Document:

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                                                                   EXHIBIT 10(p)
                       INCENTIVE STOCK OPTION AGREEMENT

                                 * * * * * * *

    This AGREEMENT, entered into as of this 15th day of August, 1999,
(hereinafter called the "Option Date") between KOLLMORGEN CORPORATION, a
corporation organized under the laws of the State of New York (hereinafter
called the "Corporation"), and Willy Verbrugghe of
             , an employee of the Corporation or of a subsidiary or affiliate of
the Corporation (hereinafter called the "Optionee").

                               WITNESSETH THAT:
                               ---------------

    WHEREAS, the Corporation by due corporate action and with the written
consent of the holders of at least a majority of the stock of the Corporation
entitled to vote adopted the 1991 Long Term Incentive Plan (such Plan, as
amended, hereinafter called the "Plan"); and

    WHEREAS, the Plan is administered by the Personnel and Compensation
Committee of the Corporation's Board of Directors (hereinafter called the
"Committee"), which is composed of individuals who are not employees of the
Corporation or otherwise eligible to receive stock options; and

    WHEREAS, the Committee has determined on the date hereof that it would be in
the best interests of the Corporation to grant to the Optionee the option
contained in this Agreement because of the incentives it will generate in the
Optionee to promote the long range interests of the Corporation; and

    WHEREAS, the Optionee wishes to accept such option, upon the terms and
conditions hereinafter provided; and
<PAGE>

    WHEREAS, the Committee has determined that the option price hereinafter
provided for is not less than 100% of the fair market value of the Common Stock
of the Corporation on the date hereof;

    NOW, THEREFORE, in consideration of the premises it is agreed as follows:

    1.  Option Grant.  Subject to the terms and conditions hereof and to the
        ------------
terms and conditions of the Plan, which are hereby incorporated herein by
reference, the Corporation hereby grants to the Optionee, and the Optionee
hereby accepts, an incentive stock option (hereinafter called the "Option")
within the meaning of Section 422(A)(b) of the Internal Revenue Code of 1986, as
amended, to purchase 70,000 shares of Common Stock, $2.50 par value, of the
Corporation (hereinafter called the "Optioned Shares") at a price of $11.25 per
share (hereinafter called the "Option Price").

    2.  Period of Option, and Conditions of its Exercise.
        ------------------------------------------------
    (a) Unless the Option be terminated earlier as provided in this Option
Agreement, the term of the Option and of this Option Agreement shall commence as
of the date hereof and terminate at the close of business on the day immediately
preceding the tenth anniversary of such date.  Upon any termination of the
Option, all rights of the Optionee hereunder shall cease.  Except as expressly
provided in paragraph 3, this Option may be exercised as follows:

         i)    up to 10% of the Optioned Shares on or after twelve (12) months
               following the Option Date;

         ii)   up to an additional 10% of the Optioned Shares on or after
               eighteen (18) months following the Option Date;

        iii)   up to an additional 20% of the Optioned Shares on or after
               twenty-four (24) months following the Option Date; and,
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         iv)   up to an additional 20% of the Optioned Shares on or after the
               third, fourth and fifth anniversary of the Option Date;

provided, however, that the Committee may accelerate the date upon which the
option may be first exercisable if in its opinion such acceleration is advisable
in order to effectuate the purposes for which the Option was granted.  Events
which the Committee may consider in arriving at such an opinion shall include,
by way of example and not limitation, any merger or consolidation of the
Corporation or any transfer by the Corporation of substantially all of its
assets or any change or proposed change in the control of the Corporation.
Notwithstanding the foregoing, upon a determination by the Committee that there
has been a sale of substantially all of the Corporation's assets or a
dissolution or liquidation of the Corporation, or a "Change in Control" of the
Corporation (as defined below) this Option shall immediately become exercisable
in full.  For this purpose a "Change in Control" shall be deemed to have
occurred if (i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any syndicate
or group deemed to be a person under Section 14(d)(2) of the Exchange Act, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 of the General Rules
and Regulations under the Exchange Act), directly or indirectly, of securities
of the Corporation representing 30% or more of the combined voting power of the
Corporation's then outstanding securities entitled to vote in the election of
directors of the Corporation; (ii) during any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement)
individuals who at the beginning of such period constituted the Board and any
new directors, whose election by the Board or nomination for election by the
Corporation's shareholders was approved by a vote of at least three-fourths
(3/4ths) 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 cease for any reason to constitute a majority thereof;
(iii) there occurs a reorganization, merger, consolidation or other corporate
<PAGE>

transaction involving the Corporation (a"Transaction"), in each case, with
respect to which the shareholders of the Corporation immediately prior to such
Transaction do not, immediately after the Transaction, own more than 50 percent
of the combined voting power of the Corporation or other corporation resulting
from such Transaction; or (iv) there is a "change in control" of the Corporation
within the meaning of Section 280G of the Internal Revenue Code and the
Regulations

    (b) Nothing in this Option Agreement shall confer upon the Optionee any
right to continue in the employ of the Corporation or any subsidiary or
affiliate thereof or interfere in any way with the right of the Corporation or
any subsidiary or affiliate thereof to terminate the employment of the Optionee
at any time.

    3.  Death or Termination of Employment of Optionee.
        ----------------------------------------------
    (a) If the employment of the Optionee by the Corporation or a subsidiary or
affiliate thereof shall terminate by reason of his death, the Option may be
exercised prior to the earlier of (i) the expiration date of the Option or (ii)
the expiration of one year after the date of the Optionee's death (or such
longer period, not exceeding one additional year, as the Committee may approve),
by the person or persons (hereinafter called the "Beneficiary") to whom the
Optionee's rights under the Option pass by will or the laws of descent or
distribution (including his estate during the period of administration),
provided, however, that the Beneficiary shall be entitled to exercise the Option
only to the same extent exercisable by the Optionee on the date of his death.

    (b) If, prior to the first anniversary of the Option Date, the Optionee's
employment with the Corporation or any subsidiary or affiliate thereof shall be
terminated for any reason, this Option Agreement, the Option and all rights to
purchase Optioned Shares pursuant hereto shall forthwith terminate and become
null and void.

    (c) If, on or after the first anniversary of the Option Date, the full-time
employment of the Optionee by the Corporation or any
<PAGE>

subsidiary or affiliate thereof shall terminate for any reason other than (i)
the death of the Optionee or (ii) circumstances which, in the sole and absolute
opinion of the Committee, constitute cause for discharge of the Optionee, the
Option may be exercised by the Optionee at any time prior to the earlier of (i)
the expiration date of the Option or (ii) the expiration of three months after
the date of such termination of employment, to the extent the Option was
exercisable by the Optionee on the date of such termination of employment.

    (d) If the employment of the Optionee by the Corporation or any subsidiary
or affiliate thereof shall terminate under circumstances which, in the sole and
absolute opinion of the Committee, constitute cause for discharge, this Option
Agreement, the Option, and all rights to purchase shares pursuant hereto, shall
forthwith terminate and become null and void.

    (e) If the Optionee is employed by a subsidiary or affiliate of the
Corporation which ceases to be such a subsidiary or affiliate, the Optionee's
employment shall be deemed to terminate upon the date of such cessation, unless
he forthwith becomes or remains an employee of the Corporation or of another
subsidiary or affiliate thereof.

    (f) To the extent that the Option is not exercised within the applicable
periods in the cases set forth in subparagraphs (a), (b) and (c) of this
paragraph 3, this Option Agreement, the Option, and all rights to purchase
shares pursuant thereto, shall forthwith terminate and become null and void.

    (g) Whether employment has been terminated for the purposes of this
Agreement shall be determined by the Committee, whose determination shall be
final, binding and conclusive.

    (h) Anything in the Plan or herein contained notwithstanding, to the extent
that (i) any formal written employment or termination agreement between the
Corporation and the Optionee which is formally executed by both the Corporation
and the Optionee contains terms
<PAGE>

governing the Options hereunder specifically or options in general in the event
of a termination of the Optionee's employment and (ii) the terms of such
employment or termination agreement applicable to such options in the event of a
termination of the Optionee's employment are more favorable to the Optionee than
the terms of this Agreement, then such terms of such employment or termination
agreement shall control the terms of this Agreement.

    4.  Non-Transferability.  During the Optionee's lifetime the Option shall be
        -------------------
exercisable only by him and neither the Option nor any other right granted to
the Optionee hereunder shall be transferable by the Optionee other than by will,
the laws of descent and distribution, or a Qualified Domestic Relations Order
under ERISA and the Code.  In the event of any attempt by the Optionee to
alienate, assign, pledge, hypothecate or otherwise dispose of this Option or of
any right hereunder, except as provided for herein, or in the event of any levy
of any attachment, execution or similar process upon the rights or interest
hereby conferred, the Corporation may terminate this Option Agreement by notice
to the Optionee and it shall thereupon become null and void.

    5.  Manner of Exercising Option.  The Option shall be exercised in the
        ---------------------------
following manner:  the Optionee (or the Beneficiary) shall give to the
Corporation notice in writing, substantially in the form set forth in Exhibit A
hereto, of his intention to purchase, specifying the number of Optioned Shares
as to which he desires to exercise the Option, the number and denomination of
the stock certificates that he desires, and the date on which he desires to
complete his purchase (the "Completion Date"), which shall not be less than five
business days thereafter.  The Optionee (or the Beneficiary) shall pay the
Corporation on the Completion Date either (i) in cash by Federal Reserve Wire
Transfer or by check, or (ii) through the delivery of shares of the
Corporation's Common Stock having a fair market value on the date of exercise
equal to the full purchase price of the shares purchased, or (iii) by a
combination of (i) and (ii) above, against delivery of one or more certificates
therefor.
<PAGE>

    6.  Issuance and Delivery of Shares.  Against payment for the shares
        -------------------------------
purchased, the Corporation will issue and deliver to the Optionee (or the
Beneficiary) on the Completion Date, one or more certificates for the shares
purchased.  If and so long as any Common Stock of the Corporation is listed on
any securities exchange, any other provisions of this Option Agreement
notwithstanding, the Corporation shall not be required to make delivery to the
Optionee (or the Beneficiary) of certificates for shares so purchased until such
shares have been listed (or authorized for listing upon official notice of
issuance) on the securities exchange on which outstanding shares of Common Stock
of the Corporation are then listed nor (whether listed or not) until there has
been compliance with such laws and regulations as the Corporation may deem
applicable, including, without limitation, the Securities Act of 1933, the 1934
Act and the rules and regulations issued thereunder.

    7.  Rights as Shareholder.  The Optionee or a transferee of the Option shall
        ---------------------
have no rights as a shareholder with respect to any share covered by the Option
until he shall have become the holder of record of such share, and, subject to
paragraph 8 hereof, no adjustment shall be made for dividends or distributions
or other rights in respect of such share for which the record date is prior to
the date upon which he shall become the holder of record thereof.

    8.  Recapitalizations, Reorganizations, etc.
        ----------------------------------------
    (a) The existence of the Option shall not affect in any way the right or
power of the Corporation or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Corporation's capital structure or its business, or any merger or consolidation
of the Corporation, or any issue of stock or of options, warrants or rights to
purchase stock or of bonds, debentures, preferred or prior preference stocks
ahead of or affecting the stock or the rights thereof or convertible into or
exchangeable for stock, or the dissolution or liquidation of the Corporation, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
<PAGE>

    (b) The shares with respect to which the Option is granted are shares of
stock of the Corporation as presently constituted, but if, and whenever, prior
to the delivery by the Corporation of all of the shares of the stock with
respect to which the Option is granted, the Corporation shall effect a
subdivision or consolidation of shares, or other capital adjustment, the payment
of a stock dividend or other increase or reduction of the number of shares of
the stock outstanding, without receiving compensation therefor in money,
services or property, the number and price of shares remaining under the Option
shall be appropriately adjusted.  Such adjustment shall be made by the
Committee, whose determination as to what adjustment shall be made, and the
extent thereof, shall be final, binding and conclusive.  Any such adjustment may
provide for the elimination of any fractional share which might otherwise become
subject to the Option.

    (c) Upon a merger or consolidation of the Corporation with any other entity,
pursuant to which the Corporation is not the surviving corporation or pursuant
to which the Corporation is the surviving corporation and holders of Common
Stock of the Corporation receive any consideration in exchange for their shares
of Common Stock of the Corporation, the Option shall be terminated (whether or
not vested) and the Optionee shall receive (i) the consideration to which the
Optionee would have been entitled pursuant to the terms of the agreement of
merger or consolidation, if immediately prior to such merger or consolidation
the Optionee had been the holder of record of a number of shares of stock of the
Corporation equal to the number of Optioned Shares to which the Option relates,
minus (ii) the Option Price.  The Committee shall have the authority to resolve
any questions regarding the application of the foregoing sentence and its
determination shall be final, binding and conclusive.

    In the event of a liquidation or dissolution of the Corporation pursuant to
which the Committee has not, under Section 2 of the Option Agreement, caused the
Option to vest at least 20 days prior to such liquidation or dissolution, the
Option shall be terminated (whether or not vested) and the Optionee shall
receive (i) the consideration to
<PAGE>

which the Optionee would have been entitled, if immediately prior to the
liquidation or dissolution the Optionee had been the holder of record of a
number of shares of stock of the Corporation equal to the number of Optioned
Shares to which the Option relates, minus (ii) the Option Price. The Committee
shall have the authority to resolve any questions regarding the application of
the foregoing sentence and its determination shall be final, binding and
conclusive.

    (d) Except as hereinbefore expressly provided, the issue by the Corporation
of shares of stock of any class, or securities convertible into or exchangeable
for shares of stock of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of options, rights or
warrants to subscribe therefor, or to purchase the same, or upon conversion of
shares or obligations of the Corporation convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of stock subject to the Option.

    9.  Change in Option Terms.  The Committee may, with the consent of the
        ----------------------
Optionee (or the Beneficiary), modify or change the terms of this Option
Agreement, including the Option Price, in a manner which does not conflict with
the provisions of the Plan; provided that the Option Price as so changed or
modified shall not be less than 100% of the fair market value of the Common
Stock of the Corporation on the date of such modification or change.

    10.  Definition of "Year", "Subsidiary" and "Affiliate".  For all purposes
         --------------------------------------------------
of this Option Agreement:

    (a) A "year" shall be a period of 365 consecutive days (or 366 consecutive
        days if a 29th of February shall fall during such period).  The first
        day of any period shall commence at 12:01 o'clock A.M., Eastern Standard
        Time, on such day, and the last day of such period shall terminate at
        12:00 o'clock midnight.  If the last day of any period shall fall on a
        Saturday, Sunday
<PAGE>

        or legal holiday in the State of New York, such period shall be deemed
        to end on the next business day thereafter.

    (b) A "subsidiary" shall be a corporation as defined in Section 424(f) of
        the Internal Revenue Code.

    (c) An "affiliate" shall be a joint venture, partnership or other entity
        (other than a corporation), 50 percent or more of which is owned
        directly or indirectly by the Corporation.

    11.  Notices.  Any notice given under this Option Agreement shall be in
         -------
writing and shall be deemed given when delivered personally, or when sent by
certified mail, postage prepaid, in the case of the Optionee to his address
hereinabove set forth or such other address as he may designate by notice given
to the Corporation, and in the case of the Corporation, to its Corporate Office
at 1601 Trapelo Road,  Waltham, MA 02154, Attention:  Secretary, or such other
address as may then be applicable by notice given to the Optionee.

    12.  Failure to Enforce not a Waiver.  The failure of the Corporation to
         -------------------------------
enforce at any time any provision of this Option Agreement or the Plan shall in
no way be construed to be a waiver of such provision as to any future event or
of any other provision hereof or of the Plan.

    13.  Governing Law.  This Option Agreement and its interpretation and
         -------------
performance shall be controlled solely by the laws of the State of New York.

    14.  Date of Granting of the Option.  The date of this Option Agreement
         ------------------------------
shall be deemed for all purposes the date of the granting of the Option, unless
and except where the grant is conditioned upon any event, in which case the date
of satisfaction on which such event occurs shall be deemed the date of the
granting of the Option.

    15.  Power of the Committee.  The Committee shall have all the powers
         ----------------------
delegated to it by the provisions of the Plan including, without
<PAGE>

limitation, the power to construe this Option Agreement and the Plan, and the
power to determine whether a termination of the Optionee's employment was for
reasons constituting cause for discharge, and any determinations of the
Committee shall be conclusive.

    16.  Provisions of the Plan.  The Option provided for herein is granted
         ----------------------
pursuant to the Plan, and the Option and this Option Agreement are in all
respects governed by, and subject to all of the terms and provisions of, the
Plan.  Any term used herein shall, unless the context plainly requires
otherwise, have the meaning assigned to it in the Plan.  The Corporation agrees
to maintain a copy of the Plan during the term of this Option Agreement at its
principal office for inspection by the Optionee at any time during normal
business hours.

    IN WITNESS WHEREOF, the Corporation has caused this Option to be signed by
its corporate officer thereunto duly authorized, and the Optionee has signed
this Option Agreement, all as of the date first above written.

                                  KOLLMORGEN CORPORATION

                                  By -------------------------
                                         Vice President

                                     -------------------------
                                         Optionee

                                   S.S. #
                                         ---------------------
<PAGE>

                                          EXHIBIT A
                                          ---------

                               [Sample form of letter to be sent by Optionee
(or Beneficiary)]

                                          [ Date ]

Kollmorgen Corporation
Attention:  Secretary
1601 Trapelo Road
Waltham, MA  02154

             Re:  Exercise of Stock Option

Dear Sirs:

    Pursuant to the terms of the Option Agreement between us dated
                , 19   , in which you have granted me an option to purchase a
----------------    ---
certain number of shares of your Common Stock, of the par value of $2.50 per
share, on certain terms and conditions, I hereby give notice that I elect to
exercise such option to the extent of               shares and that I desire to
                                      -------------
complete this purchase on                   , 19   .  On that date I shall pay
                          ------------------    ---
you the sum of                                               Dollars
               ---------------------------------------------
($           ) in full payment for such shares.  In addition, on that date I
  -----------
shall pay you all applicable federal, state and local taxes, if any, required
under withholding tax rules and regulations.  I request that such shares be
evidenced by            stock certificate(s) in the following denomination(s):
             ----------
                                    .
------------------------------------

                                  Very truly yours,

                                  [name and address]

                                  S.S.#

NOTE:   The above form should be appropriately modified in the case of use by a
        person to whom the rights of a deceased Optionee have passed by will or
        the laws of descent and distribution.<PAGE>

                                                                   EXHIBIT 10(s)

                        2000 ANNUAL INCENTIVE BONUS PLAN

The 2000 Annual Incentive Bonus Plan (the "Plan") for corporate officers, which
is directly linked to the financial performance of the Corporation, is  designed
to provide additional cash and stock compensation when specific financial
performances are achieved or exceeded. The Plan provides awards to individuals
when the Corporation meets its operating plan in terms of primary earnings per
share, cash flow, and critical objectives as follows: 60% of the bonus is
dependent on earnings per share, 20% on cash flow, and 20% on individual
objectives. Bonuses range from 30% of base pay when the plan is met to a cap of
100% of base pay when the plan is exceeded. 80% of the bonus is delivered in the
form of cash compensation and 20% in the form of restricted stock units issued
pursuant to the 1998 Management Stock Incentive Plan.

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