EXHIBIT 10.3
FORM OF
RESTRICTED STOCK AGREEMENT
(Employee — Under Annual Award Plan)
     This RESTRICTED STOCK AGREEMENT (this “Agreement”) is made and entered into
as of the            day of                     ,           , by and between
Graham Corporation, a corporation organized and existing under the laws of the
State of Delaware and having an office at 20 Florence Avenue, Batavia, New York
14020 (the “Company”) and                                          (the “RSA
Holder”).
W I T N E S S E T H :
     WHEREAS, by action of its Board of Directors (the “Board”), the Company has
adopted the 2000 Graham Corporation Incentive Plan to Increase Shareholder Value
(the “Plan”), pursuant to which Restricted Stock Awards (“RSAs”) with respect to
shares of common stock of the Company (“Shares”) may be granted to the Company’s
eligible officers and employees; and
     WHEREAS, pursuant to Article III of the Plan, a Compensation Committee (the
“Committee”) has been appointed to select the individuals to whom RSAs shall be
granted and to prescribe the terms and conditions of such grants; and
     WHEREAS, the Committee has determined that the RSA Holder is eligible to be
granted an RSA and desires to grant an RSA to the RSA Holder, and the RSA Holder
desires to accept such grant, on the terms and conditions hereinafter set forth;
     NOW, THEREFORE, the Company and the RSA Holder hereby agree as follows:
     Section 1. Grant of RSA. As of the date set forth above, the Company hereby
grants, and the RSA Holder hereby accepts the Company’s grant of, an RSA of
           Shares (the “Restricted Shares”), on the terms and conditions
hereinafter set forth.
     Section 2. Restrictions and Vesting.
          (a) Subject to the terms set forth in this Agreement, provided that
the RSA Holder is still a full-time employee of the Company at that time, the
Restricted Shares will vest on the following dates (each, a “Vesting Date”) as
follows:
[vesting schedule]
          (b) (i) Upon the date that the RSA Holder becomes eligible for
Retirement, a portion of the outstanding Restricted Shares under this Agreement
shall immediately vest in full. Such portion shall be the number of shares with
a Fair Market Value on such date equal to the minimum tax required to be
withheld by the Company on the Fair Market Value of all of the outstanding
Restricted Shares under this Agreement on such date. The Company shall deduct
and apply the shares that so vest to cover the tax withholding on the Fair
Market Value of all outstanding Restricted Shares under this Agreement on such
date that are taxable as a result of the employee becoming eligible for
Retirement. For purposes of this Agreement, “Retirement” shall mean a voluntary
separation from service by the RSA Holder when he or she is at least age 60 and
has been employed by the Company on a full-time basis for ten or more years.

 

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               (ii) Upon the death, Disability or Retirement of the RSA Holder,
all outstanding Restricted Shares under this Agreement shall immediately vest in
full.
          (c) Except as otherwise provided by Section 2(b), or unless the
Committee determines otherwise, if the RSA Holder’s employment terminates before
a Vesting Date for any reason, the unvested Restricted Shares as of such date
shall be forfeited and cancelled immediately.
     Section 3. Rights as a Stockholder. The RSA Holder will have the rights of
a stockholder with respect to the Restricted Shares, including, but not limited
to, the right to receive such cash dividends, if any, as may be declared on such
Shares from time to time and the right to vote (in person or by proxy) such
Restricted Shares at any meeting of stockholders of the Company.
     Section 4. Restrictions on Transfer of Restricted Shares. The Restricted
Shares, and the right to vote the Restricted Shares and to receive dividends
thereon, may not, except as otherwise provided in the Plan, be sold, assigned,
transferred, pledged or encumbered in any way prior to the applicable Vesting
Date, whether by operation of law or otherwise, except by will or the laws of
descent and distribution. The RSA Holder agrees that any certificate
representing the Restricted Shares (or any portion thereof) will be held by the
Company’s stock transfer agent or other representative of the Company (the “RSA
Agent”) until the applicable Vesting Dates are satisfied and the Company’s
provides written authorization to such RSA Agent.
     Section 5. Registration and Delivery of Restricted Shares. The Company’s
obligation to deliver Shares under this Agreement and/or authorize the RSA Agent
to release Restricted Shares shall, if the Committee so requests, be conditioned
upon the receipt of a representation as to the investment intention of the RSA
Holder to whom such Shares are to be delivered, in such form as the Committee
shall determine to be reasonably necessary or advisable to comply with the
provisions of applicable federal, state or local law. It may be provided that
any such representation shall become inoperative upon a registration of the
Shares or upon the occurrence of any other event eliminating the necessity of
such representation. The Company shall not be required to deliver any Shares
under this Agreement prior to (a) the admission of such Shares to listing on any
stock exchange on which Shares may then be listed, or (b) the completion of such
registration or other qualification under any state or federal law, rule or
regulations as the Committee shall determine to be necessary or advisable.
     Section 6. Adjustments in the Event of Reorganization. In the event of any
merger, consolidation, or other business reorganization in which the Company is
the surviving entity, and in the event of any stock split, stock dividend or
other event generally affecting the number of Shares held by each person who is
then a shareholder of record, the number of Restricted Shares shall be adjusted
to account for such event. Such adjustment shall be effected by multiplying such
number of Restricted Shares by an amount equal to the number of Shares that
would be owned after such event by a person who, immediately prior to such
event, was the holder of record of one Share.
     Section 7. No Right to Continued Employment. Nothing in this Agreement nor
any action of the Board or Committee with respect to this Agreement shall be
held or construed to confer upon the RSA Holder any right to a continuation of
employment by the Company or any of its affiliates which employ the RSA Holder.
The RSA Holder may be dismissed or otherwise dealt with as though this Agreement
had not been entered into.
     Section 8. Taxes. Where any person is entitled to receive Shares pursuant
to the RSA granted hereunder, the Employer shall have the right to require such
person to pay to the Employer the amount of any tax which the Employer is
required to withhold with respect to such Shares, or, in

 

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lieu thereof, to retain, or to sell without notice, a sufficient number of
Shares to cover the amount required to be withheld.
     Section 9. No Assignment. The RSA granted hereunder shall not be subject in
any manner to anticipation, alienation or assignment, nor shall such RSA be
liable for or subject to debts, contracts, liabilities, engagements or torts,
nor shall it be transferable by the RSA Holder other than by will or by the laws
of descent and distribution.
     Section 10. Notices. Any communication required or permitted to be given
under the Plan, including any notice, direction, designation, comment,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally or five (5) days
after mailing if mailed, postage prepaid, by registered or certified mail,
return receipt requested, addressed to such party at the address listed below,
or at such other address as one such party may by written notice specify to the
other party:
           (a) If to the Committee:
Graham Corporation
20 Florence Avenue
Batavia, New York 14020
Attention: Chief Accounting Officer
           (b) If to the RSA Holder, to the RSA Holder’s then current
residential address as set forth in the Company’s personnel records.
     Section 11. Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon the Company and the RSA Holder and their
respective heirs, successors and assigns.
     Section 12. Construction of Language. Whenever appropriate in the
Agreement, words used in the singular may be read in the plural, words used in
the plural may be read in the singular, and words importing the masculine gender
may be read as referring equally to the feminine or the neuter. Any reference to
a section shall be a reference to a section of this Agreement, unless the
context clearly indicates otherwise. Capitalized terms not specifically defined
herein shall have the meanings assigned to them under the Plan.
     Section 13. Governing Law. This Agreement shall be construed, administered
and enforced according to the laws of the State of New York without giving
effect to the conflict of laws principles thereof, except to the extent that
such laws are preempted by the federal law.
     Section 14. Amendment. This Agreement may be amended, in whole or in part
and in any manner not inconsistent with the provisions of the Plan, at any time
and from time to time by written agreement between the Company and the RSA
Holder.
     Section 15. Plan Provisions Control. This Agreement and the rights and
obligations created hereunder shall be subject to all of the terms and
conditions of the Plan. In the event of any conflict between the provisions of
the Plan and the provisions of this Agreement, the terms of the Plan, which are
incorporated herein by reference, shall control. By signing this Agreement, the
RSA Holder acknowledges receipt of a copy of the Plan.
     Section 16. Acceptance by RSA Holder. By executing this Agreement and
returning a fully executed copy hereof to the Committee at the address specified
in section 10, the RSA Holder

 

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signifies his acceptance of the terms and conditions of this RSA. If a fully
executed copy of this Agreement is not received by the Committee within
forty-five (45) days after the date when it is presented to the RSA Holder, the
Committee may revoke the RSA granted, and thereby avoid all obligations,
hereunder.
     IN WITNESS WHEREOF, the RSA Holder has executed, and the Company has caused
its duly authorized representative to execute, this Agreement as of the date
first above written.

             
 
      GRAHAM CORPORATION    
 
           
 
  By:        
 
           
 
      James R. Lines    
 
      President and Chief Executive Officer    

ATTEST:

     
 
 
   
Assistant Secretary
   

                  [SEAL]       RSA HOLDER    
 
                               
 
      Name: