Exhibit 10.18

 

PERFORMANCE SHARE AWARD AGREEMENT

THE TORO COMPANY AMENDED AND RESTATED 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 Amended and Restated 2010 Equity and Incentive Plan, as such plan may be
amended from time to time (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.  Except as otherwise indicated, for
purposes of this Agreement and the Performance Share Award Acceptance Agreement,
any reference to “Employer” shall mean the entity (Toro or any Affiliate or
Subsidiary) that employs you.

 

1.                                      Performance Share Award.  Subject to the
terms and conditions of this Agreement and the Plan and your consent to those
terms and conditions, Toro hereby grants you this Performance Share Award
representing the right to receive up to a maximum (your “Maximum Potential
Payout”) of 200% of your “Target Potential Payout” based on the achievement of
the Performance Goals set forth on Exhibit A to this Agreement during the
Performance Period (as defined below).  For purposes of this Performance Share
Award, your “Target Potential Payout” is equal to [            ] shares
(“Shares”) of common stock, par value $1.00 per share, of The Toro Company
(“Common Stock”).  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 Exhibit A to 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 Exhibit A to 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 described in the table(s) set forth in Exhibit A to this
Agreement.

 

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

 

a.                                      Except as otherwise provided in this
Section 3 and Exhibit A to this Agreement, 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(s) set forth in Exhibit A to this Agreement
and may range from 0% to 200% 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

 

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performance, are described in the table(s) set forth in Exhibit A to this
Agreement.

 

Payouts will be interpolated between Threshold and Target if the level of the
performance attained for the Performance Goals for the Performance Measure for
the Performance Period falls between the Threshold and Target levels specified
in the table(s) set forth in Exhibit A to this Agreement, and the payout will be
rounded down to the nearest whole number of Shares.  Payouts will be
interpolated between Target and Maximum if the level of the performance attained
for the Performance Goals for the Performance Measure for the Performance Period
falls between the Target and Maximum levels specified in the table(s) set forth
in Exhibit A to this Agreement, and the payout 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 described
in the table(s) set forth in Exhibit A to this Agreement 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 shall exclude from
the calculation of the Performance Goal, applying generally accepted accounting
principles, each of the events identified on Exhibit B that occurs during the
Performance Period.

 

d.                                      The actual number of Shares that becomes
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 the table(s) set forth in
Exhibit A to 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 and Exhibit A to 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 Shares will be issued or payment made in
settlement of this Performance Share Award.

 

c.                                       Any Shares issued to you upon
settlement of this Performance Share Award will be issued and delivered to you
in book-entry or certificate form or issued and deposited for your

 

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benefit with any broker with which you have an account relationship or Toro has
engaged to provide such services under the Plan.   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, 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 the Employer 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 the Employer 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 one year 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 (except to the extent you have properly elected to defer receipt of
any Shares under The Toro Company Deferred Compensation Plan for Officers), 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 the number of months or years you were
employed during the Performance Period.

 

b.                                      In the event your employment or other
service with the Employer 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.

 

c.                                       Notwithstanding anything to the
contrary in the Plan, and unless otherwise determined by the Committee in its
sole discretion, your termination date shall be the date on which your active
employment or other service ceases and shall not be extended by any notice of
termination of employment or severance period provided to you by contract or
practice of Toro or the Employer or mandated under local law, unless otherwise
required by applicable law.

 

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 reasonable 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

 

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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 the Employer 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 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

 

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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.

 

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 the Employer or shall adversely
affect the right of the Employer to terminate your employment or service
relationship with or without cause at any time.

 

15.                               Electronic Delivery.  Toro, in its sole
discretion, may decide to deliver any documents related to this Performance
Share Award granted to you under the Plan by electronic means.  You hereby
consent to receive such documents by electronic delivery and agree to
participate in the Plan through an on-line or electronic system established and
maintained by Toro or a third party designated by Toro.

 

16.                               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.

 

17.                               Venue.  In accepting this Performance Share
Award, you are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of the State of Minnesota of the United States of
America to resolve any and all issues that may arise out of or relate to this
Performance Share Award and this Agreement.

 

18.                               Binding Effect.  This Agreement shall be
binding upon Toro and you and its and your respective heirs, executors,
administrators and successors.

 

19.                               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.

 

20.                               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, or Managing
Director, HR & Total Rewards, as applicable, in writing.

 

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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.

 

 

December [   ], 20[   ]

 

 

 

 

By: Chairman and CEO

 

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PERFORMANCE SHARE AWARD ACCEPTANCE AGREEMENT

[             ] [       ], 20[      ]

 

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 the Employer;

 

(f)                                   In the event I am not an employee of Toro
or any Affiliate or Subsidiary, this Performance Share Award will not be
interpreted to form an employment contract or relationship with Toro or any
Affiliate or Subsidiary;

 

(g)                                  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;

 

(h)                                 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 the Employer
(for any reason whatsoever and whether or not in breach of applicable labor
laws) and I hereby irrevocably release Toro and the Employer from any such claim
that may arise; if,

 

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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;

 

(i)                                     In the event of termination of my
employment or other service (whether or not in breach of local labor laws), my
right to be issued the Shares under the Plan in settlement of the Performance
Share Award, if any, will terminate effective as of the date of termination of
my active employment or other service as determined in the sole discretion of
the Committee and will not be extended by any notice of termination of
employment or severance period provided to me by contract or practice of Toro or
the Employer or mandated under local law; furthermore, in the event of
termination of my employment or other service (regardless of any contractual or
local law requirements), my right to receive Shares in settlement of the
Performance Share Award after such termination, if any, will be measured by the
date of termination of my active employment or other service and will not be
extended by any notice of termination of employment or severance period provided
to me by contract or practice of Toro or the Employer or mandated under local
law;  the Committee shall have the sole discretion to determine the date of
termination of my active employment or other service for purposes of this
Performance Share Award;

 

(j)                                    Neither Toro nor the Employer is
providing any tax, legal or financial advice, nor is Toro or the Employer making
any recommendations regarding my participation in the Plan or my acceptance of
the Performance Share Award, my acquisition of any Shares upon settlement of the
Performance Share Award or any sale of the Shares; and

 

(k)                                 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
U.S. 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 U.S. 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 or this Performance Share Award
Acceptance Agreement, please immediately contact Toro’s Vice President,
Secretary and General Counsel or Managing Director, HR & Total Rewards, as
applicable, to decline the grant.

 

 

Signature:

 

 

 

 

 

Print Name:

 

 

 

 

 

Date:

 

 

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EXHIBIT A

PERFORMANCE SHARE AWARD AGREEMENT

 

Corporate Performance Measures

 

 

 

 

 

Performance Goal

 

Weighting

 

Performance Measure

 

Threshold
(40% payout)

 

Target
(100% payout)

 

Maximum
(200% payout)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Divisional Performance Measures

 

 

 

 

 

Performance Goal

 

Weighting

 

Performance Measure

 

Threshold
(40% payout)

 

Target
(100% payout)

 

Maximum
(200% payout)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT B

PERFORMANCE SHARE AWARD AGREEMENT

 

In determining whether and to what extent each Performance Goal has been
achieved, the Committee shall exclude from the calculation of the Performance
Goal, applying generally accepted accounting principles, each of the following
events that occurs during the Performance Period:

 

[                                                                                                                                            ]

 

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