Exhibit 2
THE TORO COMPANY
PERFORMANCE SHARE AWARD AGREEMENT
This Agreement is entered into
as of November 30, 2005, by and between
(“Employee” or “you”) and The Toro Company,
a Delaware corporation (“Toro” or “we”), to
set forth the terms and conditions of a Performance Share Award
granted to you by the Compensation and Human Resources Committee of
the Board of Directors of Toro (the “Committee”)
pursuant to The Toro Company Performance Share Plan (the
“Plan”).
1. Performance Share Award. Toro hereby grants you
Performance Shares (your “Maximum Potential Payout”)
for Fiscal Years 2006 to 2008 (the “Award Term”),
subject to the terms and conditions of this Agreement and of the
Plan and to your consent to those terms and conditions.
a. Performance Share
Definition. A Performance Share is a right to receive one
share of Toro Common Stock, par value $1.00 per share, and
Preferred Share Purchase Rights attached thereto, (the
“Common Stock”), contingent on the achievement of
Performance Goals.
b. Performance Goal
Achievement Required . You will receive shares of Common
Stock for Performance Shares under this Performance Share Award
only if Toro achieves Performance Goals for the Award Term
established by the Committee and the Committee certifies in writing
that the Performance Goals have been achieved. If the Performance
Goals are not achieved, a portion or all of your Performance Shares
will be canceled and you will receive no Common Stock for canceled
shares.
c. Performance Goals .
The Performance Goals to be achieved with respect to the Award Term
are cumulative net income plus after-tax interest of $<
> and cumulative average
net asset turns of < >
(the “Target Levels”).
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2.
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Number of Shares Delivered . If the
Performance Goals are achieved at the Target Levels, you will
receive shares of Common Stock (your “Target Payout”).
If the Performance Goals are achieved at levels above or below the
Target Levels, the number of shares of Common Stock you will
receive will be increased or reduced, including to zero, in
accordance with the matrix set forth in Exhibit
, which is attached to and
forms a part of this Agreement, subject further to adjustment and
proration as provided in the Plan and the Committee’s
resolutions of November 30, 2005. You may not receive a
greater number of shares of Common Stock than your Maximum
Potential Payout.
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3.
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Payment of Awards . Performance Shares
payable to you will be paid solely in shares of Common Stock.
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1
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4.
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Vesting and Cancellation Under Special
Circumstances .
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a.
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Death or Disability . If you
retire at or after age 65 or die or become permanently disabled and
unable to work, shares of Common Stock will be delivered with
respect to your Performance Share Award only if otherwise earned
and the number of shares to be delivered will be prorated
based on the number of days you were employed during the Award Term
through the date of such event. Such shares will be delivered only
after the conclusion of the Award Term.
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b.
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Retirement . If prior to the end
of the Award Term, you cease to be a employee by reason of
retirement at age 55 or ol
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