Exhibit 10.17

 

ANNUAL PERFORMANCE AWARD AGREEMENT

(FISCAL [        ])

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 an annual performance award (this “Annual Performance Award”)
under The Toro Company 2010 Equity and Incentive Plan, as amended (the “Plan”).
 This Annual Performance Award is subject to all of the terms and conditions set
forth in the Plan, this Agreement and the Annual Performance Award Acceptance
Agreement.  All of the terms in this Agreement and the Annual Performance Award
Acceptance Agreement that begin with a capital letter are either defined in this
Agreement or in the Plan.

 

1.                                       Annual Performance Award.  Toro hereby
grants you this Annual Performance Award denominated and to be paid if earned
entirely in cash, the amount of which will be based on the achievement of the
Performance Goals during the Performance Period (as defined below).  For
purposes of this Annual Performance Award, your “Target Potential Payout” is
equal to [    ]% of your actual base salary earnings for the fiscal year ending
October 31, [        ], and your “Maximum Potential Payout” is equal to 200% of
your Target Potential Payout; provided, however, that if you are a Covered
Employee your actual base salary earnings taken into account may not exceed your
annual base salary in effect on the Grant Date.

 

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 amount of cash payout under this Annual
Performance Award pursuant to Section 4 of this Agreement is the fiscal year
ending October 31, [        ] (the “Performance Period”).  Except as otherwise
provided in Section 8 of this Agreement, Toro intends to make payment 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 payment shall be made to
you in settlement of this Annual Performance 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 amount of cash payable in settlement of this Annual Performance
Award shall be determined by reference to the Performance Measures and
Performance Goals achieved during the Performance Period in accordance with the
tables set forth on Exhibit A attached hereto, and may range from 0% to
[      ]% of your Target Potential Payout.

 

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 Annual Performance Award shall be immediately forfeited and
terminated as of the end of the Performance Period if either:  (i) none of the
Performance Goals for the

 

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Performance Measures meet the Threshold for payment as set forth in the tables
on Exhibit A and the Committee determines that Section 3(c) of this Agreement
does not apply, or (ii) the Committee determines that Section 3(c) of this
Agreement applies but exercises its discretion pursuant to Section 3(d) of this
Agreement not to make any payment.

 

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].

 

d.                                      The actual amount that becomes payable
under this Annual Performance Award based upon achieving the Performance Goals
during the Performance Period may be adjusted downward by the Committee in its
sole and absolute discretion based on such factors as the Committee determines
to be appropriate and/or advisable.

 

4.                                       Settlement; Payment.

 

a.                                       In the event and only upon the
achievement of the “Threshold” level of performance with respect to the
Performance Goals specified in the tables set forth on Exhibit A of this
Agreement during the Performance Period, which achievement must be confirmed by
the Committee following the expiration of the Performance Period, you will
receive such amount in cash up to your Maximum Potential Payout under this
Annual Performance 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 Annual
Performance Award will be forfeited and canceled and you will receive no payment
in settlement thereof.  You may not receive a greater amount in cash than your
Maximum Potential Payout.

 

b.                                      In the event this Annual Performance
Award is forfeited or cancelled for any

 

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reason pursuant to Sections 3, 5, 6 or 7 of this Agreement or otherwise, no
payment shall be made in settlement of this Annual Performance Award.

 

c.                                       Except as provided in paragraph
(d) below, in no event will Toro make payment 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 payment pursuant to this Annual Performance Award
under The Toro Company Deferred Compensation Plan, as such plan may be amended
from time to time, or any similar successor plan, you will receive such payment
in accordance with your deferral election.

 

e.                                       The payment pursuant to this Annual
Performance 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 for any reason other than death, Disability or Retirement and the
effective date of such termination is prior to the date payment is made in
settlement of this Annual Performance Award pursuant to Section 4 of this
Agreement or would have been made had there not been a deferral election in
place, this Annual Performance Award will be terminated and forfeited.

 

b.                                      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 and the effective date
of such termination is prior to the date payment is made in settlement of this
Annual Performance Award pursuant to Section 4 of this Agreement or would have
been made had there not been a deferral election in place, this Annual
Performance Award will be terminated and forfeited; provided, however, that the
Committee may, in its sole discretion, cause payment to be made with respect
this Annual Performance Award and in accordance with the payment terms hereof,
but only if otherwise earned for the entire Performance Period and only with
respect to the portion of the Performance Period completed as of the date of
such death, Disability or Retirement.

 

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 Annual Performance 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 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 (1) 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

 

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Plan, including this Annual Performance Award.  This Section 6 shall not apply
following the occurrence of a Change of Control.

 

7.                                       Clawback, Forfeiture or Recoupment. 
Any amounts paid to you under this Annual Performance 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 or Change
of Control or similar policy or plan under which you are covered, upon the
occurrence of a Change of Control prior to the end of the Performance Period,
this Annual Performance Award shall be settled by payment of your Target
Potential Payout within 60 days after the Change of Control, unless you have
properly elected to defer your receipt of any payment pursuant to this Annual
Performance Award under The Toro Company Deferred Compensation Plan, as such
plan may be amended from time to time, or any similar successor plan, in which
case, you will receive such payment in accordance with your deferral election.

 

9.                                       No Transfer.  You may not transfer this
Annual Performance Award or any rights granted under this Annual Performance
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

 

10.                                 Tax Withholding.  Toro will deduct or
withhold from the payment 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.

 

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

 

12.                                 Successors.  All obligations of Toro under
the Plan with respect to this Annual Performance 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.

 

13.                                 No Right to Continue Employment or Service. 
Neither the Plan, this Annual Performance Award, the Annual Performance 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.

 

14.                                 Governing Law.  This Agreement and the
Annual Performance Award Acceptance Agreement shall be construed, administered
and governed in all respects under and by the

 

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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.

 

15.                                 Conflict.  To the extent the terms of this
Agreement or the Annual Performance 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 Annual Performance Award
Acceptance Agreement.

 

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

 

 

[                  ]

 

By:

 

 

 

 

 

 

 

 

Chairman and CEO

 

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ANNUAL PERFORMANCE AWARD ACCEPTANCE AGREEMENT

[                                ]

 

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

 

In accepting the Annual Performance 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
Annual Performance Award Agreement or this Annual Performance Award Acceptance
Agreement;

 

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

 

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

 

(d)                                 I am voluntarily participating in the Plan;

 

(e)                                  The Annual Performance 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)                                    In consideration of the grant of the
Annual Performance Award, no claim or entitlement to compensation or damages
shall arise from termination of the Annual Performance Award or diminution in
value of the Annual Performance Award 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 Annual Performance Award, I shall be deemed irrevocably to have waived my
entitlement to pursue such claim;

 

(g)                                 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 Annual Performance Award; and

 

(h)                                 I have been advised to consult with my own
personal tax, legal and financial

 

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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 Annual Performance Award on the terms
stated in the Annual Performance Award Agreement and this Annual Performance
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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EXHIBIT A

TO

ANNUAL PERFORMANCE AWARD AGREEMENT

(FISCAL [        ])

 

PERFORMANCE MEASURES AND GOALS

 

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.

 

The overall weighting of the Corporate, Divisional and Plan portions of your
Performance Measures and the corresponding Threshold Performance Measure that
must be attained before any payment will be made for such Corporate, Divisional
or Plan portion are as follows:

 

Weighting

 

Performance Measures

 

Threshold

 

 

 

 

 

 

 

Corporate Performance Measures

 

 

 

 

 

 

 

 

 

Divisional Performance Measures

 

 

 

 

 

 

 

 

 

Plant Performance Measures

 

 

 

If the Performance Goals for the Performance Measure attained for the
Performance Period falls between Threshold and Target or between Target and
Maximum in the tables below, the payout percentage will be determined by
straight line interpolation between Threshold and Target or Target and Maximum,
as the case may be, and rounded to the nearest whole dollar.

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A-1

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Plant Performance Measures

 

 

 

 

 

Performance Goal

Weighting

 

Performance Measure

 

Threshold
(40% payout)

 

Target
(100% payout)

 

Maximum
(200% payout)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit A-2

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