EXHIBIT 10.27
  GRAHAM
    CORPORATION
  ANNUAL
    STOCK-BASED LONG-TERM INCENTIVE AWARD PLAN
 FOR
    SENIOR EXECUTIVES
    Purpose
    
    The purpose of this Annual Stock-Based Long-Term Incentive Award
    Plan for Senior Executives (the Plan) is to motivate
    the senior executive officers of Graham Corporation (the
    Company) to increase shareholder value by providing
    them long-term stock-based awards for above-average Company
    performance.Administration
    
    The Plan will be administered by the Compensation Committee of
    the Board of Directors of the Company (the
    Committee), which shall have final and conclusive
    authority to administer and interpret the Plan.Eligibility
    
    Eligible employees will include the President and Chief
    Executive Officer and such officers direct reports,
    subject to the approval by the Committee of such participation.Award Periods
    
    Annual awards under the Plan will be based on the fiscal year of
    the Company, beginning with its April 1, 2009 through
    March 31, 2010 fiscal year (each, a Fiscal
    Year).Awards
    
    Unless the Committee determines otherwise, annual awards under
    the Plan for the Fiscal Year that commences in 2009 will consist
    of nonqualified stock options (Options) and shares
    of time-vesting restricted stock (Time-Vested Restricted
    Stock), which awards will be issued under the Amended and
    Restated 2000 Graham Corporation Incentive Plan to Increase
    Shareholder Value, or a successor plan thereto (the
    Incentive Plan), and will be subject to the terms
    thereof.Unless the Committee determines otherwise, annual awards under
    the Plan for Fiscal Years that commence in even years (e.g.,
    2010, 2012, 2014, etc.) (each, an Even Fiscal Year)
    will consist of Options and shares of performance-vesting
    restricted stock (Performance-Vested Restricted
    Stock, and together with Time-Vested Restricted Stock,
    Restricted Stock), which awards will be issued under
    the Incentive Plan, and will be subject to the terms thereof.Unless the Committee determines otherwise, annual awards under
    the Plan for Fiscal Years that commence in odd years other than
    2009 (e.g., 2011, 2013, 2015, etc.) (each, an Odd Fiscal
    Year) will consist of Time-Vested Restricted Stock and
    Performance-Vested Restricted Stock, which awards will be issued
    under the Amended and Restated 2000 Graham Corporation Incentive
    Plan to Increase Shareholder Value, or a successor plan thereto
    (the Incentive Plan), and will be subject to the
    terms thereof.Options.Unless the Committee determines otherwise, Options will be
    issued with an exercise price equal to the Fair Market Value (as
    such term is defined by the Incentive Plan) of a share of
    Company common stock on the date of grant, with a term of ten
    years, and




---



##### 



will vest over three years, 33.33% percent per year, beginning
    with the first anniversary of the date of grant.The number of Options to be issued to an eligible employee for a
    Fiscal Year will be determined by multiplying 50 percent
    (or such other percentage as may be determined by the Committee)
    of the eligible employees base salary in effect for the
    Fiscal Year by such employees Target L-T Incentive
    Percentage, and then dividing by the Black Scholes value of such
    a stock option on the date of determination, rounded to the
    nearest whole number.Each employees Target L-T Incentive Percentage is set
    forth on Exhibit A hereto, and for a given Fiscal Year is
    subject to amendment by the Committee prior to the commencement
    of such Fiscal Year.Time-Vested Restricted Stock.Unless the Committee determines otherwise, Time-Vested
    Restricted Stock will vest as follows: 50 percent of the
    shares on the second anniversary of the date of grant and the
    remaining 50 percent on the fourth anniversary of the date
    of grant.The number of shares of Time-Vested Restricted Stock to be
    issued to an eligible employee for a Fiscal Year will be
    determined by multiplying 50 percent (or such other
    percentage as may be determined by the Committee) of the
    eligible employees base salary in effect for the Odd
    Fiscal Year by such employees Target L-T Incentive
    Percentage, and then dividing by the value of a share of stock
    on the date of determination, rounded to the nearest whole
    number.Performance-Vested Restricted Stock.Unless the Committee determines otherwise, Performance-Vested
    Restricted Stock will vest on the third anniversary of the date
    of grant, depending on the satisfaction of the performance goal
    matrixes for the three-year period commencing with the Fiscal
    Year, which matrixes will be determined by the Committee and
    announced prior to the commencement of such Fiscal Year. In
    determining the performance for the three-year period commencing
    with a Fiscal Year, the Committee shall have the discretion to
    include or exclude any extraordinary events that positively or
    negatively affected the Companys financial performance for
    the Fiscal Year.The number of shares of Performance-Vested Restricted Stock to
    be issued to an eligible employee for a Fiscal Year will be
    determined by multiplying 50 percent (or such other
    percentage as may be determined by the Committee) of the
    eligible employees base salary in effect for the Fiscal
    Year by such employees Target L-T Incentive Percentage,
    and then dividing by the value of a share of stock on the date
    of determination, rounded to the nearest whole number.Effect of Certain Events.Notwithstanding any other provision of the Plan, the following
    terms shall apply to all Options and Restricted Stock awarded
    under the Plan:




---



##### 



 Upon the Retirement of an eligible employee, any
    outstanding Option awarded under the Plan will vest in full, and
    all outstanding Options may be exercised by the eligible
    employee at any time prior to their respective ten-year
    expiration dates. For purposes of the Plan,
    Retirement shall mean a voluntary separation from
    service by an eligible employee who is at least age 62 and
    who has been employed by the Company on a full-time basis for
    ten or more years. Upon the date that an employee becomes eligible for
    Retirement, a portion of the employees outstanding
    Restricted Stock awarded under the Plan will 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
    outstanding Restricted Stock awarded under the Plan 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 Stock awarded under the Plan on such date
    that are taxable as a result of the employee becoming eligible
    for Retirement. Upon the Retirement of an eligible employee, any
    outstanding Time-Vested Restricted Stock awarded under the Plan
    will vest in full, and any outstanding Performance-Vesting
    Restricted Stock will vest pro-rata based on the satisfaction of
    the applicable performance goals through the end of the quarter
    immediately preceding the date of Retirement. Upon the death of an eligible employee, any
    outstanding Options and Time-Vested Restricted Stock awarded
    under the Plan will vest in full, and any Options may be
    exercised by the eligible employees designated
    beneficiary, estate or heir, as applicable, within one year from
    the date of the eligible employees death, and any
    outstanding Performance-Vesting Restricted Stock will vest
    pro-rata based on the satisfaction of the applicable performance
    goals through the end of the quarter immediately preceding the
    date of death. Upon the Disability (as such term is defined by the
    Incentive Plan) of an eligible employee, any outstanding Options
    and Time-Vested Restricted Stock awarded under the Plan will
    vest in full, and any Options may be exercised by the eligible
    employee or his legal representative within one year from the
    date of the eligible employees Disability, and any
    outstanding Performance-Vesting Restricted Stock will vest
    pro-rata based on the satisfaction of the applicable performance
    goals through the end of the quarter immediately preceding the
    date of Disability. Except as otherwise provided by the Plan or by the
    Committee, the unvested portion of any Options and Restricted
    Stock awarded under the Plan will terminate upon the termination
    or resignation of an eligible employees employment, and
    any vested Options may be exercised by the eligible employee
    within three months from the date of the eligible
    employees termination.




---



##### 



 Unless the Committee determines otherwise, upon the
    termination of an eligible employee for cause (as such term
    shall be defined by the Committee), the vested and unvested
    portion of all unexercised Options and the unvested portion of
    all Restricted Stock awarded under the Plan will terminate, and
    no such Options will be exercisable thereafter.Payment
    
    Annual awards for a Fiscal Year will be approved by the
    Committee prior to the commencement of the Fiscal Year and will
    be issued as soon as practicable after approval.Section 409A
    
    The Plan, and the Options and Restricted Stock awarded
    thereunder, are intended to qualify for an exemption from
    Section 409A of the Internal Revenue Code of 1986, as
    amended, and the treasury regulations promulgated and other
    official guidance issued thereunder, and shall be administered
    and interpreted consistent with such intention.Amendment & Termination
    
    The Plan may be amended or terminated by the Committee at any
    time. No eligible employee will have any right to an award under
    the Plan until such award is approved by the Committee.Neither the existence of the Plan nor the grant of an award in
    any year shall give an eligible employee any right to an award
    or similar award in future years or any right to continue such
    eligible employees employment relationship with the
    Company. All eligible employees shall remain subject to
    discharge to the same extent as if the Plan were not in effect.




---



##### 



EXHIBIT A
  TARGET
    L-T INCENTIVE PERCENTAGES
  Position


Target L-T Incentive
    %President and Chief Executive Officer



35
%Vice President, Finance and Administration and Chief Financial
    Officer



35
%Vice President of Operations



35
%Chief Accounting Officer



25
%