ex10_2.htm


    
      
         

      

      
         

        
        

      

      
         

      

    


    Exhibit
      10.2

    


    The
      Toro Company

    Performance
      Share Plan

    (As
      Amended January 15, 2008)

    


    


    
      	
              1.

            	
              Purpose.  The
                purpose of The Toro
                Company Performance Share Plan (the “Plan”) is to enhance long-term
                stockholder value of The Toro Company (the “Company”), by reinforcing the
                incentives of key executives to achieve long-term performance goals
                of the
                Company; to link a significant portion of a participant’s compensation to
                the achievement by the Company of performance goals and to the value
                of
                the Company’s Common Stock, par value $1.00 per share, and related
                Preferred Share Purchase Rights (“Common Stock”); and to attract and
                motivate executives and to encourage their continued employment on
                a
                competitive basis.  The
                purposes of the Plan are to be
                achieved by the grant of Performance Share Awards.

            


    

    


    
      	
              2.

            	
              Eligibility
                and
                Participation.  Key employees
                of the Company, who,
                through their position or performance, can have a significant, positive
                impact on the Company’s financial results, shall be eligible to
                participate in the Plan. The
                Compensation Committee (the
                “Committee”) shall select recipients of Performance Shares (“Plan
                Participants”).  Newly-hired
                and newly-promoted
                executives may be selected as Plan Participants subject to the provisions
                of paragraph 3.c.(ii), if applicable.

            


    

    


    
      	
              3.

            	
              Performance
                Share Awards.

            


    

    


    
      	
               

            	
              a.

            	
              Performance
                Share Defined.  A Performance
                Share is a right to
                receive shares of Common Stock or Common Stock units, contingent
                on the
                achievement of performance goals of the Company during a three-year
                period, except that a shorter period may be established for new
                participants (the “Award Term”).  A
                Performance Share Award shall be
                subject to such conditions, restrictions and contingencies as the
                Committee shall determine.

            


    

    


    
      	
               

            	
              b.

            	
              Vesting.  Performance
                Shares shall be
                subject to forfeiture until they vest and shall vest only after the
                conclusion of the Award Term, and only if the Committee makes the
                certification required by paragraph 3.c.(iv), except as may otherwise
                be
                provided in paragraphs 3.e.(i), 3.e.(ii) and 3.e.(iv).

            


    

    


    
      	
               

            	
              c.

            	
              Section 162(m) Conditions.  Performance
                Share Awards may
                be designated as “performance-based compensation” as that term is used in
                Section 162(m) of the Internal Revenue Code of 1986, as amended
                (the “Code”).

            


    

    


    
      	
               

            	
              (i)

            	
              Performance
                Goals.  The performance
                goal
                criteria (“Performance Goals”) that may be used by the Committee for
                Performance Shares shall include one or more of the following, as
                selected
                by the Committee: cumulative earnings, cumulative earnings per share,
                profit after tax, net income, return on invested capital, invested
                capital
                dollars, earnings per share, average net assets, after-tax interest
                expense, return on average net assets, average net asset turns, cumulative
                average net asset turns, return on equity, return on beginning equity,
                revenue growth, earnings growth, economic value added, fill rate,
                customer
                care and customer satisfaction scores.

            


    

    


    
      	
               

            	
              (ii)

            	
              Establishment
                of Performance Goals.  Performance
                Share
                Awards designated “performance-based compensation” shall be granted, and
                Performance Goals shall be established, by the Committee in writing
                not
                later than 90 days after the commencement of the period of service
                to
                which the Performance Goal relates, or such other period required
                under
                Section 162(m) of the Code, provided that the outcome is
                substantially uncertain at the time the Committee establishes the
                Performance Goal; and provided further that in no event will a Performance
                Goal be considered to be preestablished if it is established
                after 25% of the period of service (as scheduled in good faith at the
                time the Performance Goal is established) has elapsed.

            


    

    


    
      	
               

            	
              (iii)

            	
              Section 162(m) Maximum
                Award Payment.  With respect
                to a
                Performance Share Award that is designated “performance-based
                compensation” for purposes of Section 162(m), the maximum number of
                shares that may be issued under the award shall be set at the time
                the
                Committee grants the award and establishes Performance Goals under
                the
                award.  Notwithstanding
                any other
                provision of this Plan, the maximum number of Performance Shares
                that may
                be granted to a Plan Participant with respect to any Award Term is
                100,000, subject to adjustment as provided in paragraph 4.

            


    

    


    
      	
               

            	
              (iv)

            	
              Certification
                of Payment.  Before any
                payment or
                delivery of shares of Common Stock is made under the Plan to any
                Participant who is a person referred to in Section 162(m), the
                Committee must certify in writing, as reflected in the minutes, that
                the
                Performance Goals established with respect to a Performance Share
                Award
                have been achieved.  To
                the extent necessary with
                respect to any fiscal year or Award Term, in order to avoid any undue
                windfall or hardship due to external causes, the Committee may make
                the
                determination as to whether a Performance Goal has been achieved
                without
                regard to the effect on the Performance Goal measure, as it may otherwise
                be presented in the financial statements, of any change in accounting
                standards, any acquisition by the Company not planned for at the
                time the
                Performance Goals are established or any Board-approved extraordinary
                or
                non-recurring event or item.  With
                respect to any Plan
                Participant who is a person referred to in Section 162(m), the
                Committee shall have the discretion to decrease an award payment
                under a
                Performance Share Award, but may not under any circumstances increase
                such
                amount.

            


    

    


    
      	
               

            	
              d.

            	
              Delivery.  Certificates
                for shares of
                Common Stock in the number of Performance Shares that vest under
                an award
                will be delivered as soon as possible after the applicable vesting
                requirements (including accelerated vesting under paragraph 3.e.(iv))
                have
                been fulfilled, except that if a Plan Participant has properly elected
                to
                defer income that may be attributable to an award under a Company
                deferred
                compensation plan, Common Stock units will be credited to the Plan
                Participant’s account thereunder.  In
                the event vesting requirements
                are not fulfilled or in the event Performance Shares are canceled
                under
                the provisions of paragraph 3.e.(v), Performance Shares shall be
                canceled
                and have no value.

            


    

    


    
      	
               

            	
              e.

            	
              Vesting
                and
                Cancellation Under Special Circumstances.

            


    

    


    
      	
               

            	
              (i)

            	
              Retirement,
                Death or Disability.  If
                a Plan Participant
                retires, dies or becomes permanently disabled and unable to work
                prior to
                the end of an Award Term, but after the conclusion of not less than
                33% of
                the Award Term, the Committee may, in its sole discretion, cause
                shares of
                Common Stock to be delivered with respect to the participant’s Performance
                Share Award, but only if otherwise earned and only with respect to
                the
                portion of the applicable Award Term 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.  “Retirement”
means
                termination of
                employment with the Company at age 55 or older and with a number
                of years
                of service to the Company that, when added together with the participant’s
                age, equals at least 65.  The
                Committee shall consider the
                requirements of paragraph (A) under this paragraph 3.e.(i) and shall
                have the discretion to consider any other fact or circumstance in
                making
                its decision as to whether to deliver shares, including whether the
                participant again becomes employed.  Shares
                shall be delivered only
                after the conclusion of the applicable Award Term in accordance with
                paragraphs 3.b., 3.c. and 3.d. of the Plan.

            


    

    


    
      	
               

            	
              (A)

            	
              Non-compete.  Notwithstanding
                the
                foregoing, if a Plan Participant retires prior to age 65, and within
                one year after the later of the date of that retirement or the date
                shares
                are delivered pursuant to paragraph 3.e.(i), the Plan Participant
                (a) is employed or retained by or renders service to any organization
                that, directly or indirectly, competes with or becomes competitive
                with
                the Company, or if the rendering of such services is prejudicial
                or in
                conflict with the interests of the Company; or (b) violates any
                confidentiality agreement or agreement governing the ownership or
                assignment of intellectual property rights with the Company, or
                (c) engages in any other conduct or act determined to be injurious,
                detrimental or prejudicial to any interest of the Company, the Company
                may
                rescind or restrict the special vesting under this paragraph
                3.e.(i) or withhold or have the right to the return of the economic
                value of the Performance Shares that vested under this paragraph;
                provided, however, that this provision shall not be applicable in
                the
                event of a Change of Control.

            


    

    


    
      	
               

            	
              (ii)

            	
              Reassignment.  If
                prior to the end of an
                Award Term, a Plan Participant is reassigned to a position with the
                Company (including a subsidiary or parent of the Company), and that
                position is not eligible to participate in the Plan, but the Plan
                Participant does not terminate employment with the Company, the Committee
                may, in its sole discretion, cause shares of Common Stock to be delivered
                with respect to the participant’s Performance Share Award, but only if
                otherwise earned and only with respect to the portion of the applicable
                Award Term completed at the date of such reassignment, based on full
                fiscal years only, with no shares to be delivered for partial fiscal
                years.

            


    

    


    
      	
               

            	
              (iii)

            	
              Other
                Termination.  In
                the event that a Plan
                Participant terminates employment with the Company other than by
                reason of
                retirement, death or disability as provided
                in
                paragraph 3.e.(i), Performance Shares in such participant’s name that
                have not yet vested shall not vest and shall be canceled.

            


    

    


    
      	
               

            	
              (iv)

            	
              Change
                of Control.  Notwithstanding
                the
                provisions of paragraphs 3.b. and 3.c., all Performance Shares that
                have
                not yet vested shall vest and become immediately payable if there
                is a
                change of control of the Company.

            


    

    


    
      	
               

            	
              Change
                of Control means:

            


    

    


    
      	
               

            	
              (A)

            	
              The
                acquisition by any individual,
                entity or group (within the meaning of Section 13(d)(3) or
                14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership
                (within the meaning of Rule 13d-3 under the Exchange Act) of 15% or
                more of either (a) the then-outstanding shares of Common Stock of the
                Company (the “Outstanding Company Common Stock”) or (b) the combined
                voting power of the then-outstanding voting securities of the Company
                entitled to vote generally in the election of directors (the “Outstanding
                Company Voting Securities”); provided, however, that for purposes of this
                paragraph (A), the following acquisitions shall not constitute a
                Change of
                Control: (a) any acquisition directly from the Company, (b) any
                acquisition by the Company, (c) any acquisition by any employee
                benefit plan (or related trust) sponsored or maintained by the Company
                or
                any corporation controlled by the Company, or (d) any acquisition by
                any corporation pursuant to a transaction that complies with clauses
                (a),
                (b) and (c) of paragraph (C) of this
                paragraph 3.e.(iv); or

            


    

    


    
      	
               

            	
              (B)

            	
              Individuals
                who, as of the date
                hereof, constitute the Board of Directors of the Company (the “Incumbent
                Board”) cease for any reason to constitute at least a majority of the
                Board; provided, however, that any individual becoming a director
                subsequent to the date hereof whose election, or nomination for election
                by the Company’s stockholders, was approved by a vote of at least a
                majority of the directors then comprising the Incumbent Board shall
                be
                considered as though such individual were a member of the Incumbent
                Board,
                but excluding, for this purpose, any such individual whose initial
                assumption of office occurs as a result of an actual or threatened
                election contest with respect to the election or removal of directors
                or
                other actual or threatened solicitation of proxies or consents by
                or on
                behalf of a Person other than the Board; or

            


    

    


    
      	
               

            	
              (C)

            	
              Consummation
                of a reorganization,
                merger or consolidation of the Company or sale or other disposition
                of all
                or substantially all of the assets of the Company or the acquisition
                by
                the Company of assets or stock of another entity (a “Business
                Combination”), in each case, unless, following such Business Combination,
                (a) all or substantially all of the individuals and entities who were
                the beneficial owners, respectively, of the Outstanding Company Common
                Stock and Outstanding Company Voting Securities immediately prior
                to such
                Business Combination beneficially own, directly or indirectly, more
                than
                50% of, respectively, the then-outstanding shares of common stock
                and the
                combined voting power of the then-outstanding voting securities entitled
                to vote generally in the
                election of directors, as the case may be, of the corporation resulting
                from such Business Combination (including, without limitation, a
                corporation which as a result of such transaction owns the Company
                or all
                or substantially all of the Company’s assets either directly or through
                one or more subsidiaries) in substantially the same proportions as
                their
                ownership, immediately prior to such Business Combination of the
                Outstanding Company Common Stock and Outstanding Company Voting
                Securities, as the case may be, (b) no Person (excluding any
                corporation resulting from such Business Combination or any employee
                benefit plan (or related trust) of the Company or such corporation
                resulting from such Business Combination) beneficially owns, directly
                or
                indirectly, 15% or more of, respectively, the then-outstanding shares
                of
                common stock of the corporation resulting from such Business Combination,
                or the combined voting power of the then-outstanding voting securities
                of
                such corporation except to the extent that such ownership existed
                prior to
                the Business Combination and (c) at least a majority of the members
                of the board of directors of the corporation resulting from such
                Business
                Combination were members of the Incumbent Board at the time of the
                execution of the initial agreement, or of the action of the Board,
                providing for such Business Combination; or

            


    

    


    
      	
               

            	
              (D)

            	
              Approval
                by the stockholders of
                the Company of a complete liquidation or dissolution of the
                Company.

            


    

    


    
      	
               

            	
              (v)

            	
              Committee
                Discretion to Scale Back Awards.  At
                any time during an Award
                Term of more than one fiscal year, the Committee may, in its discretion,
                cancel a portion of the Performance Shares in any Performance Share
                Award
                prior to the conclusion of the Award Term (a “Scale Back”), provided
                that:

            


    

    


    
      	
               

            	
              (A)

            	
              the
                Performance Share Award has
                not yet vested;

            


    

    


    
      	
               

            	
              (B)

            	
              based
                on financial information
                contained in the Company’s financial statements or similar internal
                reports, the Committee determines that the Performance Goals for
                the Award
                Term cannot be achieved at the maximum levels established at the
                time
                of grant;

            


    

    


    
      	
               

            	
              (C)

            	
              Performance
                Share Awards shall be
                Scaled Back in proportion to the estimated short fall in achievement
                of
                Performance Goals from maximum levels;

            


    

    


    
      	
               

            	
              (D)

            	
              all
                Performance Share Awards for
                the same Award Term are Scaled Back by the same percentage;

            


    

    


    
      	
               

            	
              (E)

            	
              once
                an award is Scaled Back, it
                may not again be increased to add or recover Performance Shares that
                were
                canceled; and

            


    

    


    
      	
               

            	
              (F)

            	
              Performance
                Shares canceled in a
                Scale Back shall again be available to the Committee for grant of
                new
                Performance Share Awards for any future Award Term.  This
                provision shall not be used
                in any manner that could have the effect of repricing a previous
                Performance Share Award grant.

            


    

    


    
      	
               

            	
              f.

            	
              Dividends
                and
                Voting.  A
                Plan Participant shall have no rights as a stockholder with respect
                to
                Performance Shares unless and until Common Stock or Common Stock
                units are
                issued in settlement of the award.

            


    

    


    
      	
               

            	
              g.

            	
              Non-transferability.  Neither
                Performance Shares nor Performance Share Awards nor any interest
                in any
                one of such awards or shares may be anticipated, alienated, encumbered,
                sold, pledged, assigned, transferred or subjected to any charge or
                legal
                process, other than by will or the laws of descent and distribution,
                so
                long as the Performance Shares have not vested and shares of Common
                Stock
                have not been distributed in accordance with the Plan, and any sale,
                pledge, assignment or other attempted transfer shall be null and
                void.  A
                Plan Participant may receive
                payment under a Performance Share Award only while an employee of
                the
                Company and only if continuously employed from the date the award
                was
                granted, except as may otherwise be provided in paragraphs
                3.e.(i) and 3.e.(ii).

            


    

    


    
      	
              4.

            	
              Maximum
                Shares
                Subject to Performance Share Awards.  Subject to
                the
                provisions of paragraph 4.a., the total number of shares of Common
                Stock that may be issued pursuant to Performance Share Awards under
                the
                Plan is 2,750,000.  Shares
                of Common Stock that may be
                issued hereunder may be authorized but unissued shares, reacquired
                or
                treasury shares or outstanding shares acquired in the market or from
                private sources or a combination thereof.

            


    

    


    
      	
               

            	
              a.

            	
              Adjustments.  In
                the event of a corporate
                transaction involving the Company, the Common Stock or the Company’s
                corporate or capital structure, including but not limited to any
                stock
                dividend, stock split, extraordinary cash dividend, recapitalization,
                reorganization, merger, consolidation, reclassification, split-up,
                spin-off, combination or exchange of shares, or a sale of the Company
                or
                of all or part of its assets or any distribution to stockholders
                other
                than a normal cash dividend, the Committee shall make such proportional
                adjustments as are necessary to preserve the benefits or potential
                benefits of the Performance Share Awards.  Action
                by the Committee may
                include all or any of adjustment in (i) the maximum number and kind
                of securities subject to the Plan as set forth in this paragraph;
                (ii) the maximum number and kind of securities that may be made
                subject to Performance Share Awards for any individual as set forth
                in
                paragraph 3.c. (iii); (iii) the number and kind of securities subject
                to any outstanding Award; and (iv) any other adjustments that the
                Committee determines to be equitable.

            


    

    


    
      	
              5.

            	
              Administration.  The
                Plan shall
                be administered by the Committee.  The
                Committee shall have the
                authority to administer the Plan; establish policies under the Plan;
                amend
                the Plan, subject to the provisions of paragraph 8; interpret provisions
                of the Plan; select Plan Participants; establish Performance Goals;
                make
                Performance Share Awards; or terminate the Plan, in its sole
                discretion.  The
                Committee may delegate
                administrative duties and all decisions not required to be exercised
                by it
                under Section 162(m) or Section 16 of the Exchange Act, as
                it solely determines, including to Company officers.  All
                decisions of the Committee
                shall be final and binding upon all parties including the Company,
                its
                stockholders and Plan Participants.

            


    

    


    
      	
              6.

            	
              Tax
                Withholding.  The
                Company shall have the
                right to deduct from any settlement made under the Plan or to require
                the
                Participant to pay the amount of any federal, state or local taxes
                of any kind required by law
                to be withheld with respect to the grant, vesting, payment or settlement
                of an award under this Plan, or to take such other action as may
                be
                necessary in the opinion of the Company to satisfy all obligations
                for the
                payment of such taxes.  If
                Common Stock is withheld or
                surrendered to satisfy tax withholding, such stock shall be valued
                at its
                fair market value as of the date it is withheld or surrendered.  The
                Company may also deduct from
                any award settlement any other amounts due the Company by the Plan
                Participant.

            


    

    


    
      	
              7.

            	
              Governing
                Law.  The
                Plan, awards granted
                under the Plan, agreements entered into under the Plan and Performance
                Shares 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 of the Plan or an award or agreement
                or Performance Shares to the substantive law of another
                jurisdiction.

            


    

    


    
      	
              8.

            	
              Plan
                Amendment
                and Termination.  The Committee
                may, in its sole
                discretion, amend, suspend or terminate the Plan at any time, with
                or
                without advance notice to Plan Participants, provided that no amendment
                to
                the Plan shall be effective that would increase the maximum number
                of
                Performance Shares that may be granted under paragraph 3.c.(iii) to a
                participant who is a person referred to in Section 162(m); that would
                change the Performance Goal criteria applicable to a participant
                who is a
                person referred to in Section 162(m) for payment of awards as
                set forth in paragraph 3.c.(i); or that would modify the requirements
                as
                to eligibility for participation under paragraph 2, unless the
                stockholders of the Company shall have approved such change in accordance
                with the requirements of Section 162(m).  No
                amendment, modification or
                termination of the Plan may adversely affect in a material manner
                any
                right of any Plan Participant with respect to any Performance Share
                Award
                theretofore granted without such participant’s written consent.

            


    

    


    9.           
Effective
      Date of the
      Plan and Amendments.  The Plan first became
      effective on November 18, 1998.  Any amendment to the Plan shall be
      effective on the date established by the Committee, subject to stockholder
      approval, if required under the provisions of paragraph 8.