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Exhibit 10a
1988 INCENTIVE STOCK OPTION PLAN
OF TWIN DISC, INCORPORATED
(1) PURPOSE The purpose of this incentive stock option plan
(hereinafter called "Plan") is to secure for Twin Disc, Incorporated
(hereinafter called "Company") the benefits which result from providing
present or future officers and key employees of the Company with the
performance incentives inherent in common stock ownership. This Plan is
expected to benefit the Company's shareholders by enabling the Company to
attract and retain qualified management personnel, to provide incentive
compensation to such personnel, and to encourage such personnel to acquire
or increase their proprietary interests in the Company. It is intended that
options issued pursuant to this Plan shall constitute incentive stock options
within the meaning of Section 422A of the Internal Revenue Code of 1986, as
amended.
(2) STOCK The total number of shares of common stock to be subject
to options upon the exercise of options granted under this Plan will not
exceed 125,000 shares of the Company's common stock, subject to adjustment as
provided in Paragraph 9(a) hereof. Such shares may be authorized and unissued
shares of common stock which have been reacquired by the Company, or a
combination thereof. Shares subject to an option under this Plan which is not
exercised in full, or shares as to which the right to purchase is forfeited
through default or otherwise, shall remain available for other options under
this Plan.
(3) ELIGIBILITY An option may be granted to any officer or key
employee of the Company (hereinafter called "Eligible Participant").
(4) MAXIMUM CALENDAR YEAR GRANT TO ANY EMPLOYEE The aggregate fair
market value (determined at the time an option is granted) of the stock for
which an Eligible Participant may be granted incentive stock options first
exercisable in any calendar year shall not exceed $100,000.
(5) ADMINISTRATION
(a) This Plan will be administered by a committee (hereinafter called
"Committee") of not less than three (3) non-officer directors, who
shall be appointed and serve at the pleasure of the Board of
Directors.
(b) A majority of the Committee shall constitute a quorum, and acts
of a majority at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee shall be deemed the
acts of the Committee.
(c) The Committee shall select one of its members as Chairman. The
Committee shall appoint a Secretary, who shall maintain a record of
its actions, decisions and proceedings. The Committee shall have the
authority to grant options, and subject to the express provisions of
this Plan:
(1) Determine the number of shares subject to each option and the
terms thereof;
(2) Prescribe rules and regulations from time to time for
administration of this Plan;
(3) Decide any questions arising as to the interpretation or
application of any provision of this Plan.
(d) No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect
to the Plan or any option granted under it.
(6) OPTION PRICE Each option shall state the option price, which
shall be not less than the fair market value of such stock at the date of grant
of the option, unless an optionee (hereinafter called "Participant") owns more
than ten percent (10%) of the total combined voting power of all classes of the
Company's stock, in which case the option price shall be at least one hundred
ten percent (110%) of the fair market value of the such stock. The fair market
value of the stock at the date of grant shall be the closing price of the stock
on the business day preceding the date of grant on the principal stock exchange
on which the Company's stock is then listed.
(7) TERMS OF OPTION Options shall be exercisable upon the terms and
conditions set forth below. Each option granted under this Plan shall be
evidenced by an agreement between the Company and the Participant, and shall
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contain, in such form and with such other provisions as the Committee shall
from time to time approve and determine, provisions to the following effect:
(a) An option shall be nontransferable and may be exercised only by
the Participant during the Participant's lifetime. A Participant shall
have the right upon his death to transfer options granted to him,
either by will or under the laws of intestate succession, subject to
the provisions of Paragraph 7(b)(2) hereof.
(b)
(1) If a Participant's employment by the Company is terminated for
any reason other than death or disability, the Participant may,
within the ninety (90) days after termination, exercise any rights
under any option theretofore granted to the Participant which the
Participant would have been entitled to exercise on the date of
such determination.
(2) If a Participant's employment by the Company is terminated by
death, the person or persons to whom any option theretofore granted
to the Participant passes, pursuant to his will or under the laws
of intestate succession, may exercise any rights under any option
theretofore granted to the Participant which the Participant would
have been entitled to exercise on the date of his death, but such
exercise must be made within one year of the death of the
Participant. If the termination is due to disability, the
Participant may exercise the option within one (1) year form the
date of such termination.
(3) To the extent any option has not yet become exercisable on the
date a Participant's employment is terminated, such option shall
automatically terminate.
(c) An option must be exercised within ten (10) years of its grant,
unless the Participant owns more than ten percent (10%) of the total
combined voting power of all classes of the Company's stock, in which
case it must be exercised within five (5) years its grant.
(d) An option shall be exercised by delivering to the Chief Financial
Officer of the Company at its principal business office a written
notice designating the number of shares for which it is being
exercised. Payment in full for the number of shares for which the
option is being exercised must accompany such notice.
(8) SHARES ACQUIRED ON EXERCISE OF OPTION
(a) At the time of exercise, unless the shares acquired are the
subject of an effective registrations statement, a Participant shall
be required to give a written representation that he is acquiring such
shares for his own account and for purposes of investment, and not with
a view to, or for sale in connection with, the distribution of such
shares, nor with any present intention of distributing such shares. The
Participant shall further acknowledge his understanding that such
shares are not registered under the Securities Act of 1933, as amended,
on the ground that the issuance of shares pursuant to the exercise of
an option granted pursuant to this Plan is exempt from registration as
not involving any public offering, and that the Company's reliance on
such exemption is in part based on the foregoing representation. The
Participant shall further agree that he will not sell or transfer any
shares purchased through exercise of an option until a registration
statement covering the shares is effective, or until he receives an
opinion by the Company's counsel that a proposed sale or transfer will
not violate the Securities Act of 1933, as amended, or until he obtains
a no-action letter from the Securities Exchange Commission with respect
thereto.
(b) Unless shares acquired are covered by an effective registration
statement, their certificates shall bear an appropriate legend
restricting their transfer.
(9) MISCELLANEOUS
(a) In the event any stock dividend, subdivision, stock split,
combination of shares, reclassification, recapitalization, or if the
Company shall participate in a merger or consolidation in which the
Company is the surviving corporation, or if other similar change in the
capitalization of the Company occurs affecting its common stock, the
Committee shall make corresponding adjustments in(1) the number of
shares and the price per share applicable to the outstanding options,
(2) the number of shares then reserved for award under options
thereafter to be granted, and (3) applicable limitations set forth in
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this Plan with respect to the granting of options.
(b) No fractional shares of stock shall be issued upon the exercise of
any option and the Company shall not be under any obligation to
compensate any Participant for fractional shares.
(c) This Plan does not impose on the Company an obligation to continue
the employment of any Participant or Eligible Participant.
(d) No Participant shall have any rights as a shareholder of the
Company with respect to any shares for which he has an option to
purchase until issuance to him of a certificate representing such
shares.
(10) EFFECTIVE DATE OF PLAN This plan shall become effective upon the
later of the date of adoption by the Board of Directors of the Company or the
date of ratification by the Company's shareholders, subject to compliance with
all applicable laws.
(11) TERM OF PLAN Options may be granted pursuant to this Plan form
time to time within a period of ten (10) years from the effective date of the
Plan.