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 3 rd day of August, 2009, to memorialize an award of performance stock of even date herewith.

WHEREAS, the Company adopted a Long Term Incentive Compensation Plan in 2004, as amended in 2006 (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, effective August 3, 2009, the Committee made an award of performance stock 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 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 August 3, 2009.  Such performance stock award shall entitle the Employee to receive the number of shares of the Company’s common stock (the “Shares”) awarded pursuant to the table below if the Company achieves the economic profit objective stated below (the “Performance Objective”):

The Performance Objective is the amount of the Company’s economic profit (measured as the difference between the Company’s cumulative net operating profit after taxes and the Company’s cumulative capital charge) for the cumulative three fiscal year period ending June 30, 2012, as specified in the table above.  If the Company achieves the maximum Performance Objective as specified on the table above, the Employee will earn the maximum number of Shares.  If the Company achieves the target Performance Objective as specified on the table above, the Employee will receive the target number of Shares.  If the Company achieves the threshold Performance Objective stated above, the Employee will earn the threshold number of Shares.  No Shares will be earned for performance below the 3-year cumulative economic profit threshold and no additional Shares will be earned for performance exceeding the 3-year cumulative economic profit maximum.  In the event that the Company’s economic profit is between the achievement levels set forth in the above table, the number of Shares awarded shall be determined by interpolation.  Any fractional share of the Company resulting from such interpolation shall be rounded up to a whole share of the Company.  The Committee shall certify whether and to what extent such Performance Objective is satisfied before any Shares are awarded.  Such certification, and the issuance of Shares pursuant to such certification, shall be made within 2½ months after June 30, 2012.

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 the Employee is terminated for cause, the performance stock granted to the Employee shall be forfeited.  The Committee shall conclusively determine whether the Employee was terminated for cause for purposes of this performance stock award.

4.   Termination of Employment due to Death or Disability .  If prior to attaining the Performance Objective the Employee terminates employment due to death or disability, a prorated portion of the performance stock granted shall immediately vest, and the Company shall deliver shares of Company stock underlying such prorated awards as if the maximum Performance Objective had been fully achieved.  Such payment shall be made no later than 2-1/2 months after the Employee’s termination of employment due to death or disability.  The prorated award shall be determined by multiplying the number of shares underlying the award by a fraction, the numerator of which is