Exhibit 10.17

 

PERFORMANCE SHARE AWARD AGREEMENT

THE TORO COMPANY 2010 EQUITY AND INCENTIVE PLAN

 

This Agreement (this “Agreement”) dated [                                ]
(“Grant Date”) between The Toro Company, a Delaware corporation (“Toro”), and
[                                        ] (“you”) sets forth the terms and
conditions of a grant to you of a performance share award (this “Performance
Share Award”) under The Toro Company 2010 Equity and Incentive Plan (the
“Plan”).  This Performance Share Award is subject to all of the terms and
conditions set forth in the Plan, this Agreement and the Performance Share Award
Acceptance Agreement should you decide to accept this Performance Share Award. 
All of the terms in this Agreement and the Performance Share Award Acceptance
Agreement that begin with a capital letter are either defined in this Agreement
or in the Plan.

 

1.             Performance Share Award.  Toro hereby grants you this Performance
Share Award representing the right to receive up to a maximum (your “Maximum
Potential Payout”) of [              ] shares (“Shares”) of common stock, par
value $1.00 per share, of Toro (“Common Stock”) under the Plan, subject to the
terms and conditions of this Agreement and the Plan and your consent to those
terms and conditions.  For purposes of this Performance Share Award, your right
to receive [              ] Shares is considered your “Target Potential
Payout”.  The number and type of Shares issuable under this Performance Share
Award are subject to adjustment pursuant to Section 4.4 of the Plan.

 

2.             Performance Period.  The period of time during which the
Performance Goals described in Section 3 of this Agreement must be met in order
to determine the degree of payout or the number of Shares that may be issued
under this Performance Share Award pursuant to Section 4 of this Agreement is
the three (3) fiscal years ending October 31, [        ] to [        ] (the
“Performance Period”).  Except as otherwise provided in Section 8 of this
Agreement, Toro intends to issue Shares to you only at the end of the
Performance Period and only upon the achievement of the Performance Goals
described in Section 3 of this Agreement, and except as otherwise provided in
Section 8 of this Agreement, no Shares shall be issued to you in settlement of
this Performance Share Award prior to the end of the Performance Period or if
none of the Performance Goals for the Performance Measures meet the Threshold
for payment as set forth in the table in Section 3 of this Agreement.

 

3.             Performance Measures; Performance Goals and Determination of
Amount of Payment.

 

a.             Except as otherwise provided in this Section 3, the number of
Shares payable in settlement of this Performance Share Award shall be determined
by reference to the Performance Measures and Performance Goals achieved during
the Performance Period in accordance with the table below and may range from 0%
to [      ]% of your Target Potential Payout.  The Performance Measures and the
Performance Goals to be achieved on a cumulative basis over the Performance
Period and their respective weightings and their respective Threshold, Target
and Maximum levels of performance, are set forth below:

 

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Performance Goal

 

Weighting

 

Performance Measure

 

Threshold
([    ]% payout)

 

Target
(100% payout)

 

Maximum
([      ]%
payout)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payouts will be interpolated between Threshold and Target if the Performance
Goals for the Performance Measure attained for the Performance Period falls
between the Threshold and Target percentages specified in the table, and will be
rounded down to the nearest whole number of Shares. Payouts will be interpolated
between Target and Maximum if the Performance Goals for the Performance Measure
attained for the Performance Period falls between the Target and Maximum
percentages specified in the table, and will be rounded down to the nearest
whole number of Shares.

 

b.             Absent the occurrence of a Change of Control prior to the end of
the Performance Period, and to the extent not previously forfeited or terminated
pursuant to Section 5, 6 or 7 of this Agreement, this Performance Share Award
shall be immediately forfeited and terminated as of the end of the Performance
Period if none of the Performance Goals for the Performance Measures meet the
Threshold for payment as set forth in the table above and the Committee
determines that Section 3(c) of this Agreement does not apply.

 

c.             In determining whether and to what extent each Performance Goal
has been achieved, the Committee [may/shall] exclude from the calculation each
of the following events that occurs during a Performance Period, each as defined
by generally accepted accounting principles and as identified in Toro’s
consolidated financial statements, notes to the consolidated financial
statements, management’s discussion and analysis or other filings with the
Securities and Exchange Commission by Toro:  [(i) items related to a change in
accounting or measurement principles; (ii) items relating to financing
activities; (iii) expenses for restructuring or productivity initiatives;
(iv) other non-operating items; (v) items related to acquisitions; (vi) items
attributable to the business operations of any entity acquired by Toro during
the Performance Period; (vii) items related to the disposal of a business or
segment of a business; (viii) items related to discontinued operations that do
not qualify as a segment of a business under applicable accounting standards;
(ix) items attributable to any stock dividend, stock split, combination or
exchange of stock occurring during the Performance Period; (x) any other items
of significant income or expense which are determined to be appropriate
adjustments; (xi) items relating to unusual or extraordinary corporate
transactions, events or developments, (xii) items related to amortization of
acquired intangible assets; (xiii) items that are outside the scope of Toro’s
core, on-going business activities; (xiv) items related to acquired in-process
research and development; (xv) items relating to changes in tax laws;
(xvi) items relating to major licensing or partnership arrangements;
(xvii) items relating to asset impairment charges; (xviii) items relating to
gains or losses for litigation, arbitration and contractual settlements;
(xix) foreign exchange gains and losses; or (xx) items relating to any other
unusual or nonrecurring events or changes in applicable laws, accounting
principles or business conditions;] and shall include each of the following
events that occurs during a Performance Period, each as defined by generally
accepted

 

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accounting principles and as identified in Toro’s financial statements, notes to
the financial statements, management’s discussion and analysis or other filings
with the Securities and Exchange Commission by Toro: [(A) items related to a
change in accounting or measurement principles; (B) items relating to financing
activities; (C) expenses for restructuring or productivity initiatives;
(D) other non-operating items; (E) items related to acquisitions; (F) items
attributable to the business operations of any entity acquired by Toro during
the Performance Period; (G) items related to the disposal of a business or
segment of a business; (H) items related to discontinued operations that do not
qualify as a segment of a business under applicable accounting standards;
(I) items attributable to any stock dividend, stock split, combination or
exchange of stock occurring during the Performance Period; (J) any other items
of significant income or expense which are determined to be appropriate
adjustments; (K) items relating to unusual or extraordinary corporate
transactions, events or developments, (L) items related to amortization of
acquired intangible assets; (M) items that are outside the scope of Toro’s core,
on-going business activities; (N) items related to acquired in-process research
and development; (O) items relating to changes in tax laws; (P) items relating
to major licensing or partnership arrangements; (Q) items relating to asset
impairment charges; (R) items relating to gains or losses for litigation,
arbitration and contractual settlements; (S) foreign exchange gains and losses;
or (T) items relating to any other unusual or nonrecurring events or changes in
applicable laws, accounting principles or business conditions.]

 

d.             The actual number of Shares that become vested and issuable based
on achieving the Performance Goals during the Performance Period may be adjusted
downward by the Committee in its sole and absolute discretion based on such
extraordinary factors (e.g. a significant one-time gain) as the Committee
determines to be appropriate and/or advisable.

 

4.             Settlement; Issuance and Delivery of Shares.

 

a.             In the event and only upon the achievement of at least the
“Threshold” level of performance with respect to at least one (1) of the
Performance Goals described in Section 3 of this Agreement during the
Performance Period, which achievement must be certified in writing by the
Committee following the expiration of the Performance Period, you will receive
such number of Shares up to your Maximum Potential Payout under this Performance
Share Award as determined pursuant to Section 3 of this Agreement and subject to
applicable withholding.  If none of the Performance Goals are achieved at the
“Threshold” level of performance or above, then this Performance Share Award
will be forfeited and canceled and you will receive no Shares in settlement
thereof.  You may not receive a greater number of Shares than your Maximum
Potential Payout.

 

b.             In the event this Performance Share Award is forfeited or
cancelled for any reason pursuant to Section 3, 5, 6 or 7 of this Agreement or
otherwise, no payment shall be made in settlement of this Performance Share
Award.

 

c.             Except as provided in paragraph (d) below, in no event will Toro
deliver Shares to you later than March 15 of the calendar year following the
calendar year in which the Performance Period ends.

 

d.             Notwithstanding any of the foregoing or any other provision of
this Agreement,

 

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in the event you have properly elected to defer your receipt of any Shares
issuable pursuant to this Performance Share Award under The Toro Company
Deferred Compensation Plan for Officers, as such plan may be amended from time
to time, or any similar successor plan, you will receive such Shares in
accordance with your deferral election.

 

e.             The issuance and delivery of Shares pursuant to this Performance
Share Award shall be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required.

 

5.              Effect of Death, Disability, Retirement or Other Termination of
Employment or Other Service.

 

a.             In the event your employment or other service with Toro or any
Affiliate or Subsidiary, as the case may be, is terminated by reason of death,
Disability or Retirement prior to the end of the Performance Period, this
Performance Share Award will be terminated and forfeited; provided, however,
that if in the event your employment or other service with Toro or any Affiliate
or Subsidiary, as the case may be, is terminated by reason of death, Disability
or Retirement prior to the end of the Performance Period, but after the
conclusion of not less than 33 1/3% of the Performance Period, the Committee
may, in its sole discretion, cause Shares to be delivered or payment made with
respect to this Performance Share Award pursuant to Section 4 of this Agreement,
but only if otherwise earned for the entire Performance Period and only with
respect to the portion of the applicable Performance Period completed at the
date of such event, with proration based on full fiscal years only and no Shares
to be delivered for partial fiscal years.

 

b.             In the event your employment or other service with Toro or any
Affiliate or Subsidiary, as the case may be, is terminated for any reason other
than death, Disability or Retirement prior to the end of the Performance Period,
this Performance Share Award will be terminated and forfeited.

 

6.             Adverse Action.  In addition to the other rights of the Committee
under the Plan, if you are determined by the Committee, acting in its sole
discretion, to have taken any action that would constitute an Adverse Action,
(a) all of your rights under the Plan and any agreements evidencing an Award
granted under the Plan, including this Agreement evidencing this Performance
Share Award, then held by you shall terminate and be forfeited without notice of
any kind, and (b) the Committee in its sole discretion may require you to
surrender and return to Toro all or any Shares received, or to disgorge all or
any profits or any other economic value (however defined by the Committee) made
or realized by you, during the period beginning one year prior to your
termination of employment or other service with Toro, an Affiliate or a
Subsidiary, in connection with any Awards granted under the Plan, including this
Performance Share Award, or any Shares issued upon the exercise, vesting or
settlement of any Awards, including this Performance Share Award.  This
Section 6 shall not apply following the occurrence of a Change of Control.

 

7.             Clawback, Forfeiture or Recoupment.  Any Shares issued to you
under this Performance Share Award will be subject to the forfeiture provision
contained in Section 13.6(b) of the Plan

 

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as well as any other or additional “clawback,” forfeiture or recoupment policy
adopted by Toro either prior to or after the date of this Agreement.

 

8.             Change of Control. Notwithstanding any provision of this
Agreement to the contrary and subject to the terms of any separate Change of
Control or similar agreement to which you are bound, this Performance Share
Award shall become immediately vested upon the occurrence of a Change of Control
prior to the end of the Performance Period and unless deferred as provided under
Section 4(d) of this Agreement, shall be settled by payment of your Maximum
Potential Payout as soon as practicable after the occurrence of such Change of
Control but in no event later than March 15 of the calendar year following the
calendar year in which the Change of Control occurred. Notwithstanding any
provision of this Agreement to the contrary, any amounts paid in settlement of
this Performance Share Award pursuant to this Section 8 shall be paid in Shares
representing your Maximum Potential Payout or such other form having a value
equivalent to your Maximum Potential Payout, as may be authorized by the
Committee in its sole discretion.

 

9.             Shareholder Status.  You will have no rights as a shareholder of
Toro with respect to this Performance Share Award unless and until Shares are
issued in settlement of this Performance Share Award pursuant to Section 4 of
this Agreement. Except as expressly provided in the Plan, no adjustments will be
made for dividends or other rights for which the record date is prior to
issuance of Shares.

 

10.           No Transfer.  You may not transfer this Performance Share Award or
any rights granted under this Performance Share Award other than by will or
applicable laws of descent and distribution or, if approved by the Committee,
pursuant to a qualified domestic relations order entered into by a court of
competent jurisdiction.

 

11.           Tax Withholding.  In the event you do not make prior arrangements
with Toro to pay any tax withholding obligations that may arise in connection
with this Performance Share Award, Toro will deduct or withhold from the Shares
issued under this Agreement any federal, state, local or other taxes of any kind
that Toro reasonably determines are required by law to be withheld with respect
to income recognized or will take such other action as may be necessary in the
opinion of Toro to satisfy all obligations for the payment of such taxes.  If
the payment of tax withholding obligations is satisfied in the form of withheld
or surrendered Shares, such Shares will be valued at their Fair Market Value on
the date the withholding is to be determined, but in no event shall such
withholding exceed the minimum statutory withholding requirement.

 

12.           Performance-Based Compensation.  If you are a Covered Employee, it
is intended that all payments under this Performance Share Award constitute
“qualified performance-based compensation” within the meaning Section 162(m) of
the Code and the Plan.  This Performance Share Award is to be construed and
administered in a manner consistent with such intent.

 

13.           Successors.  All obligations of Toro under the Plan with respect
to this Performance Share Award shall be binding on any successor to Toro,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business or assets of Toro.

 

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14.           No Right to Continue Employment or Service.  Neither the Plan,
this Performance Share Award, the Performance Share Award Acceptance Agreement
nor any related material shall give you the right to continue in employment by
or perform services to Toro or any Affiliate or Subsidiary or shall adversely
affect the right of Toro or any Affiliate or Subsidiary to terminate your
employment or service relationship with Toro or any Affiliate or Subsidiary with
or without cause at any time.

 

15.           Governing Law.  This Agreement and the Performance Share Award
Acceptance Agreement shall be construed, administered and governed in all
respects under and by the applicable laws of the State of Delaware, excluding
any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation to the substantive law of another jurisdiction.

 

16.           Conflict.  To the extent the terms of this Agreement or the
Performance Share Award Acceptance Agreement are inconsistent with the Plan, the
provisions of the Plan shall control and supersede any inconsistent provision of
this Agreement or the Performance Share Award Acceptance Agreement.

 

17.           Non-Negotiable Terms.  The terms of this Performance Share Award
and the Performance Share Award Acceptance Agreement are not negotiable, but you
may refuse to accept this Performance Share Award by notifying Toro’s Vice
President, Secretary and General Counsel in writing.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by The Toro
Company and has been executed by you by execution of the attached Performance
Share Award Acceptance Agreement.

 

 

[                  ]

By:

 

 

 

Chairman and CEO

 

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PERFORMANCE SHARE AWARD ACCEPTANCE AGREEMENT

[                    ,           ]

 

I hereby agree to the terms and conditions governing the Performance Share Award
as set forth in the Performance Share Award Agreement, this Agreement and as
supplemented by the terms and conditions set forth in the Plan.

 

In accepting the Performance Share Award, I hereby acknowledge that:

 

(a)           The Plan is established voluntarily by Toro, it is discretionary
in nature and it may be modified, amended, suspended or terminated by Toro at
any time, unless otherwise provided in the Plan, the Performance Share Award
Agreement or this Performance Share Award Acceptance Agreement;

 

(b)           The grant of the Performance Share Award is voluntary and
occasional and does not create any contractual or other right to receive future
Performance Share Awards, or benefits in lieu of Performance Share Awards, even
if Performance Share Awards have been granted repeatedly in the past;

 

(c)           All decisions with respect to future Performance Share Award
grants, if any, will be at the sole discretion of Toro;

 

(d)           I am voluntarily participating in the Plan;

 

(e)           The Performance Share Award is not part of normal or expected
compensation or salary for any purposes, including, but not limited to,
calculating any severance, resignation, termination, redundancy, end of service
payments, bonuses, long-service awards, pension or retirement benefits or
similar payments and in no event should be considered as compensation for, or
relating in any way to, past services for Toro or any Affiliate or Subsidiary;

 

(f)            The future value of the Shares that may issued in settlement of
the Performance Share Award is unknown and cannot be predicted with certainty
and if the Performance Share Award vests and the Shares become issuable in
settlement hereof in accordance with the terms of the Performance Share Award
Agreement and this Agreement, the value of those Shares may increase or
decrease;

 

(g)           In consideration of the grant of the Performance Share Award, no
claim or entitlement to compensation or damages shall arise from termination of
the Performance Share Award or diminution in value of the Performance Share
Award or the Shares issuable in settlement hereof resulting from termination of
my employment or service by Toro or any one of its Affiliates or Subsidiaries
(for any reason whatsoever and whether or not in breach of applicable labor
laws) and I hereby irrevocably release Toro and its Affiliates and Subsidiaries
from any such claim that may arise; if, notwithstanding the foregoing, any such
claim is found by a court of competent jurisdiction to have arisen, then, by
acceptance of the Performance Share Award, I shall be deemed irrevocably to have
waived my entitlement to pursue such claim;

 

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(h)           Toro is not providing any tax, legal or financial advice, nor is
Toro making any recommendations regarding my participation in the Plan or my
acceptance of the Performance Share Award; and

 

(i)            I have been advised to consult with my own personal tax, legal
and financial advisors regarding my participation in the Plan before taking any
action related to the Plan.

 

I hereby acknowledge that I have received electronically a copy of the Plan, the
Prospectus relating to the Plan and Toro’s most recent Annual Report on
Form 10-K.  I hereby agree to accept electronic delivery of copies of any future
amendments or supplements to the Prospectus or any future Prospectuses relating
the Plan and copies of all reports, proxy statements and other communications
distributed to Toro’s security holders generally by email directed to my Toro
email address.

 

Note:  If you do not wish to accept the Performance Share Award on the terms
stated in the Performance Share Award Agreement and this Performance Share Award
Acceptance Agreement, please immediately contact Toro’s Vice President,
Secretary and General Counsel to decline the grant.

 

 

 

Signature:

 

 

Print Name:

 

 

Date:

 

 

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