1
PERFORMANCE STOCK AWARD GRANT AGREEMENT
THIS PERFORMANCE STOCK AWARD GRANT AGREEMENT (the "Agreement"), by
and between TWIN DISC, INCORPORATED (the "Company") and __________________ (the
"Employee") is dated this 28th day of July , 2005, to memorialize an award of
performance stock of even date therewith.
WHEREAS, the Company adopted an Stock Incentive Plan in 2004 (the "Plan")
whereby the Compensation Committee of the Board of Directors (the "Committee")
is authorized to grant performance stock awards that entitle an employee of
the Company receiving such award to shares of common stock of the Company if
the Company achieves a predetermined performance objective; and
WHEREAS, the Committee has determined it to be in its best interests of
the Company to grant the Employee a performance stock award as an inducement
to achieve the below described objective.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein set forth, the parties hereto agree as follows:
1. Performance Stock Award Grant. Subject to the terms of the Plan,
a copy of which has been provided to the Employee and is incorporated herein
by reference, the Company has granted Employee a performance stock award
effective July 28, 2005. Such performance stock award shall entitle the
Employee to receive _____ shares of the Company's common stock (the "Shares")
if the Company achieves Two Hundred Fifty Million ($250,000,000) in
consolidated annual revenue in the fiscal year beginning on July 1, 2007 and
ending on June 30, 2008 (the "Performance Objective"), subject to the terms
and conditions and restrictions set forth below.
2. Price Paid by Employee. The price to be paid by the Employee for
the shares granted shall be No Dollars ($ 0.00) per share.
3. Voluntary Termination of Employment Prior to Retirement/Termination
for Cause. If prior to attaining the Performance Objective an Employee
voluntarily terminates employment prior to the Employee becoming eligible for
normal or early retirement under the Company's defined benefit pension plan
covering the Employee or the employment of an Employee is terminated for cause,
the performance stock awards granted to such Employee shall be forfeited. The
Committee shall conclusively determine whether an Employee was terminated for
cause for purposes of this performance stock award.
4. Death/Disability/Other Termination of Employment Other than Change
of Control of Company. If prior to attaining the Performance Objective an
Employee dies, becomes permanently disabled, voluntarily terminates employment
after becoming eligible for normal or early retirement under the Company's
defined benefit pension plan covering the Employee, or is terminated for any
reason other than for cause or following a Change in Control of the Company
as described in Section 5 (each a "Qualifying Event"), the performance stock
awards granted to such Employee shall be paid on a prorated basis if and when
the Performance Objective is achieved. Such prorated performance stock awards
shall be subject to the following terms and conditions:
(a) The prorated award shall be determined by multiplying the number
of shares underlying the award by a fraction, the numerator of which is
the number of days from July 1, 2004, through the Employee's last day of
employment, and the denominator or which is the number of days from
July 1, 2004, through June 30, 2007. Any fractional share of the
Company resulting from such a prorated award shall be rounded up to a
whole share of the Company.
(b) Except as otherwise provided in Section 4(c), shares of the
Company underlying such prorated awards shall be delivered in the
ordinary course after the determination by the Committee that the
Performance Objective has been achieved (and no later than 2-1/2 months
after June 30, 2007).
(c) The Committee has the authority in its sole discretion to
immediately vest the prorated portion of the performance stock awards
granted hereunder of an Employee who experiences a Qualifying Event and
deliver shares of Company stock underlying such prorated awards as if
the Performance Objective had been fully achieved.
(d) The Committee shall conclusively determine whether an Employee
shall be considered permanently disabled for purposes of this performance
stock award.
5. Change of Control. Notwithstanding Sections 3 and 4 above, if an
event constituting a Change in Control of the Company occurs and the Employee
thereafter terminates employment for any reason, then the performance stock
award granted hereunder shall immediately vest and the Shares of the Company
underlying the award shall be delivered as if the Performance Objective had
2
been fully achieved, regardless of whether termination of employment is by
the Employee, the Company or otherwise. Employee's continued employment with
the Company, for whatever duration, following a Change in Control of the
Company shall not constitute a waiver of the Employee's rights with respect
to this Section 5.
For purposes of this Section 5, a "Change in Control of the Company"
shall be deemed to occur in any of the following circumstances:
(a) if there occurs a change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") whether or not the Company is then
subject to such reporting requirement;
(b) if any "person" (as defined in Sections 13(d) and 14(d) of the
Exchange Act) other than Xxxxxxx Xxxxxx or any member of his family (the
"Xxxxxx Family"), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities;
(c) if during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement) there shall cease
to be a majority of the Board comprised as follows: individuals who at
the beginning of such period constitute the Board and any new director(s)
whose election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved; or
(d) if the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the shareholders of the Company
approve a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all the
Company's assets.
6. No Rights of Shareholder. Until the Performance Objective is met,
the performance stock award grant shall not entitle the Employee any rights of
a shareholder, including the right to receive dividends or to vote the Shares.
In the event that the Performance Objective is met, the Shares of the Company
shall be issued to the Employee whose performance stock award has not been
forfeited, and a certificate representing the Shares shall be delivered to the
Employee.
7. Employment Status. Neither this Agreement nor the Plan impose on
the Company any obligation to continue the employment of the Employee.
TWIN DISC, INCORPORATED
By:
___________________________________
Its:
___________________________________
EMPLOYEE:
___________________________________
___________________________________
