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RESTRICTED STOCK GRANT AGREEMENT
THIS RESTRICTED STOCK GRANT AGREEMENT (the "Agreement"), by and between TWIN
DISC, INCORPORATED (the "Company") and ____________________ (the "Employee") is
dated this 15th day of October 2004, to memorialize an award of restricted
stock of even date herewith.
WHEREAS, the Company adopted an Incentive Compensation Plan in 1998 (the
"Plan") whereby the Compensation Committee of the Board of Directors (the
"Committee") is authorized to award shares of common stock of the Company to
officers and key employees carrying restrictions such as a prohibition against
disposition and establishing a substantial risk of forfeiture; and
WHEREAS, the Committee has determined it to be in its best interests of the
Company to provide the Employee with an inducement to acquire or increase the
Employee's equity interest in the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements herein set forth, the parties hereto agree as follows:
1. Stock 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
grants to the Employee ______ shares of the common stock of the Company,
subject to the terms and conditions and restrictions set forth below.
2. Fair Market Value. The fair market value of the shares granted was
______________ Dollars ($_______) per share on the date of grant.
3. Price Paid by Employee. The price to be paid by the Employee for the
shares granted shall be No Dollars ($ 0.00) per share.
4. Transferability. For a period of two (2) years from the date of grant
the shares granted shall not be subject to sale, assignment, pledge or other
transfer of disposition by the Employee, except as provided in Section 6, or
except by reason of an exchange or conversion of such shares because of merger,
consolidation, reorganization or other corporate action. Any shares into which
the granted shares may be converted or for which the granted shares may be
exchanged in a merger, consolidation, reorganization or other corporate action
shall be subject to the same transferability restrictions as the granted
shares.
On the second anniversary of the date of grant, fifty percent (50%) of the
shares granted shall become freely transferable, and on the fourth anniversary
of the date of the grant, the remaining fifty percent (50%) of the shares shall
become freely transferable.
5. Forfeitability. Except as provided in Section 6 of this Agreement, if
the employment of the Employee shall terminate prior to the expiration of two
(2) years from the date of grant other than by reason of death or permanent
disability, the shares granted (or any shares into which they may have been
converted or for which they may have been exchanged) shall be forfeited.
If the employment of the Employee shall terminate after the second
anniversary of the date of grant and prior to the fourth anniversary of the
date of grant, fifty percent (50%) of the shares shall be forfeited. If the
Employee continues to be employed on the fourth anniversary of the date of
grant, the remaining fifty percent (50%) of the shares shall become
non-forfeitable.
6. Termination Following Change in Control. Notwithstanding Sections 4 and
5 of this Agreement, if an event constituting a Change in Control of the
Company occurs and the Employee thereafter terminates employment for any
reason, the shares granted hereunder shall become freely transferable and
non-forfeitable, 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 his rights with respect to this Section 6.
For purposes of this Section 6, 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;
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(b) if any "person" (as defined in Sections 13(d) and 14(d) of the Exchange
Act) other than Michael Batten or any member of his family (the "Batten
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.
7. Death/Disability. Upon the death or permanent disability of the Employee
while employed by the Company the transferability provisions and the
forfeitability provisions shall cease to apply. The Committee shall
conclusively determine whether the Employee shall be considered permanently
disabled for purposes of this restricted stock grant.
8. Rights of Shareholder. Upon the date of issuance of certificates for
shares granted, the Employee shall otherwise have all the rights of a
shareholder including the right to receive dividends and to vote shares. Cash
and stock dividends shall be payable to the Employee as they are paid by the
Company, even if the restrictions on the shares to which such dividends relate
have not yet lapsed. The certificates representing such shares shall be held
by the Company for account of the Employee, and shall be delivered to the
Employee as and when the shares represented thereby become non-forfeitable.
9. Section 83(b) Election. The Employee acknowledges that: (1) the stock
granted pursuant to the Plan and this Agreement is restricted property for
purposes of Section 83(b) of the Internal Revenue Code and that the shares
granted are subject to a substantial risk of forfeiture as therein defined
until the year in which such shares are no longer subject to a substantial
risk of forfeiture; and (2) that the Employee may make an election to include
the fair market value of the shares in income in the year of the grant in
which case no income is included in the year the shares are no longer subject
to a substantial risk of forfeiture. Responsibility for determining whether
or not to make such an election and compliance with the necessary requirements
is the sole responsibility of the Employee.
10. Restrictions on Transfer. The Employee agrees for himself and his heirs,
legatees and legal representatives, with respect to all shares granted
hereunder (or any securities issued in lieu of or in substitution or exchange
therefore) that such shares will not be sold or transferred except pursuant to
an effective registration statement under the Securities Act of 1933, as
amended, or until the Company is provided with an opinion of counsel that a
proposed sale or transfer will not violate the Securities Act of 1993, as
amended. The Employee represents that such shares are being acquired for the
Employee's 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.
11. 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:
_____________________________________