 402(g)(3) of the Code or any contribution to a Code Section 457 eligible governmental plan) that exceed applicable limits and are made by an Employee who is eligible to make 401(k) Contributions under this Plan and who will have attained age 50 before the close of the Employee’s taxable year.  Those applicable limits are a statutory limit, which is any limit on elective deferrals or annual additions (as defined in Section 5.2) permitted to be made (without regard to Section 414(v) of the Code and applicable Regulations) with respect to a Covered Employee for a year provided in Sections 401(a)(30) or 415(c) of the Code, Employer provided limits on elective deferrals (without regard to Section 414(v) of the Code and applicable Regulations), and actual deferral percentage limits under Section 401(k)(3) of the Code (the highest amount of elective deferrals that can be retained in the Plan by a Highly Compensated Employee under the rules of Section 401(k)(8)(C) of the Code).

(c)                                  The amount of elective deferrals in excess of an applicable limit is determined as of the end of the Plan Year by comparing the total elective deferrals for the Plan Year with the applicable limit for the Plan Year.  However, in the case of a Plan that provides for separate Employer provided limits on elective deferrals for separate portions of Compensation within the Plan Year (such as each pay period), the applicable limit for the Plan Year is the sum of the dollar amounts of the limits for the separate pay periods, except that an alternative is available under Regulations if different limits are provided for different parts of the year (a time-weighted average of the deferral percentage limits under Section 401(k)(3) of the Code may be applied).  Also, in the case of an applicable limit that is applied on the basis of a year other than the Plan Year (e.g., the calendar year limit on elective deferrals under Section 401(a)(30) of the Code), the determination of whether elective deferrals are in excess of the applicable limit is made on the basis of such other year.

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(d)                                 Elective deferrals with respect to a Participant that are in excess of an applicable limit are treated as Catch-up Contributions as of a date within a taxable year of the Participant only to the extent that such elective deferrals do not exceed the Catch-up Contribution limit of Section 414(v)(2)(B)(i) of the Code for that taxable year, including cost of living adjustments, reduced by elective deferrals previously treated as Catch-up Contributions for the taxable year.  For purposes of determining the maximum amount of permitted Catch-up Contributions for a Participant, the determination of whether an elective deferral is a Catch-up Contribution is made as of the last day of the Plan Year (or in the case of Section 415 of the Code, the limitation year as defined in Section 5.2), except that, with respect to elective deferrals in excess of an applicable limit that is tested on the basis of the taxable year or calendar year (e.g., the Section 401(a)(30) limit on elective deferrals), the determination of whether such elective deferrals are treated as Catch-up Contributions is made at the time they are deferred.

(e)                                  Employees in other Employer plans described in applicable Regulations must be able to make similar contributions pursuant to those Regulations (unless an exception described in those Regulations applies) for Catch-up Contributions to receive the treatment described in this Plan.

(f)                                   Catch-up Contributions are not taken into account in applying the limits of Sections 401(a)(30) and 415(c) of the Code.  Also, to the extent provided in applicable Regulations, they are not taken into account in application of the actual deferral percentage test under Section 401(k)(3) of the Code.  Further, Catch-up Contributions are not taken into account for purposes of Section 416 of the Code for a current Plan Year, but such contributions for prior Plan Years are taken into account for purposes of that section.  Similarly, Catch-up Contributions are not taken into account for purposes of Section 410(b) of the Code for a current Plan Year, but such contributions for prior Plan Years are taken into account for purposes of that section.

(g)                                  The dollar limit on catch-up contributions under Section 414(v)(2)(B)(i) of the Code is $5,000 for taxable years beginning in 2006 and later years.  After 2006, the $5,000 limit will be adjusted by the Secretary of the Treasury for cost-of-living increases under Section 414(v)(2)(C) of the Code.  Any such adjustments will be in multiples of $500.  The limit is $6,000 for 2016.

Section 4.16.  Roth 401(k) Contributions.

(a)                                 A Roth 401(k) Contributions Account is an Account of a Participant reflecting Roth 401(k) Contributions, investment income or loss allocated thereto and distributions.  A Participant’s Roth 401(k) Contributions Account is 100% Vested at all times.

(b)                                 The Plan will accept Roth 401(k) Contributions on behalf of any Participant who may make 401(k) Contributions.  A Participant’s Roth 401(k) Contributions will be allocated to the Participant’s Roth 401(k) Contributions Account.  Unless specifically stated otherwise in the Plan, Roth 401(k) Contributions will be treated as 401(k) Contributions for all purposes under the Plan, including the nonforfeitability and distribution restrictions applicable to 401(k) Contributions, Catch-up Contributions under Section 4.15, loans, Matching Contributions, and rules on frequency of elections to make a Roth 401(k) Contribution or change the rate of such contributions.  However, if Participants are deemed to have elected to make 401(k) Contributions (an automatic enrollment occurs), none of the deemed contributions will be Roth 401(k) Contributions.

(c)                                  A Participant’s Roth 401(k) Contribution is an elective deferral (as defined in Section 402(g)(3) of the Code) that is (1) designated irrevocably by the Participant at the time of the election to make that elective deferral as a Roth 401(k) Contribution that is being made in lieu of all or a portion of the 401(k) Contributions the Participant is otherwise eligible to make under the Plan; and (2) treated by

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the Participant’s Participating Employer as includible in the Participant’s income at the time the Participant would have received that amount in cash if the Participant had not made that election.

(d)                                 Contributions and withdrawals of Roth 401(k) Contributions attributable to a Participant will be credited and debited to the Roth 401(k) Contributions Account maintained for that Participant.  The Plan will maintain a record of the amount of Roth 401(k) Contributions in each Participant’s Roth 401(k) Contributions Account.  Gains, losses, and other credits or charges must be separately allocated on a reasonable and consistent basis to each Participant’s Roth 401(k) Contributions Account and the Participant’s other Accounts under the Plan.

(e)                                  Notwithstanding Section 7.12, a direct rollover of a distribution from a Roth 401(k) Contributions Account under the Plan will only be made to another account of the same type under an applicable retirement plan described in Section 402A(e)(1) of the Code or to a Roth IRA described in Section 408A of the Code, and only to the extent the rollover is permitted under the rules of Section 402(c) of the Code.  Also, notwithstanding Section 4.6, the Plan will accept a Rollover Contribution to a Roth 401(k) Contributions Account only if it is a direct rollover from another account of the same type under an applicable retirement plan described in Section 402A(e)(1) of the Code and only to the extent the rollover is permitted under the rules of Section 402(c) of the Code.  Further, a Participant’s Roth 401(k) Contributions Account and the Participant’s other Accounts are treated as accounts held under two separate plans (within the meaning of Section 414(l) of the Code) for purposes of applying the automatic rollover rules for mandatory distributions under Section 401(a)(31)(B)(i)(I) of the Code and the special rules in A-9 through A-11 of Section 1.401(a)(31)-1 of Regulations (split by Participant between direct rollover and lump sum, division of direct rollover between different plans, and any requirement of a minimum balance to do direct rollover).

(f)                                   If distributions may be made from either a Participant’s 401(k) Contributions Account or Roth 401(k) Contributions Account prior to or after a Termination of Service, distribution will be made proportionately from the Participant’s 401(k) Contributions Account and Roth 401(k) Contributions Account.

ARTICLE V.
Allocation of Contributions

Section 5.1.  Allocation of Contributions.

(a)                                 As of each Valuation Date, all 401(k) Contributions, After-Tax Contributions, and Rollover Contributions made on behalf of a Participant, which have been remitted to the Trustee since the immediately preceding Valuation Date, shall be allocated to the appropriate Account of the Participant described in Section 6.1.  All 401(k) Contributions and After-Tax Contributions will be allocated to the profit sharing portion of the Plan.

(b)                                 As of the last day of a Plan Year, a Participating Employer’s Toro Investment Fund Contributions for that Plan Year shall be allocated by the Administrator (or the Trustee upon the direction of the Administrator) to each individual who is a Qualified Employee of that Participating Employer for that Plan Year as follows:

(1)                                 Portions of such contribution shall be allocated under Subsections (b)(2) and (b)(3) below.  The percentage utilized in Subsection (b)(2) for purposes of determining the amount to be allocated under that Subsection shall not exceed the lesser of (A) the percentage of Compensation allocated in Subsection (b)(3), or (B) 5.7%.

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(2)                                 A portion of the Participating Employer’s contribution shall be allocated among such Qualified Employees in a manner which results in each Qualified Employee’s share being proportionate to the ratio of the “excess compensation” of such Qualified Employee from such Employer for the Plan Year over the aggregate “excess compensation” of all such Qualified Employees from such Employer for the Plan Year.  That portion shall be equal to the product of such aggregate “excess compensation” and the percentage determined under Subsection (b)(1) expressed as a fraction.

(3)                                 That portion of the Participating Employer’s contribution for such Plan Year remaining unallocated after the allocation provided for in Subsection (b)(2) shall be allocated among such Qualified Employees in a manner which results in a Qualified Employee’s share being proportionate to the ratio of the Qualified Employee’s Compensation from such Employer for the Plan Year over the aggregate Compensation of all such Qualified Employees from such Employer for the Plan Year.

“Excess compensation” means for purposes of this Subsection (b) Compensation in excess of the Social Security Taxable Wage Base in effect as of the beginning of the Plan Year.

For purposes of this Subsection (b), a Qualified Employee’s Compensation shall not include amounts received prior to the date that the Qualified Employee became a Covered Employee.

Toro Investment Fund Contributions will be allocated to the profit sharing portion of the Plan.

(c)                                  As of the last day of a Plan Year, a Participating Employer’s Matching Contributions which have been made on behalf of the Participant shall be allocated by the Administrator (or the Trustee upon the direction of the Administrator) to the appropriate Account of such Participant.  Alternatively, in the discretion of the Administrator, if Matching Contributions are made throughout such Plan Year, allocations of those contributions may be made as of each Valuation Date.  Matching Contributions will be allocated to the stock bonus portion of the Plan that is an ESOP.

(d)                                 As of the last day of a Plan Year, a Participating Employer’s ESOP Contribution for such year under Section 4.2(a) shall be allocated by the Administrator (or the Trustee upon the direction of the Administrator) to the ESOP General Account of each individual who is a Qualified Employee of that Participating Employer for that Plan Year in the proportion that the Compensation of the Qualified Employee from that Employer for that Plan Year bears to the total Compensation from that Employer for the Plan Year of all such Qualified Employees.  For purposes of this Subsection (d), a Qualified Employee’s Compensation shall not include amounts received prior to the date that the Qualified Employee became a Covered Employee.  ESOP Contributions will be allocated to the stock bonus portion of the Plan that is an ESOP.

(e)                                  A Participating Employer’s cash contribution for a Plan Year that has been made under Section 4.2(b) shall be used first to pay any principal and interest due on an Exempt Loan.  The balance shall be allocated to the ESOP General Accounts of Qualified Employees of such Participating Employer as of such day as the Administrator shall determine, but no later than the last day of such Plan Year, and shall be allocated in the manner described in Subsections (g)(1) and (g)(2) of this Section 5.1.

(f)                                   The Trustee may acquire Toro Common Stock for the Trust with the proceeds of an Exempt Loan.  Toro Common Stock acquired with the proceeds of an Exempt Loan shall not be allocated to the Accounts of Participants but shall be maintained in a ESOP Toro Common Stock Suspense Account until such time as the stock is released from encumbrance under the Exempt Loan.  If more than

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one Exempt Loan is outstanding, all Toro Common Stock acquired with the proceeds of such loans shall be maintained in a single ESOP Toro Common Stock Suspense Account.

(g)                                  Toro Common Stock which has been contributed by a Participating Employer under Section 4.2(b), or released from encumbrance under an Exempt Loan during a Plan Year (including fractional shares) shall be allocated to the ESOP Toro Common Stock Accounts of Participants as of such day as the Administrator shall determine, but no later than the last day of that Plan Year, and shall be allocated in the following manner:

(1)                                 If such allocation is made as of a date between July 1 and December 31, the Toro Common Stock shall be allocated to such Accounts of Participants who are Covered Employees of such Participating Employer on the date of the allocation in the same proportion as the Compensation of each such Participant for the calendar year ending on the December 31 which occurs during such period, multiplied by a fraction, not to exceed one, the numerator of which is the number of months that the Participant has been a Covered Employee during that year prior to such allocation date and the denominator of which is 12, bears to the total such Compensation of all such Participants so apportioned.

(2)                                 If such allocation is made as of a date between January 1 and June 30, the Toro Common Stock shall be allocated to the Accounts of Participants who are Covered Employees of such Participating Employer on the date of the allocation in the same proportion as the Compensation of each such Participant for the calendar year ending on the December 31 which falls immediately prior to such period, multiplied by a fraction, not to exceed one, the numerator of which is the number of months that the Participant was a Covered Employee prior to such allocation date during the year of the allocation and the denominator of which is 12, bears to the total such Compensation of all such Participants so apportioned.

For purposes of this Subsection (g), an Employee’s Compensation shall not include amounts received prior to the date that the Employee became a Covered Employee.

(h)                                 Toro Common Stock that has been purchased with the assets of a Participant’s ESOP General Account shall be allocated to the Participant’s ESOP Toro Common Stock Account as of the Valuation Date coincident with or immediately following such purchase.

(i)                                     A special contribution made on behalf of a Participant under Section 4.14 shall be allocated to the Account of that Participant as of the last day of the Plan Year for which the contribution is made.  Such contributions will be allocated to the stock bonus portion of the Plan that is an ESOP.

Section 5.2.  Dividends.  Dividends paid to the Trustee on Toro Common Stock that is held in one of a Participant’s ESOP Accounts may be disbursed to such Participant or invested in Toro Common Stock under that Account at the election of the Participant.  The Administrator shall establish rules and a process for such elections, including allowing participants a reasonable time to make such an election.  If the Participant elects that such a disbursement be made, the disbursement must be made before 90 days after the end of the Plan Year in which the dividends are paid to the Trustee.  If the Participant does not make the election made available by this section, then such dividends will be invested in Toro Common Stock.  Also, dividends paid on Toro Common Stock not allocated to Participants’ Accounts shall be used by the Trustee to pay interest on any outstanding Exempt Loans, and, if no such Exempt Loans exist, such dividends shall be disbursed in the manner described in the preceding provisions of this section.  This section shall be interpreted in a manner consistent with Section 404(k) of the Code.

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Section 5.3.  Limitations on Annual Additions.

(a)                                 For purposes of this Section 5.3:

(1)                                 “Annual additions” means, for each limitation year, the sum of:

(A)                               contributions by a Participating or Related Employer to this Plan or any other qualified defined contribution retirement plan (not including restorations to Participant Accounts or restorative payments that are to be excluded under regulatory guidance);

(B)                               any forfeitures allocated to a Participant under such plan;

(C)                               any contribution to such a plan by the Participant, including mandatory and voluntary contributions, but not rollover contributions, repayments of loans, repayments of amounts described in Section 411(a)(7)(B) of the Code (in accordance with Section 411(a)(7 (C) of the Code) and in Section 411(a)(3)(D) of the Code, repayments that would have been included in the prior phrase except that the Plan doesn’t restrict the timing of repayment to the maximum extent permitted by Section 411 of the Code, or contributions to a qualified cost of living arrangement (within the meaning of Section 415(k)(2)(B) of the Code);

(D)                               amounts allocated to an individual medical account, as defined in Section 415(l)(2) of the Code, which is part of a pension or annuity plan maintained by a Participating or Related Employer and amounts derived from contributions paid or accrued which are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in Section 419A(d)(3) of the Code, under a welfare benefit fund, as defined in Section 419(e) of the Code, maintained by a Participating or Related Employer; and

(E)                                allocations under a simplified employee pension maintained by a Participating or Related Employer.

“Annual additions” shall include excess deferrals, excess contributions or excess aggregate contributions (as those terms are used in Section 1.415(c)-1 of the Treasury Regulations), even if distributed as part of a correction, unless an exception applies.  Excess deferrals (as that term is used in Section 1.415(c)-1(b) of the Treasury Regulations) that are distributed in accordance with Section 1.402(g)-1(e)(2) or(3) of the Treasury Regulations do not give rise to “annual additions.” Also, catch-up contributions are not part of “annual additions.  Further, correcting contributions made pursuant to Section 4.12 shall be considered “annual additions” only if required by specific rules.  In addition, direct transfers from another qualified plan are not “annual additions.

If no more than one-third of the contributions to the ESOP Accounts for a Plan Year are allocated to the ESOP Accounts of Highly Compensated Employees for that year, then interest on loans described in Section 9.9 that are deductible under Section 404(a)(9)(B) and charged against the Participant’s Account and forfeitures of Toro Common Stock acquired with such a loan and held under the Matching Contributions Account shall not be part of the Participant’s Annual Additions for that year.

The term “annual additions” shall include or not include such other amounts as is provided under Sections 1.415(c)-1 (a), (b) or (e) of the Treasury Regulations.

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(2)                                 “Earnings” means Compensation.

(3)                                 “Excess amount” means the amount credited or allocated to a Participant in excess of the limits allowable under Section 5.3(b).

(4)                                 “Limitation year” means the Plan Year.

(b)                                 Except to the extent permitted under Section 414(v) of the Code (regarding Catch up Contributions), annual additions credited to any Participant for any limitation year under this Plan and any other qualified defined contribution retirement plan maintained by any Participating Employer or Related Employer, shall not exceed an amount equal to the lesser of:

(1)                                 $40,000 (this amount shall be adjusted as provided in Section 415(d) of the Code; $53,000 in 2016), except that the dollar limitation shall be reduced for a short limitation year which occurs on account of a short Plan Year (the dollar limitation for the short Plan Year will equal the otherwise applicable dollar limitation multiplied by the ratio of the number of months in the short limitation year over twelve (12)); or

(2)                                 100 percent of the Participant’s earnings for the limitation year.

The limit referred to in Subsection (b)(1) above is subject to adjustments as indicated.  A limit change for a calendar year applies to all limitation years ending within the calendar year, but the change does not apply until the beginning of that calendar year.

The limit referred to in Subsection (b)(2) above shall not apply to a post-retirement medical benefit account (as defined in Section 415(l) of the Code) or a post-retirement medical benefits account for a key employee (as defined in Section 419A(d)(1) of the Code).  Also, the earnings taken into account for a limitation year may not exceed the limitation under Section 401(a)(17) of the Code that applies for that year.  Further, the earnings to be taken into account for a limitation year shall be those that are actually paid or made available to the Participant within the limitation year and prior to the Participant’s severance from employment, except as otherwise provided in the definition of earnings.  In addition, the Plan is not required to determine a Participant’s earnings on the basis of the earliest payments of earnings during a limitation year.

Generally, an annual addition, including one that is made pursuant to a corrective amendment (that complies with Section 1.410(a)(4)-11(g) of Treasury Regulations), is credited with respect to a Participant for a particular limitation year if it is allocated to the Participant’s Account under the terms of the Plan (or the corrective amendment) as of any date within that limitation year (a contribution may only be treated as credited to such a year if permitted by applicable regulations).  Corrective allocations for an erroneous forfeiture in a prior limitation year, or because of an erroneous failure to allocate amounts in a prior limitation year, and allocations made pursuant to veterans’ reemployment rights that relate to a prior limitation year shall be allocated to that prior limitation year.

(c)                                  If an excess amount is determined for any limitation year by the Administrator or its delegate, such excess amount shall be treated as follows:

(1)                                 First, any non-deductible voluntary contributions made to this Plan or any other qualified retirement plan maintained by a Participating or Related Employer, to the extent that the return thereof would reduce such excess amount, shall be returned to the Participant.

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(2)                                 Any remaining excess amount shall be attributed to, and treated in accordance with the provisions of, the qualified retirement plan or plans maintained by a Participating or Related Employer in the following order:

(A)                               Any qualified 401(k) retirement plans and profit sharing plans;

(B)                               Any qualified stock bonus retirement plans;

(C)                               Any qualified target benefit retirement plans;

(D)                               Any qualified money purchase retirement plans;

(E)                                Any welfare benefit fund or individual medical account; and

(F)                                 Any simplified employee pension.

(3)                                 Any excess amount which is attributed to this Plan shall be treated as follows:

(A)                               If the Participating Employer’s contribution for the limitation year has not been made, the amount that would otherwise be contributed to the Plan shall be reduced by such excess amount;

(B)                               If the Participating Employer’s contribution for the limitation year has been made and an excess amount still exists, any elective deferrals (as defined in Section 402(g)(3) of the Code), plus attributable earnings, to the extent they would reduce the excess amount, will be distributed to the Participant.  Such distribution shall be made as soon as administratively possible after that limitation year.

(C)                               If after the application of Paragraph (B) an excess amount still exists, and the Participant is covered by the Plan at the end of the limitation year, the excess amount in the Participant’s Account will be used to reduce Participating Employer contributions (including any allocation of forfeitures) for such Participant in the next limitation year, and each succeeding limitation year if necessary.

(D)                               If after the application of Paragraph (B) an excess amount still exists, and the Participant is not covered by the Plan at the end of a limitation year, the excess amount will be held unallocated in a suspense account.  The suspense account will be applied to reduce future Participating Employer contributions for all remaining Participants in the next limitation year, and each succeeding limitation year if necessary.

(E)                                If such a suspense account is in existence at any time during a limitation year pursuant to this section, it will not participate in the allocation of investment gains and losses.  If a suspense account is in existence at any time during a particular limitation year, all amounts in the suspense account must be allocated and reallocated to Participants’ Accounts before any Employer or any Employee contributions may be made to the Plan for that limitation year.  Except as provided above in this subsection, excess amounts may not be distributed to Participants or former Participants.

(d)                                 If elective deferrals are distributed to any Participant under the prior subsection for a Plan Year, earnings or losses allocable to such distributed elective deferrals for such Plan Year shall also be distributed to the Participant at the same time.  Such earnings and losses shall be determined in

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accordance with any reasonable method for computing the income or losses allocable to such distributed elective deferrals provided the method is consistent with the Employee Plans Compliance Resolution System promulgated by the Internal Revenue Service, does not violate Section 401(a)(4) of the Code and is used consistently for all Participants and for all such corrective distributions under the Plan for the Plan Year and is used for allocating income to Participant Accounts.

(e)                                  If non-deductible voluntary contributions are distributed to any Participant under Section 5.3(c)(1) for a Plan Year, earnings or losses allocable to such distributed voluntary contributions for such Plan Year shall also be distributed to the Participant at the same time.  Such earnings and losses shall be determined in accordance with any reasonable method for computing the income or losses allocable to such distributed voluntary contributions provided the method does not violate Section 401(a)(4) of the Code and is used consistently for all Participants and for all such corrective distributions under the Plan for the Plan Year and is used for allocating income to Participant Accounts.

(f)                                   Notwithstanding the prior provisions of this section, the methods of reduction described in Subsections (c)(3) above may only be used if the reductions are due to forfeitures, a reasonable error in estimating Compensation, a reasonable error in determining the amount of elective deferrals (within the meaning of Section 402(g)(3)) which may be made without causing the limits of this section to be exceeded, or other causes permitted by applicable Regulations.  Also, notwithstanding the prior provisions of this section, the methods of reduction described in those subsections may only be used if the reductions are permitted by the Internal Revenue Service’s Employee Plans Compliance Resolution System.  Further, corrections of excess allocations may be made as provided by that system.

Section 5.4.  Data for Administration.  Each Participating Employer shall prepare and send to the Administrator (or the Trustee at the direction of the Administrator) any data required by the Administrator in connection with determination of any allocations to be made under the Plan.

ARTICLE VI.
Interest in Fund

Section 6.1.  Individual Accounts.

(a)                                 The Administrator (or the Trustee upon the direction of the Administrator) shall maintain an individual account for each Participant that shall show the amount of the Participant’s beneficial interest in the Trust Fund.  Each Participant’s individual account shall be divided into the following Accounts (each such Account may have further subaccounts as provided in this Plan or as needed):

(1)                                 Employer Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from Toro Investment Fund Contributions made by a Participating Employer on and after August 1, 1995, and attributable to similar contributions made under any Prior Plan prior to that date and the Participant’s interest in the Trust Fund derived from amounts transferred to it pursuant to Section 9.7;

(2)                                 401(k) Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from 401(k) Contributions made by the Participant on and after August 1, 1995, and attributable to similar contributions made under any Prior Plan prior to that date;

(3)                                 After-Tax Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from After-Tax contributions made by the

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Participant on and after August 1, 1995 and before 2012, and attributable to similar contributions made under The Toro Company Matching Stock Plan prior to August 1, 1995;

(4)                                 Matching Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from Matching Contributions made on behalf of the Participant on and after August 1, 1995, and attributable to similar contributions made under The Toro Company Matching Stock Plan prior to that date;

(5)                                 ESOP Toro Common Stock Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from Toro Common Stock and allocated to it under Sections 5.1(f), (g), and (h);

(6)                                 ESOP General Account, which shall show the Participant’s interest in the Trust Fund derived from a Participating Employer’s cash contributions as described under Sections 5.1 (c) and (d) and not invested in Toro Common Stock;

(7)                                 Rollover Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from Rollover Contributions;

(8)                                 Voluntary Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from voluntary after tax contributions made by the Participant (such contributions are no longer permitted);

(9)                                 Catch-up Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from Catch-up Contributions;

(10)                          Qualified Matching Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from qualified matching contributions made in accordance with Section 4.7;

(11)                          Qualified Nonelective Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from qualified nonelective contributions made in accordance with Section 4.7 or Section 14.12;

(12)                          Roth 401(k) Contributions Account, which shall show the amount of the Participant’s interest in the Trust Fund derived from Roth 401(k) Contributions; and

(13)                          Such further Accounts as may be established by the Administrator.

(b)                                 Contributions or transfers to the Plan on behalf of a Participant shall be credited to the appropriate Account described in Section 6.1(a) on the date provided in Section 5.1.  Such Accounts shall also be adjusted as provided in Section 6.2 and shall be reduced by any disbursements made pursuant to Article VII.  The Administrator may also determine to combine any of the Accounts as it may determine for administrative purposes.

(c)                                  At the time of establishing any additional Accounts as permitted by Section 6.1(a)(13), the Administrator shall designate whether the assets allocated to that Account are fully Vested.

(d)                                 A separate subaccount shall be established as part of such Accounts as the Administrator or its delegate may determine in order to account for the contributions made to those Accounts.  Subaccounts may be necessary to account for assets described in Section 6.3(b).

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(e)                                  Those Accounts that are considered part of the ESOP Account will be considered part of the stock bonus portion of the Plan that is an ESOP.

Section 6.2.  Determination and Allocation of Changes in Value.  For purposes of determining the change in the value of each Investment Fund and allocating that change in value among the Accounts of which some portion is invested in such Investment Fund, the following steps shall be taken:

(a)                                 The Administrator (or the Trustee upon the direction of the Administrator) shall determine the fair market value of each Investment Fund (using the Toro Common Stock Value as the value of Toro Common Stock) as of each Valuation Date, and the value so determined shall be deemed to be the value of such Investment Fund on such Valuation Date.  The difference between the value of such Investment Fund on such Valuation Date and the sum of:

(1)                                 All contributions which have been made to the Trust during the Valuation Period ending upon such Valuation Date and which have been invested in such Investment Fund; and

(2)                                 Any portion of any Account transferred to such Investment Fund during such Valuation Period; and

(3)                                 The value of such Investment Fund on the next preceding Valuation Date (not including Employer Contributions made subsequent to that date but allocated as of such date or a previous Valuation Date and invested in such Investment Fund); minus

(4)                                 All disbursements and distributions from such Investment Fund during the Valuation Period (either to Participants or their Beneficiaries or to another Investment Fund),

shall be the net increase or decrease in the value of such Investment Fund for the Valuation Period.

(b)                                 The net increase or decrease in the value of such Investment Fund for such Valuation Period shall be allocated to each Account of which a portion is invested in such Investment Fund in the proportion that the “Adjusted Portion” of such Account as of the Valuation Date ending such Valuation Period bears to the total of the Adjusted Portions of each such Account as of such Valuation Date.  In addition, there shall be a pro rata division of each such allocation among the subaccounts (if any) of each such Account.

(c)                                  The “Adjusted Portion” of a Participant’s Account as of any Valuation Date shall be the difference between the value of the portion of the Participant’s Account invested in such Investment Fund as of the next preceding Valuation Date and the sum of all disbursements from the Investment Fund made to the Participant or any of the Participant’s Beneficiaries or to another Investment Fund during the Valuation Period ending upon the Valuation Date as of which such Adjusted Portion is being determined.

(d)                                 Notwithstanding subsection (a), no part of the value of Toro Common Stock which has been released from the ESOP Toro Common Stock Suspense Account (except any such Toro Common Stock which has been allocated to Participants’ Accounts) nor income attributable to such Toro Common Stock (received during such Valuation Period) and no cash or other property received during such Valuation Period upon the sale of such Toro Common Stock shall be considered in determining the value of an Investment Fund for purposes of this Section 6.2.  Also, notwithstanding subsection (a), no part of the value of Encumbered Toro Common Stock shall be considered in determining the value of an Investment Fund for purposes of this Section 6.2.  Income attributable to such Encumbered Toro Common Stock shall be used to repay any outstanding loan used to purchase Encumbered Toro Common

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Stock to the extent provided under the Plan.  Any Toro Common Stock allocated to a Participant’s Toro Common Stock Account shall be treated as a separate investment from the funds allocated to the Participant’s other Accounts and shall not share in any amounts allocated pursuant to this Section 6.2.  Any increase or decrease in the value of such Toro Common Stock and any income attributable to that Toro Common Stock shall be allocated directly to such Participant’s Toro Common Stock Account.  Also, if any such Toro Common Stock is sold, the proceeds of such sale shall be deemed allocated to such Participant’s Account as of the Valuation Date coincident with or following the date of such sale and such Toro Common Stock shall cease to be attributed to the Participant’s Toro Common Stock Account as of such Valuation Date.

(e)                                  In the event that Section 4.11 is applicable in any Plan Year, adjustments shall be made to the calculations described in the preceding provisions of this section so as to take account of the provisions of Section 4.11.

(f)                                   Notwithstanding the preceding provisions of this section, the Administrator may determine to allocate the portion of the net increase or decrease in value of an Investment Fund allocable to a Participant’s Account based on a modified definition of Adjusted Portion so long as such modification is equitable and non-discretionary.  Under that modified definition, as of the applicable Valuation Date, contributions (of a type selected by the Administrator) made during the relevant Valuation Period on behalf of the Participant may be added to the Participant’s Adjusted Portion determined before application of this subsection (f).

(g)                                  The Administrator or its delegate, or the Trustee at the direction of the Administrator, shall maintain adequate records of the cost basis of Toro Common Stock acquired by the Trustee.

(h)                                 Suspense accounts described in Section 5.3 shall not share in any change in value of an Investment Fund, unless the record-keeping system used for Plan administration requires otherwise.

Section 6.3.  Vesting.

(a)                                 Except as provided otherwise in this section, amounts contributed to a Participant’s account under Sections 4.1, 4.2, 4.3, 4.4, 4.6, 4.7, 4.14, 4.15 and 4.16, together with income attributable thereto, shall be 100 percent Vested (nonforfeitable) at all times.  Also, dividends on Toro Common Stock allocated to a Participant’s Account under Section 5.2, together with income attributable thereto, shall be 100 percent Vested.  Any Accounts established by the Administrator under Section 6.1(a)(13) which have been designated by the Administrator as being fully Vested or subject to the Vesting and Withdrawal Limitations, shall be fully Vested.  The subaccounts of the Participant’s Accounts described in Section 6.1(d) (which reflect amounts which are not forfeited under Section 6.3(b)) shall also be fully Vested.

Effective as of January 1, 2012, in the case of an individual who becomes a Participant on or after January 1, 2012, amounts contributed under Section 4.1 or Section 4.2, together with income attributable thereto, shall not be 100% Vested at all times but shall be Vested as described in the following provisions of this section with respect to such Participants.

(b)                                 Amounts contributed under Section 4.5, together with income attributable thereto and amounts contributed under The Toro Company Matching Stock Plan (as it existed prior to the formation of this Plan) pursuant to a similar section of that plan together with income attributable thereto, and Accounts established under Section 6.l(a)(13) which the Administrator has not designated as being fully Vested or subject to the Vesting and Withdrawal Limitations, shall be Vested in accordance with the following schedule:

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On completion of one year of Vesting Service, twenty percent (20%)

On completion of two years of Vesting Service, forty percent (40%)

On completion of three years of Vesting Service, sixty percent (60%)

On completion of four years of Vesting Service, eighty percent (80%)

On completion of five years of Vesting Service, one hundred percent (100%).

However, the Trust Fund Share of a Participant shall be 100 percent (100%) Vested no later than when the Participant reaches age 65 or, if earlier, the date such Participant dies prior to incurring a Termination of Service, or incurs a Termination of Service on account of a Disability.

Effective as of January 1, 2012, in the case of an individual who becomes a Participant on or after January 1, 2012, amounts contributed under Section 4.1 or Section 4.2, together with income attributable thereto, shall be Vested in accordance with that schedule.

(c)                                  If a Participant incurs a Termination of Service, any portion of the Participant’s Trust Fund Share to which a Participant is not entitled shall be held in a suspense account (such suspense account shall be broken into subaccounts which shall correspond with and equal in number the Participant’s Accounts and subaccounts of those Accounts which contain forfeitable amounts) by the Trustee pending the Participant’s return as an Employee of a Participating Employer or Related Employer of that Participating Employer, or the Participant’s experiencing a Forfeiture Event.  The disposition of such suspense account shall be as follows:

(1)                                 If the Participant returns as an Employee of a Participating Employer or Related Employer of a Participating Employer before the Participant experiences a Forfeiture Event, there shall be no forfeiture and such suspense account shall cease to exist unless a distribution has been made and Section 6.3(e) is applicable.

(2)                                 If such Participant experiences a Forfeiture Event before the Participant is rehired by a Participating Employer or Related Employer of a Participating Employer, all amounts held in the suspense account shall be forfeited and any balance remaining in any subaccount of the suspense account which are attributable to a contribution made by a Participating Employer shall be applied as soon as administratively possible to pay expenses incurred by the Plan or to reduce future contributions of such Participating Employer and the Administrator shall select the type of contribution which shall be reduced (unless those balances are used to restore amounts forfeited by others as provided in paragraph (4) below).  Whether forfeited amounts are used to pay Plan expenses or to reduce future contributions is to be decided by the Administrator in the Administrator’s sole discretion.  A Participant’s forfeited amounts may be restored as specified in paragraph (4) below.

(3)                                 If a Participant has a Vested Share, and the entire Vested Share has not been distributed to the Participant, a forfeiture shall not take place until the Participant has incurred five consecutive One-Year Breaks in Service.  If the value of a Participant’s Vested benefit is zero, the Participant shall be deemed to have received a distribution of such Vested benefit.

(4)                                 If a Participant has incurred a Termination of Service and is later re-employed by a Participating Employer, and if the Participant had received a distribution of the Participant’s entire Vested Share prior to such re-employment, any portion of the Participant’s Trust Fund

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Share which was forfeited shall be restored if and when the Participant repays to the Trust the full amount distributed to the Participant provided that the Participant makes that repayment before the earlier of (A) five years after the date of the Participant’s re-employment, or (B) the close of the first period of five consecutive One-Year Breaks in Service commencing after the distribution.  In the event a Participant did not have a Vested Share and is re-employed by a Participating Employer before the Participant has five consecutive One-Year Breaks in Service, the Participant’s Trust Fund Share which was forfeited shall be restored in full upon such re-employment.  In each case, the restored amounts shall be unadjusted by any gains or losses which may have occurred subsequent to the Participant’s Termination of Service.  Restoration shall be made using assets forfeited by other Participants under this Plan or contributions made for that purpose by the Participant’s Participating Employer which generated the contributions which were forfeited.

(5)                                 If any forfeited amounts are attributable to contributions made by an Employer that is no longer a Participating Employer, such amounts shall be applied in an equitable manner determined by the Administrator as if they were attributable to other Participating Employers.

(d)                                 Matching Contributions which relate to excess deferrals, excess contributions, or excess aggregate contributions (those terms are intended to have the meanings given them in Regulations under Section 401(k) of the Code) which are distributed under Section 4.3 or Section 4.7 of the Plan and are not excess aggregate contributions (and earnings or losses attributable to those contributions determined by the Administrator) will be forfeited.  Forfeitures of excess aggregate contributions are described in Section 4.7 of the Plan.  At the Administrator’s discretion, forfeitures from a Participant’s Matching Contributions Account will be used to pay Plan expenses or to reduce Toro Investment Fund Contributions or Matching Contributions for the Plan Year in which the forfeitures are deemed to occur.

(e)                                  If a distribution is made pursuant to Article VII of less than all of the portion of a Participant’s Account to a Participant who is not then fully Vested in such Account (as provided in this section), or amounts are restored under Section 6.3(c)(4), then a separate subaccount shall be established for the portion of the Participant’s Account which contains forfeitable amounts.  Until the Participant forfeits amounts in the subaccount or becomes fully Vested under this section, whichever occurs first, the Participant’s Vested portion (X) of such subaccount at any relevant time shall be determined by the formula “X = P(B + (R x D)) - (R x D)” where “P” is the Vested percentage at such relevant time, “B” is the subaccount balance at the relevant time, “D” is the amount of the Participant’s subaccount which was previously distributed, and “R” is the ratio of the subaccount balance at the relevant time to the subaccount balance immediately after the distribution.

Section 6.4.  Inalienability of Interest.  Neither the interest of a Participant or of any Beneficiary in the Trust Fund or the Participant’s Trust Fund Share nor any right to the disbursement of all or any part thereof shall be subject to voluntary or involuntary alienation or encumbrance of any kind in any manner.  Any attempted alienation or encumbrance shall be wholly void.  In case of any such attempt, the Trustee shall have the power upon the direction of the Administrator to terminate the interest or right to disbursement of the Trust Fund Share and to hold or apply it for the benefit of the Participant or (if the Participant be deceased) the Participant’s Beneficiary in accordance with the terms of the Plan.  Nothing in this section shall be deemed to prevent the transfer of the Trust Fund to a successor Trustee.  Further, this section shall not apply to certain voluntary and revocable assignments specified in Section 401(a)(13)(A) of the Code, a Qualified Domestic Relations Order or any offset permitted under Section 401(a)(l3)(C) of the Code.

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Section 6.5.  Termination of Interest.  After there shall have been distributed to or for the benefit of a Participant or the Participant’s Beneficiary the entire portion of the Participant’s Trust Fund Share to which the Participant or Beneficiary is entitled, the Participant’s interest therein shall terminate.

ARTICLE VII.
Distribution to Participants

Section 7.1.  Right to Disbursements.  A Participant who incurs a Termination of Service or, in the event of the Participant’s death, the Participant’s Beneficiary shall be entitled to a disbursement of the Participant’s Vested Share at such time and such manner as is provided in this Article VII.

Section 7.2.  Method of Disbursement.

(a)                                 A Participant’s Vested Share may be disbursed by any of the following methods as the person who is entitled to the distribution shall designate in writing or by another method permitted by the Administrator:

(1)                                 A single sum of cash (Toro Common Stock or a combination of such stock and cash may be distributed from the Participant’s ESOP Accounts); or

(2)                                 A series of installments (including installments of different amounts that may be modified pursuant to such a Participant designation).

In the event that assets of another plan are transferred to this Plan on behalf of a Participant, any additional optional forms of distribution applicable to the transferred assets under the former plan shall be available with respect to the portion of the Participant’s Vested Share attributable to those transferred assets, but only to the extent they may not be or have not been eliminated or modified under applicable regulations to one of the above listed options.  Also, any additional optional forms of distribution applicable to any assets of the prior plan held in a Participant’s Accounts shall continue to be available with respect to the portion of the Participant’s Vested Share attributable to such assets of the prior plan, but only to the extent they may not be or have not been eliminated or modified under applicable regulations to one of the above listed options.

Options that have been preserved and are not to be eliminated under this section are described in Section 7.13.

(b)                                 If a Participant’s Vested Share exceeds $1,000, and the Participant has not reached the latest date that distribution must commence to the Participant under Section 7.3 of the Plan, then the Participant must consent to any distribution of such Vested Share.  Such consent shall not be required in the event that the Participant’s Vested Share does not exceed such amount.  However, such consent shall be required after the Participant’s Annuity Starting Date for immediate distribution of the balance of the Participant’s Vested Share, if the distribution to the Participant is subject to Code Sections 401(a)(11) and 417.

(c)                                  If:

(1)                                 a Participant’s consent is required under subsection (b); and

(2)                                 if the Participant is married on the Participant’s Annuity Starting Date and the requirements of Section 7.4 of the Plan are applicable to the Participant;

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then both the Participant and the Participant’s spouse (or where either the Participant or the Participant’s spouse has died, the survivor) must consent to any distribution of the Participant’s Vested Share (spousal consent shall be comparable to the spousal consent described in Section 7.4).

(d)                                 The following additional requirements apply with respect to distributions:

(1)                                 The Administrator or its delegate shall notify the Participant, and the Participant’s spouse if a spouse’s consent is required under subsection (c), of the right and the consequences of failing to defer any distribution until the latest date permitted under Section 7.3 of the Plan.  Such notification shall include a general description of the material features and an explanation of the relative values of, the optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of Section 417(a)(3) of the Code.  Notwithstanding the foregoing, only the Participant need consent to the commencement of a distribution in the qualified joint and survivor annuity form described in Section 7.4 of the Plan prior to reaching such date.  Furthermore, if payment in the qualified joint and survivor annuity form is not required with respect to the Participant pursuant to Section 7.4 of the Plan, only the Participant needs to consent to distribution of the Participant’s Vested Share prior to reaching such date.  Neither the consent of the Participant nor the Participant’s spouse shall be required to the extent that a distribution is required to satisfy Section 401(a)(9) or Section 415 of the Code.

(2)                                 The Administrator or its delegate shall also provide a written explanation to the Participant consistent with Section 402(f) of the Code that explains the right to make the election described under Section 7.12 of the Plan (the explanation may be provided electronically if permitted by applicable guidance).

(3)                                 The Administrator or its delegate shall provide each Participant with notice of the Participant’s rights specified in subsections (d)(1) and (d)(2) hereof no less than 30 days and no more than 180 days before the distribution date for the Participant.  Consent of the Participant to the distribution in writing or by another method permitted by applicable rules or regulations and made available by the Administrator must not be made before the Participant receives the notice and must not be made more than 180 days before such distribution date.

(4)                                 If a distribution is one to which Sections 401(a)(11) and 417 of the Code do not apply, or if any notice requirement under such sections which is applicable to the Participant has been satisfied, such distribution may commence less than 30 days after the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that:

(A)                               the Administrator or its delegate clearly informs the Participant that the Participant has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution (and, if applicable, a particular distribution option), and

(B)                               the Participant, after receiving the notice, affirmatively elects a distribution.

(e)                                  Notwithstanding any provision of the Plan to the contrary, to the extent that any optional form of benefit under this Plan permits a distribution to a Participant prior to the Participant’s death, disability, or Termination of Service, and prior to termination of the Plan, the optional form of benefit is not available with respect to benefits attributable to assets (including the post transfer earnings thereon) and liabilities that are transferred, within the meaning of Section 414(l) of the Code, to the Plan from a

54

money purchase pension plan or target benefit plan qualified under Section 401(a) of the Code (other than any portion of those assets and liabilities attributable to voluntary employee contributions).

Section 7.3.  Distribution Requirements.

(a)                                 Any person entitled to the disbursement of a Participant’s interest in the Trust Fund shall make application for such disbursement with the Administrator or its delegate in writing or by another method required or made available by the Administrator, and shall furnish such data in support of the application as the Administrator may reasonably require for the proper administration of the Plan.  The disbursement shall be made or shall begin as soon as administratively feasible after such application with all such supporting data has been provided to the Administrator or its delegate.  The amount to be distributed shall be determined as of a Valuation Date that follows such application and is on or as close to but before the date of distribution as is administratively feasible under the circumstances applicable to the distribution.  Notwithstanding the prior provisions of this subsection (a), distribution shall not be made later than a date required by subsection (b) or subsection (c) and if distribution must be made by such a date, the amount to be distributed shall be determined as of a Valuation Date on or as close to but before the date of distribution as is administratively feasible under the circumstances applicable to the distribution.  Notwithstanding the prior provisions of this subsection (a), in order to ease administration of distributions, the Administrator may specify that the amounts to be distributed shall be determined as of a limited number of valuation dates selected by it in a nondiscriminatory manner.  If any application for disbursement is denied, the Participant or the Participant’s spouse or Beneficiary may take advantage of the claims procedures provided in Article VIII.

(b)                                 (1)                                 Subject to Section 7.3(c) and unless the Participant elects otherwise under subsection (b)(2), the payment of the Participant’s Vested Share, other than a death benefit, shall begin no later than the 60th day following the close of the Plan Year in which the latest of the following events occurs:

(A)                               The Participant’s Normal Retirement Date; and

(B)                               The date the Participant incurs a Termination of Service.

(2)                                 Subject to Section 7.3(c), a Participant may elect to have payment of the Participant’s Vested Share begin after the date prescribed under Subsection (b)(1) above by:

(A)                               submitting to the Administrator or its delegate a written statement, signed by the Participant, or

(B)                               by another method permitted by applicable rules or regulations and provided by the Administrator,

specifying the date to which the Participant wishes the commencement of the payment of the Participant’s Vested Share to be deferred and furnishing such other information as the Administrator may reasonably require.  Such Participant shall be deemed to have made such election if the Participant fails to consent to a distribution by the day described in Subsection (b)(1).

(c)                                  Distributions to any Participant, other than a five percent owner (as defined in Section 416(i) of the Code), under the Plan shall commence no later than the later of the April 1 of the calendar year following the calendar year in which the Participant attains age 70½ or the date the Participant incurs a Termination of Service.  A Participant who is not a five percent owner may elect to

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have the benefit distribution commence on or after the April 1 of the calendar year following the year in which the Participant attains age 70½.  Benefit distributions to a Participant who is a five percent owner must commence by the April 1 of the calendar year following the calendar year in which the Participant attains age 70½.

(d)                                 The method of distribution elected under Section 7.2(a) is subject to the rules of Section 7.15.

(e)                                  Anything herein to the contrary notwithstanding, if the amount to which the Participant is entitled does not exceed $1,000 and if payment may be made under Section 7.2(b) without Participant consent, the Administrator shall direct the Trustees to distribute the entire amount to which the Participant is entitled in a lump sum payment, as soon as administratively feasible after the Participant becomes so entitled.  For purposes of this Section 7.3 and Section 7.5, if the value of a Participant’s Vested benefit is zero, the Participant will be deemed to have received a distribution of such Vested benefit.

(f)                                   No distribution may be made from a Participant’s 401(k) Contribution Account or any Account comprised of Matching Contributions or non-elective contributions which are treated as elective contributions in accordance with the provisions of Section 4.7 except under one of the following circumstances:

(1)                                 Such Participant’s severance from employment with the Participating Employers and their Related Employers (a change in status of an Employee from being an Employee of an Employer to being a Leased Employee of the Employer will not be treated as such a severance from employment; also, if a Participant’s new Employer maintains the Plan, including by continuance or transfer of assets and liabilities with respect to the Participant, the Participant will not be treated as having such a severance from employment);

(2)                                 Such Participant’s death or disability;

(3)                                 Such Participant’s attainment of age 59½;

(4)                                 The avoidance or alleviation of financial hardship (in the case of contributions to which Section 402(e)(3) of the Code applies);

(5)                                 The termination of this Plan without the establishment of a successor plan within the meaning of Treasury Regulation Section 1.401(k)-1(d)(4); or

(6)                                 In the case of a qualified reservist distribution, as defined in Section 72(t)(2)(G)(iii) of the Code, the date on which a period referred to in subclause (iii) of such section begins.

This Section 7.3(f) does not apply to distributions of excess deferrals or excess contributions (those terms are intended to have the meaning given them in Regulations under Section 401(b) of the Code), or excess Annual Additions described in Section 5.3(d) of the Plan.  To be treated as an event described in Subsection (f)(5), the Participant must receive a lump sum distribution (as defined in Treasury Regulation Section 1.401(k)-1(d)(4)(ii)).

This Section 7.3(f) does not establish any right to a distribution, but the other provisions of the Plan may specify that distribution will be made on account of one or more of the events referred to in this Section 7.3(f).

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Section 7.4.  Qualified Joint and Survivor Annuity.

(a)                                 (1)  Notwithstanding the prior provisions of this Article VII, benefits payable to or on behalf of a Participant shall be paid in the form of a qualified joint and survivor annuity described in Paragraph (2) hereof in the case of a Participant who has an annuity option available under Section 7.2(a) of the Plan on account of a transfer of assets to the Plan, and either (A) elects to receive distribution in the form of an annuity or (B) has been credited with such a transfer from a money purchase pension plan or target benefit plan qualified under Section 401(a) of the Code.  The requirements of this Paragraph (1) shall not apply if the Participant and, if the Participant is married, the Participant’s spouse waive the qualified joint and survivor annuity pursuant to the requirements of Subsection (b) hereof.

(2)                                 A qualified joint and survivor annuity is an annuity payable to a Participant for the Participant’s life with annuity payments equal to 50% of the Participant’s annuity payments continuing to the Participant’s spouse upon the death of the Participant.  However, in the case of an unmarried Participant, a qualified joint and survivor annuity is an annuity payable to a Participant for the Participant’s life.

(b)                                 (1)  An election to waive the qualified joint and survivor annuity, or life annuity in the case of an unmarried Participant, must be made by the Participant in writing or by another method permitted by applicable rules or regulations and made available by the Administrator during the 180 day period ending on the Annuity Starting Date and, if the Participant is married, the Participant’s spouse must consent to the election in writing or by another method permitted by applicable rules or regulations and made available by the Administrator.  The spouse’s consent must specifically acknowledge the effect of such election, any other designated Beneficiary and the form of payment elected.  The spouse’s consent must be witnessed by a Plan representative or a notary public or by another method permitted by applicable rules or regulations and made available by the Administrator.  The consent shall not be binding on a subsequent spouse.  Spousal consent shall not be required if it is established to the satisfaction of the Administrator or its delegate that it cannot be obtained because there isn’t a spouse, the spouse cannot be located, or under such other circumstances as may be prescribed by applicable rules or regulations.  The Participant may revoke that consent in writing or by another method permitted by applicable rules or regulations and made available by the Administrator any election made hereunder without the consent of the spouse, at any time during the election period.  A change in designated Beneficiary made subsequent to a spousal consent shall be deemed to be a revocation of the waiver.  Any subsequent election to waive the survivor annuities must comply with the requirements of this paragraph. Notwithstanding the prior provisions of this Subsection (b)(1), the consent of the spouse may expressly permit designation by the Participant without any requirement of further consent by the spouse.

(2)                                 Not less than 30 days and not more than 180 days before the Annuity Starting Date, the Administrator or its delegate shall provide the Participant with a written explanation of:

(A)                               the terms and conditions of the qualified joint and survivor annuity;

(B)                               the Participant’s right to waive the qualified joint and survivor annuity and the effect thereof;