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PERFORMANCE STOCK UNIT AWARD GRANT AGREEMENT
THIS PERFORMANCE STOCK UNIT AWARD GRANT AGREEMENT (the "Agreement"), by
and between TWIN DISC, INCORPORATED (the "Company") and _______________________
(the "Employee") is dated as of the 20th day of January, 2006, to memorialize
an award of performance stock units of even date herewith.
WHEREAS, the Company adopted a Stock Incentive Plan in 2004 (the "Plan")
whereby the Compensation Committee of the Board of Directors (the "Committee")
is authorized to grant awards of various types to certain key employees of the
Company; and
WHEREAS the Company amended the Plan on January 20, 2006, to authorize the
award of performance stock units, which entitle an employee of the Company
receiving such an award to a cash payment equal to the value of the common
stock of the Company if the Company achieves a predetermined performance
objective; and
WHEREAS, effective January 20, 2006, the Committee made an award of
performance stock units to the Employee as an inducement to achieve the below
described performance 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 Unit 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 an award of _______ performance
stock units effective January 20, 2006. Such performance stock units entitle
the Employee to receive a cash payment equal to the product of the number of
units multiplied by the fair market value of the Company's common stock as of
June 30, 2008, if the Company achieves at least Two Hundred Fifty Million
Dollars ($250,000,000) in consolidated annual sales revenue in the fiscal year
beginning on July 1, 2007 and ending on June 30, 2008 (the "Performance
Objective"), as reported in its consolidated financial statements for such
fiscal year. The Committee shall certify whether such Performance Objective
is satisfied before any payment pursuant to a performance stock unit is made.
2. Price Paid by Employee. The price to be paid by the Employee for the
performance stock units granted shall be No Dollars ($ 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 units 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 unit 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 units
granted to such Employee shall be paid on a prorated basis if and when the
Performance Objective is achieved. Such prorated performance stock unit awards
shall be subject to the following terms and conditions:
(a) The prorated award shall be determined by multiplying the cash payment
due pursuant to the vesting of the award by a fraction, the numerator of
which is the number of days from July 1, 2005, through the Employee's
last day of employment, and the denominator or which is the number of
days from July 1, 2005, through June 30, 2008.
(b) Except as otherwise provided in Section 4(c), the payment of such
prorated award shall be paid 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 units granted
hereunder of an Employee who experiences a Qualifying Event and to make
a cash payment pursuant to such prorated awards as if the Performance
Objective had been fully achieved. In such event, the calculation of
the cash payment due to the Employee shall be based on the fair market
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value of the Company's common stock as of the effective date of such
Employee's termination of employment.
(d) The Committee shall conclusively determine whether an Employee shall
be considered permanently disabled for purposes of this performance
stock unit 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
units granted hereunder shall immediately vest and a cash payment shall be made
as if the Performance Objective had been fully achieved, regardless of whether
termination of employment is by the Employee, the Company or otherwise. Such
cash payment shall be equal to the number of performance stock units granted to
the Employee multiplied by the fair market value of the Company's common stock
as of the effective date of such Change in Control. 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 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.
6. Awards Contingent Upon Shareholder Approval of Plan Amendments. All of
the performance stock units granted hereunder are contingent upon the approval
by the Company's shareholders at the Company's 2006 annual meeting of the
amendments to the Plan approved by the Board on January 20, 2006. Upon the
occurrence of said event, the grant of performance stock units awarded herein
shall be effective as of the date specified herein with no further action
required by the Committee. If such approval does not occur at the Company's
2006 annual meeting of shareholders, the awards granted hereunder shall be null
and void.
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:
________________________________________