Document:

EXHIBIT 10.2

 

BRIGGS & STRATTON CORPORATION AND SUBSIDIARIES

 

2005 Annual Report on Form 10-K

 

AMENDED AND RESTATED ECONOMIC VALUE ADDED

INCENTIVE COMPENSATION PLAN

 

 

As Amended and Restated

Effective 8-9-05

 

BRIGGS & STRATTON CORPORATION

 

ECONOMIC VALUE ADDED

INCENTIVE COMPENSATION PLAN

 

 

 

As adopted by the Compensation Committee on April 20, 2004 and
amended on August 9, 2005

 

2

 

BRIGGS & STRATTON CORPORATION

ECONOMIC VALUE ADDED INCENTIVE COMPENSATION PLAN

 

I.      Plan
Objectives

 

A.    To promote the
maximization of shareholder value over the long term by providing incentive
compensation to key employees of Briggs & Stratton Corporation (the “Company”)
in a form which is designed to financially reward participants for an increase
in the value of the Company to its shareholders.

 

B.    To provide
competitive levels of compensation to enable the Company to attract and retain
employees who are able to exert a significant impact on the value of the
Company to its shareholders.

 

C.    To encourage
teamwork and cooperation in the achievement of Company goals.

 

D.    To recognize
differences in the performance of individual participants.

 

II.    Plan
Administration

 

The
Compensation Committee of the Board of Directors (the “Committee”) shall be
responsible for the design, administration, and interpretation of the Plan.

 

III.   Definitions

 

A.    “Accrued Bonus”
means the bonus, which may be negative or positive, which is calculated in the
manner set forth in Section V.A.

 

B.    “Actual EVA”
means the EVA as calculated for the relevant Plan Year.

 

C.    “Base Salary”
means the amount of a Participant’s base compensation earned during the Plan
Year without adjustment for bonuses, salary deferrals, value of benefits,
imputed income, special payments, amounts contributed to a savings plan or
similar items.

 

D.    “Capital”
means the Company’s weighted average monthly operating capital for the Plan
Year, calculated as follows:

 

	
   

  	
   

  	
  Current Assets

  
	
  -

  	
   

  	
  Non-operating
  Investments

  
	
  +

  	
   

  	
  Bad Debt Reserve

  
	
  +

  	
   

  	
  LIFO Reserve

  
	
  -

  	
   

  	
  Deferred Tax Liabilities or Assets

  Classified as Current Assets

  
	
  -

  	
   

  	
  Current
  Noninterest-Bearing Liabilities

  
	
  +

  	
   

  	
  Warranty Reserve

  
	
  +

  	
   

  	
  Environmental
  Reserve

  
	
  +

  	
   

  	
  Property, Plant,
  Equipment, Net

  
	
  -

  	
   

  	
  Construction in
  Progress

  
	
  +

  	
   

  	
  Other Assets
  (not including prepaid Pension Costs)

  
	
  (+/-)

  	
   

  	
  Unusual Capital
  Items

  

 

E.     “Capital
Charge” means the deemed opportunity cost of employing Capital in the
Company’s businesses, determined as follows:

 

Capital Charge = Capital X Cost of Capital

 

1

 

F.     Cost of
Capital” means the weighted average of the cost of equity and the after tax
cost of debt for the relevant Plan Year on a market value basis.  The Cost of Capital will be determined (to
the nearest tenth of a percent) by the Committee prior to each Plan Year,
consistent with the following methodology:

 

a)     Cost of Equity =
Risk Free Rate + (Business Risk Index X Average Equity Risk Premium)

 

b)    Debt Cost of
Capital = Debt Yield X (1 - Tax Rate)

 

c)     The weighted average
of the Cost of Equity and the Debt Cost of Capital is determined by reference
to the actual debt-to-capital ratio

 

where
the Risk Free Rate is the average daily closing yield rate on 10 year U.S.
Treasury Bonds for the month of March immediately preceding the relevant
Plan Year, the Business Risk Index is determined by using an average of the Beta available in the four (4) most
recent Value Line reports on the Company. 
The Average Equity Risk Premium is 6%, the Debt Yield is the weighted
average yield of all borrowing included in the Company’s permanent capital, and
the tax rate is the combination of the relevant federal and state income tax
rates.

 

G.    “Designated
Key Contributor” means those Participants named by the Chief Executive
Officer as a Designated Key Contributor under the Plan.

 

H.    “Divisional
EVA Performance Factor” means an Individual Performance Factor calculated
in the same manner as the Company Performance Factor as set forth in Section VI.A.,
except that EVA, Actual EVA, Target EVA, EVA Leverage Factor, NOPAT, Capital,
Capital Charge and other relevant terms shall be defined by reference to the
particular operating division, service division or sales group, not by
reference to the entire Company.

 

I.      “Economic
Value Added” or “EVA” means the NOPAT that remains after subtracting
capital Charge, expressed as follows:

 

	
  NOPAT

  	
   

  	
   

  
	
  Less:

  	
   

  	
  Capital Charge

  
	
  Equals:

  	
   

  	
  EVA

  

 

EVA
may be positive or negative.

 

J.     “EVA Leverage
Factor” means the expected deviation in EVA from the average EVA, generally
reflected as a percentage of capital employed. 
For purposes of this Plan, the Company’s EVA Leverage Factor is
determined to be $27 million.

 

K.    “NOPAT”
means cash adjusted net operating profits after taxes for the Plan Year,
calculated as follows:

 

	
   

  	
   

  	
  Pretax Income

  
	
  +

  	
   

  	
  Interest Expense

  
	
  -

  	
   

  	
  Normal Pension
  Costs

  
	
  +/-

  	
   

  	
  Pension
  Income/Expense

  
	
  +/-

  	
   

  	
  Change in LIFO
  Reserve

  
	
  +/-

  	
   

  	
  Change in Bad
  Debt Reserve

  
	
  +/-

  	
   

  	
  Change in Post
  Retire Health Care Reserve

  
	
  +/-

  	
   

  	
  Change in
  Warranty Reserve

  
	
  +/-

  	
   

  	
  Other Income &
  Expense on Non-Operating Investments

  
	
  +/-

  	
   

  	
  Unusual Charges

  
	
  +/-

  	
   

  	
  Amortization of
  Unusual Income or Expense Items

  
	
  -

  	
   

  	
  Cash Taxes on
  the above (+/-changes in Deferred Taxes)

  

 

L.     “Plan Year”
means the one year period coincident with the Company’s fiscal year.

 

M.   “Senior
Executives” means those Participants designated as Senior Executives by the
Committee with respect to any Plan Year.

 

2

 

N.    “Target EVA”
means the target level of EVA for the Plan Year, determined as follows:

 

	
   

  	
   

  	
  Prior Year

  	
   

  	
  Prior Year

  	
   

  
	
  Target EVA

  	
  =

  	
  Target EVA

  	
  +

  	
  Actual EVA

  	
   

  
	
   

  	
   

  	
   

  	
  2

  	
   

  	
   

  

 

IV.   Eligibility

 

A.    Eligible
Positions.  In general, all Company
Officers, Division General Managers, and members of the corporate operations
group, and certain direct reports of such individuals may be eligible for
participation in the Plan.  However,
actual participation will depend upon the contribution and impact each eligible
employee may have on the Company’s value to its shareholders, as determined by
the Chief Executive Officer of the Company, and approved by the Committee.

 

B.    Nomination and
Approval.  Each Plan year, the Chief
Executive Officer of the Company will nominate eligible employees of the
Company and its subsidiaries and affiliates to participate in the Plan for the
next Plan Year.  The Committee will have
the final authority to select Plan participants (the “Participants”) among the
eligible employees nominated by the Chief Executive Officer of the
Company.  Continued participation in the
Plan is contingent on approval of the Committee.  Selection normally will take place, and will
be communicated to each Participant, prior to the beginning of the pertinent
Plan Year.

 

V.    Individual
Participation Levels

 

A.    Calculation of
Accrued Bonus.  Each Participant’s
Accrued Bonus will be determined as a function of the Participant’s Base
Salary, the Participant’s Target Incentive Award (provided in paragraph V.B.,
below), Company Performance Factor (provided in Section VI.A.) and the
Individual Performance Factor (provided in Section VI.B.) for the Plan
Year.  Each Participant’s Accrued Bonus
will be calculated as follows:

 

	
   

  	
   

  	
   

  	
  Target

  	
   

  	
  Company

  	
   

  	
   

  	
   

  	
   

  	
  Target

  	
   

  	
  Individual

  
	
  30%

  	
  Participant’s

  	
    x

  	
  Incentive

  	
    x

  	
  Performance

  	
  +

  	
  70%

  	
  Participant’s

  	
    x

  	
  Incentive

  	
    x

  	
  Performance

  
	
   

  	
  Base Salary

  	
   

  	
  Award

  	
   

  	
  Factor

  	
   

  	
   

  	
  Base Salary

  	
   

  	
  Award

  	
   

  	
  Factor

  

 

In no case may the Accrued Bonus exceed three times
the Target Incentive Award or be less than negative one times the Target
Incentive Award.

 

B.    Target
Incentive Awards.  The Target
Incentive Awards will be determined according to the following schedule:

 

	
   

  	
   

  	
  Target Incentive Award

  	
   

  
	
  Executive Position

  	
   

  	
  (% of Base Salary)

  	
   

  
	
  Chief Executive
  Officer

  	
   

  	
  100

  	
  %

  
	
  Chief Operating
  Officer

  	
   

  	
  80

  	
  %

  
	
  Executive Vice
  President & Senior Vice President

  	
   

  	
  60

  	
  %

  
	
  Other Elected
  Officers

  	
   

  	
  40

  	
  %

  
	
  Division General
  Manager

  	
   

  	
  40

  	
  %

  
	
  Designated Key
  Contributors

  	
   

  	
  25

  	
  %

  
	
  All Others

  	
   

  	
  20

  	
  %

  

 

VI.   Performance
Factors

 

A.    Company
Performance Factor Calculation.  For
any Plan Year, the Company Performance Factor will be calculated as follows:

 

3

 

	
  Company
  Performance Factor =

  	
  1.00

  	
   +

  	
  Actual
  EVA - Target EVA

  
	
   

  	
   

  	
   

  	
  EVA Leverage Factor

  

 

B.    Individual
Performance Factor Calculation. 
Determination of the Individual Performance Factor will be the responsibility
of the individual to whom the participant reports.  This determination will be subject to
approval by the Committee and should be in conformance with the process set
forth below:

 

(1)   Quantifiable
Supporting Performance Factors.  The
Individual Performance Factor of the Accrued Bonus calculation will be based on
the accomplishment of individual, financial and/or other goals (“Supporting
Performance Factors”).  Whenever
possible, individual performance will be evaluated according to quantifiable
benchmarks of success.  These Supporting
Performance Factors will represent an achievement percentage continuum that
ranges from 50% to 150% of the individual target award opportunity, and will be
enumerated from .5 to 1.5 based on such continuum. Provided, however, that if
the Quantifiable Supporting Performance Factor is based on divisional EVA and
is calculated in the same manner as the Company Performance Factor as set forth
in Section VI.A. with respect to such division (such Supporting
Performance Factor referred to herein as a Divisional EVA Performance Factor),
then the Supporting Performance Factor may be unlimited, if so approved by the
Committee.  A Quantifiable Supporting
Performance Factor may also be unlimited if the Quantifiable Supporting
Performance Factor as approved by the Committee for such individual is the same
as the Company Performance Factor determined in accordance with Section VI.A.

 

(2)   Non-Quantifiable
Supporting Performance Factors.  When
performance cannot be measured according to a quantifiable monitoring system,
an assessment of the Participant’s overall performance may be made based on a
Non-Quantifiable Supporting Performance Factor (or Factors).  The person to whom the Participant reports
will evaluate the Participant’s performance, and this evaluation will determine
the Participant’s Supporting Performance Factor (or Factors) according to the
following schedule:

 

	
  Individual

  	
   

  	
  Supporting

  	
   

  
	
  Performance Rating

  	
   

  	
  Performance Factor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Outstanding

  	
   

  	
  1.3 - 1.5

  	
   

  
	
  Excellent

  	
   

  	
  1.1 - 1.3

  	
   

  
	
  Good

  	
   

  	
  .9 - 1.1

  	
   

  
	
  Satisfactory

  	
   

  	
  .5 -.9

  	
   

  
	
  Unsatisfactory

  	
   

  	
  0

  	
   

  

 

(3)   Aggregate
Individual Performance Factor.  The
Individual Performance Factor to be used in the calculation of the Accrued
Bonus shall be equal to the average (or weighted average) of one or more
Quantifiable and/or Non-Quantifiable Supporting Performance Factors according
to relative importance, except that the Non-Quantifiable Supporting Performance
Factor shall account for no more than 15% of the Accrued Bonus.

 

VII.  Change in Status During the Plan Year

 

A.    New Hire,
Transfer, Promotion, Demotion

 

A
newly hired employee or an employee transferred, promoted, or demoted during
the Plan Year to a position qualifying for participation (or leaving the
participating class) may accrue (subject to discretion of the Committee) a pro
rata Accrued Bonus based on the percentage of the Plan Year (actual weeks/full
year times a full year award amount for that position) the employee is in each
participating position.

 

B.    Discharge

 

An
employee discharged during the Plan Year shall not be eligible for an Accrued
Bonus, even though his or her service arrangement or contract extends past
year-end, unless the Committee determines that the conditions of the
termination indicate that a prorated Accrued Bonus is appropriate.  The Committee shall have full and final
authority in making such a determination.

 

4

 

C.    Resignation

 

An
employee who resigns during the Plan Year to accept employment elsewhere
(including self-employment) will not be eligible for an Accrued Bonus.

 

D.    Death,
Disability, Retirement

 

If a
Participant’s employment is terminated during a Plan Year by reason of death,
disability, or normal or early retirement under the Company’s retirement plan, a
tentative Accrued Bonus will be calculated as if the Participant had remained
employed as of the end of the Plan Year. 
The final Accrued Bonus will be calculated by multiplying the tentative
Accrued Bonus by a proration factor.  The
proration factor will be equal to the number of full weeks of employment during
the Plan Year divided by fifty-two.  For
purposes of this section, the date a participant is deemed to be terminated
pursuant to disability shall be the date the employee begins receiving a monthly
Long Term Disability Benefit under the Company’s Group Insurance Plan.

 

Each
employee may name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under this Plan is to be paid
in case of the employee’s death.

 

Each
such designation shall revoke all prior designations by the employee, shall be
in the form prescribed by the Committee, and shall be effective only when filed
by the employee in writing with the Committee during his or her lifetime.

 

In the
absence of any such designation, benefits remaining unpaid at the employee’s
death shall be paid to the employee’s estate.

 

E.     Leave of
Absence

 

An
employee whose status as an active employee is changed during a Plan Year as a
result of a leave of absence may, at the discretion of the Committee, be
eligible for a pro rata Accrued Bonus determined in the same way as in
paragraph D. of this Section.

 

VIII.        Bonus
Paid and Bonus Bank

 

All or
a portion of the Accrued Bonus will be either paid to the Participant or credited
to or charged against the Bonus Bank as provided in this Article.

 

A.    Participants
Who Are Not Senior Executives.  All
positive Accrued Bonuses of Participants who are not Senior Executives for the
Plan Year shall be paid in cash, less amounts required by law to be withheld
for income and employment tax purposes, on or before the end of the second
month following the end of the Plan Year in which the Accrued Bonus was
earned.  Participants who are not Senior
Executives shall not be charged or otherwise assessed for negative Accrued
Bonuses nor shall such Participants have any portion of their Accrued Bonuses
banked.

 

B.    Participants
Who Are Senior Executives.  The Total
Bonus Payout to Participants who are Senior Executives for the Plan Year shall
be as follows:

 

	
   

  	
   

  	
  Accrued
  Bonus

  
	
  Less:

  	
   

  	
  Extraordinary
  Bonus Accrual

  
	
  Plus:

  	
   

  	
  Bank
  Payout

  
	
  Equals:

  	
   

  	
  Total
  Bonus Payout

  

 

The
Total Bonus Payout for each Plan Year, less amounts required by law to be
withheld for income tax and employment tax purposes, shall be paid on or before
the end of the second month following the end of the Plan Year in which it was
earned.

 

5

 

C.    Establishment
of a Bonus Bank.  To encourage a long
term commitment to the enhancement of shareholder value by Senior Executives, “Extraordinary
Bonus Accruals” shall be credited to an “at risk” deferred account (“Bonus Bank”)
for each such Participant, and all negative Accrued Bonuses shall be charged
against the Bonus Bank, as determined in accordance with the following:

 

1.     “Bonus Bank”
means, with respect to each Senior Executive, a bookkeeping record of an
account to which Extraordinary Bonus Accruals are credited, and negative
Accrued Bonuses debited as the case may be, for each Plan Year, and from which
bonus payments to such Senior Executive are debited.

 

2.     “Bank Balance”
means, with respect to each Senior Executive, a bookkeeping record of the net
balance of the amounts credited to and debited against such Senior Executive’s
Bonus Bank.  The Bank Balance shall
initially be equal to zero.

 

3.     “Extraordinary
Bonus Accrual” shall mean the amount of the Accrued Bonus for any year that
exceeds the Senior Executive’s Target Incentive Award.

 

4.     Annual
Allocation.  Each Senior Executive’s
Extraordinary Bonus Accrual or negative Accrued Bonus is credited or debited to
the Bonus Bank maintained for that Senior Executive.  Such Annual Allocation will occur as soon as
possible after the conclusion of each Plan Year.  Although a Bonus Bank may as a result of
negative Accrual Bonuses have a deficit, no Senior Executive shall be required,
at any time, to reimburse his/her Bonus Bank for such deficit other than by
crediting an Extraordinary Bonus Accrual to a deficit balance.

 

5.     “Available
Balance” means that the Bank Balance at the point in time immediately after
the Annual Allocation has been made.

 

6.     “Payout
Percentage” means the percentage of the Available Balance that may be paid
out in cash to the Participant.  The
Payout Percentage will equal 33%.

 

7.     “Bank Payout”
means the amount of the Available Balance that may be paid out in cash to the
Senior Executive for each Plan Year.  The
Bank Payout is calculated as follows:

 

Bank Payout  
=  Available Balance  X 
Payout Percentage

 

The Bank Payout is subtracted from the Bank Balance.

 

8.     Treatment of
Available Balance Upon Termination

 

a)     Resignation
or Termination With Cause.  Senior
Executives leaving voluntarily to accept employment elsewhere (including
self-employment) or who are terminated with cause will forfeit their Available
Balance.

 

b)    Retirement,
Death, Disability or Termination Without Cause.  In the event of a Senior Executive’s normal
or early retirement under the Company’s retirement plan, death, disability, or
termination without cause, the Available Balance, less amounts required by law
to be withheld for income tax and employment tax purposes, shall be paid to the
Senior Executive on or before the end of the second month following the end of
the Plan Year in which the termination for one of such events occurred.

 

c)     For purposes of
this Plan “cause” shall mean:

 

(i)    any act or acts
of the Participant constituting a felony under the laws of the United States,
any state thereof or any foreign jurisdiction;

 

(ii)   any material
breach by the Participant of any employment agreement with the Company or the
policies of the Company or the willful and persistent (after written notice to
the Participant) failure or refusal of the Participant to comply with any
lawful directives of the Board;

 

6

 

(iii)  a
course of conduct amounting to gross neglect, willful misconduct or dishonesty;
or

 

(iv)  any
misappropriation of material property of the Company by the Participant or any
misappropriation of a corporate or business opportunity of the Company by the
Participant.

 

IX.   Administrative
Provisions

 

A.    Amendments.  The Board of Directors of the Company shall
have the right to modify or amend this Plan from time to time, or suspend it or
terminate it entirely; provided that no such modification, amendment,
suspension, or termination may, without the consent of any affected
participants (or beneficiaries of such participants in the event of death),
reduce the rights of any such participants (or beneficiaries, as applicable) to
a payment or distribution already earned under Plan terms in effect prior to
such change.

 

B.    Interpretation
of Plan.  Any decision of the
Committee with respect to any issues concerning individual selected for awards,
the amount, terms, form and time of payment of awards, and interpretation of
any Plan guideline, definition, or requirement shall be final and binding.

 

C.    Effect of
Award on Other Employee Benefits.  By
acceptance of a bonus award, each recipient agrees that such award is special additional
compensation and that it will not affect any employee benefit, e.g., life
insurance, etc., in which the recipient participates, except as provided in
paragraph D. below.

 

D.    Retirement
Programs.  Awards made under this
Plan shall be included in the employee’s compensation for purposes of the
Company Retirement Plans and Savings Plan.

 

E.     Right to
Continued Employment; Additional Awards. 
The receipt of a bonus award shall not give the recipient any right to
continued employment, and the right and power to dismiss any employee is
specifically reserved to the Company.  In
addition, the receipt of a bonus award with respect to any Plan Year shall not
entitle the recipient to an award with respect to any subsequent Plan Year.

 

F.     Adjustments
to Performance Goals.  When a
performance goal is based on Economic Value Added or other quantifiable
financial or accounting measure, it may be necessary to exclude significant
nonbudgeted or noncontrollable capital investments or gains or losses from
actual financial results in order to properly measure performance.  The Committee will decide those items that
shall be considered in adjusting actual results.  For example, some types of items that may be
considered for exclusion are:

 

(1)   Any gains or
losses which will be treated as extraordinary in the Company’s financial
statements.

 

(2)   Profits or losses
of any entities acquired by the Company during the Plan Year, assuming they
were not included in the budget and/or the goal.

 

(3)   Material gains or
losses not in the budget and/or the goal which are of a nonrecurring nature and
are not considered to be in the ordinary course of business.  Some of these would be as follows:

 

(a)   Gains or losses
from the sale or disposal of real estate or property.

 

(b)   Gains resulting
from insurance recoveries when such gains relate to claims filed in prior
years.

 

(c)   Losses resulting
from natural catastrophes, when the cause of the catastrophe is beyond the
control of the Company and did not result from any failure or negligence on the
Company’s part.

 

(4)   Capital incurred
for a major acquisition for a reasonable period following such acquisition.

 

G.    Vesting.  All amounts due but unpaid to any Participant
under this plan shall vest, subject to the terms of this EVA Plan, upon actual
termination of employment of the Participant.

 

7

 

X.    Miscellaneous

 

A.    Indemnification.  Each person who is or who shall have been a
member of the Committee or of the Board, or who is or shall have been an employee
of the Company, shall not be liable for, and shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with any claim,
action, suit, or proceeding to which he or she may be a party by reason of any
action taken or failure to act under this Plan. 
The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under the
Company’s Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.

 

B.    Expenses of
the Plan.  The expenses of
administering this Plan shall be borne by the Company.

 

C.    Withholding
Taxes.  The Company shall have the
right to deduct from all payments under this Plan any Federal or state taxes
required by law to be withheld with respect to such payments.

 

D.    Governing Law.  This Plan shall be construed in accordance
with and governed by the laws of the State of Wisconsin.

 

8EXHIBIT 10.6(a)

 

BRIGGS & STRATTON
CORPORATION AND SUBSIDIARIES

 

2005 Annual Report on Form 10-K

 

FORM OF STOCK OPTION
AGREEMENT UNDER THE

PREMIUM OPTION AND STOCK AWARD
PROGRAM

 

 

[Date]

 

[Name]

 

You have been awarded a
stock option, restricted stock and/or deferred stock under the Briggs &
Stratton Corporation Premium Option and Stock Award Program (“Program”) as
follows:

 

	
  Stock Option:

  	
   

  	
   

  
	
  Type of
  Option:

  	
   

  	
  Premium Stock Option

  
	
  Date of
  Grant:

  	
   

  	
  [Date]

  
	
  Exercise
  Price:

  	
   

  	
  $[110% of Fair Market Value on grant date]

  
	
  Number of Shares:

  	
   

  	
  [Number] shares - Incentive stock option under IRC
  Sec. 422

  
	
   

  	
   

  	
  [Number] shares - Non-qualified stock
  options

  
	
  Exercise
  Period:

  	
   

  	
  [Date] to [Date]

  
	
   

  	
   

  	
   

  
	
  Restricted Stock:

  	
   

  	
   

  
	
  Date of
  Grant:

  	
   

  	
  [Date]

  
	
  Number of
  Shares:

  	
   

  	
   

  
	
  Vesting
  Date:

  	
   

  	
  [Date]

  
	
   

  	
   

  	
   

  
	
  Deferred Stock:

  	
   

  	
   

  
	
  Date of
  Grant

  	
   

  	
  [Date]

  
	
  Number of
  Shares:

  	
   

  	
   

  
	
  Vesting
  Date:

  	
   

  	
  [Date]

  

 

These stock awards are subject to the terms
and conditions of the Program.  In
addition, stock options are subject to the Stock Option Agreement, restricted
stock is subject to the Restricted Stock Award Agreement, and deferred stock is
subject to the Deferred Stock Award Agreement.

 

Please acknowledge your
acceptance of the terms of these awards by signing two copies of each of the
attached agreements and returning one signed copy of each to the company’s
Secretary.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BRIGGS & STRATTON CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  John S. Shiely

  
	
   

  	
   

  	
  Chairman, President and

  
	
   

  	
   

  	
  Chief Executive Officer

  
					

 

2

 

BRIGGS & STRATTON
CORPORATION

INCENTIVE COMPENSATION PLAN

STOCK
OPTION AGREEMENT

 

	
  Optionee:

  	
   

  	
  [Name]

  
	
  No. of Shares:

  	
   

  	
  [Number]

  
	
  Date of Grant:

  	
   

  	
  [Date]

  
	
  Expiration Date:

  	
   

  	
  [Date]

  
	
  Exercise Price:

  	
   

  	
  $[110% of Fair Market Value on grant date]

  

 

BRIGGS & STRATTON
CORPORATION (the “Company”), a Wisconsin corporation, hereby grants to the
above-named employee (the “Optionee”) under The Briggs & Stratton
Corporation Stock Incentive Plan as amended and restated in the Incentive
Compensation Plan (the “Plan”) a stock option to purchase from the Company
during the period commencing (except as otherwise provided herein) on [Date]
and ending (except as otherwise provided herein) on the expiration date set
forth above (the “option term”) up to but not exceeding in the aggregate the
number of shares set forth above of the Common Stock, $0.01 par value, of the
Company (“Common Stock”) at the price per share set forth above, all in
accordance with and subject to the following terms and conditions:

 

1.                                       No shares
subject to this option may be purchased before [Date].  On such date and from time to time
thereafter, the shares subject to this option may be purchased during the
option term.  If the Optionee’s
employment is terminated for any reason prior to [Date], then, unless otherwise
determined by (or pursuant to authority granted by) the Compensation Committee
(the “Committee”) of the Board of Directors of the Company, this option shall
not be exercisable.

 

2.                                       If the effective
date of retirement of the Optionee is before [Date], the Optionee may make
application (at least one month prior to retirement) to the Committee for this
option to become exercisable on such effective date.  Such application may be denied or granted in
whole or in part.

 

3

 

The following additional provisions shall
apply with respect to the exercise of the option following termination of
employment:  (i) In the event that
the Optionee’s employment shall be terminated by reason of death before the
option is exercisable, the option may thereafter be exercised for a period of
one year from the date of death.  (ii) In
the event that the Optionee’s employment shall be terminated by reason of
Disability or Retirement, no shares may be purchased after a period of three
years from the date of termination of employment; provided, however, that if
the Optionee’s employment is terminated by reason of Disability or Retirement
and if the Optionee dies within three years of such termination of employment,
this option shall continue to be exercisable for a period of 12 months from the
date of death of the Optionee.  (iii) In
the event that an Optionee’s employment is terminated for any other reason, no
shares may be purchased after the date of termination of employment; except that
the option, to the extent then exercisable, may be exercised for the balance of
the option term.  However, nothing in
(i), (ii) or (iii) above shall permit the purchase of any shares
after the expiration date set forth above. 
The Optionee’s employment shall be deemed to be terminated when he or
she is no longer employed by (i) the Company, a subsidiary or an affiliate
thereof, or (ii) a corporation, or a parent or subsidiary thereof,
substituting a new option for the option granted by this Agreement (or assuming
the option granted by this Agreement) by reason of a merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation.  Leaves of absence shall not
constitute termination of employment.

 

Notwithstanding anything in the foregoing to
the contrary, to the extent permitted under Section 422 of the Code, if
the Optionee’s employment is terminated by reason of death, Disability or
Retirement and the portion of this option that is otherwise exercisable during
the post-termination period as provided above and as specified under Sections
5(f), (g) or (h) of the Plan, applied without regard to Section 5(j)
of the Plan, is greater than the portion that is exercisable as an incentive
stock option during such post-termination period under Section 422, such
post-termination period shall automatically be extended (but not beyond the
original option term) to the extent necessary to permit the Optionee to
exercise this option either as an incentive stock option or, if exercised after
the expiration periods that apply for purposes of Section 422, as a
non-qualified stock option.

 

4

 

3.                                       Exercise of this
option shall occur on the date (the “Date of Exercise”) the Company receives at
its principal executive offices (i) a written notice (the “Notice of
Exercise”) specifying the number of shares to be purchased, and (ii) payment
by certified check, cashier’s check or confirmation of a wire transfer for the
purchase price for such shares.  In lieu
of such payment by certified check, cashier’s check or wire transfer, the
Optionee may tender to the Company (i) outstanding shares of Common Stock,
having a Fair Market Value, determined on the Date of Exercise, equal to the
purchase price for the number of shares being purchased, or (ii) a
combination of shares of outstanding Common Stock, as described above, so
valued and payment as aforesaid which equals said purchase price, together, in
each case, with payment of any applicable stock transfer tax.  If the Fair Market Value, as so determined,
of the shares tendered to the Company shall exceed the purchase price
applicable to the number of shares being purchased, an appropriate cash
adjustment will be made by the Company for any fractional share remaining.  The Company will not deliver shares of Common
Stock being purchased upon any exercise of this option unless it has received
an acceptable form of payment for all applicable withholding taxes or
arrangements satisfactory to the Company for the payment thereof have been
made. Withholding taxes may be paid with outstanding shares of Common Stock
(including Common Stock delivered upon exercise of this option), such Common
Stock being valued at Fair Market Value on Date of Exercise. The Optionee shall
have no rights as a stockholder with respect to any shares covered by this
option until the date of the issuance of a stock certificate for such shares.

 

4.                                       This option is
not transferable by the Optionee otherwise than by will or the laws of descent
and distribution and is exercisable during the Optionee’s lifetime only by the
Optionee or by the guardian or legal representative of the Optionee.

 

5.                                       The terms and
provisions of this Agreement (including, without limiting the generality of the
foregoing, terms and provisions relating to the option price and the number and
class of shares subject to this option) shall be subject to appropriate
adjustment in the event of any recapitalization, merger, consolidation,
disposition of property or stock, separation, reorganization, stock dividend,
issuance of rights, combination or split-up or exchange of shares, or the like.

 

6.                                       Whenever the
word “Optionee” is used herein under circumstances such that the provision
should logically be construed to apply to the executors, the administrators, or
the person or

 

5

 

persons to whom this option may be transferred by will or by the laws
of descent and distribution, it shall be deemed to include such person or
persons.

 

7.                                       The terms and
provisions of the Plan (a copy of which will be furnished to the Optionee upon
written request to the Briggs & Stratton Corporation, 12301 West Wirth
Street, Wauwatosa, Wisconsin 53222) are incorporated herein by reference.  To the extent any provision of this Agreement
is inconsistent or in conflict with any term or provision of the Plan, the Plan
shall govern.  Capitalized terms not
otherwise defined herein have the meaning set forth in the Plan.

 

IN WITNESS WHEREOF, this Incentive Stock
Option Agreement has been duly executed as of [Date].

 

 

	
   

  	
  BRIGGS & STRATTON CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  John S. Shiely

  
	
   

  	
   

  	
  Chairman, President and

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Optionee Name]

  
					

 

6

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