Exhibit
10.3


 


RESTRICTED STOCK UNIT AGREEMENT


 


UNDER THE
MAC-GRAY CORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN


 


Name
of Grantee:


No. of
Restricted Stock Units Granted:


Grant
Date:


Final
Acceptance Date:


 


Pursuant to the Mac-Gray Corporation 2005 Stock Option
and Incentive Plan (the “Plan”) as amended through the date hereof, Mac-Gray
Corporation (the “Company”) hereby grants a deferred stock award consisting of
the number of Restricted Stock Units listed above (an “Award”) to the Grantee
named above.  Each Restricted Stock Unit
shall relate to one share of Common Stock, par value $0.01 per share (the “Stock”)
of the Company specified above, subject to the restrictions and conditions set
forth herein and in the Plan.


 


1.                                       Acceptance of Award.  The Grantee shall
have no rights with respect to this Award unless he or she shall have accepted
this Award prior to the close of business on the Final Acceptance Date
specified above by signing and delivering to the Company a copy of this Award
Agreement.  Any consideration due to the
Company on the issuance of the Award has been deemed to be satisfied by past
services rendered by the Grantee to the Company.


 


2.                                       Restrictions on Transfer of Award.


 


(a)                                  The Award may not be sold, transferred,
pledged, assigned or otherwise encumbered or disposed of by the Grantee until (i) the
Restricted Stock Units have vested as provided in Section 3 of this
Agreement and (ii) shares of Stock have been issued to the Grantee.


 


(b)                                 If the Grantee’s employment with the
Company and its Subsidiaries is voluntarily or involuntarily terminated for any
reason prior to the satisfaction of the vesting conditions set forth in Section 3
below, any Restricted Shares that have not vested as of such date shall
automatically and without notice terminate, be forfeited and be and become null
and void, and neither the Grantee nor any of his or her successors, heirs,
assigns, or personal representatives will thereafter have any further rights or
interests in such unvested Restricted Stock Units.


 


3.                                       Vesting of Restricted Stock Units. 
The restrictions and conditions in Section 2 of this Agreement
shall lapse on up to one third (1/3) of the Restricted Stock Units following
each of the Company’s three succeeding fiscal years commencing with the fiscal
year in which this Award was granted (each, a “Fiscal Year”) on the date (the “Vesting
Date”) on which the Committee makes a determination that the Company has
achieved the Performance Measure (as defined below) target amount established
by the Committee for such Fiscal Year, provided that the Grantee is an employee
of the Company or a Subsidiary on such Vesting Date.  The actual number of Restricted Stock Units
that will vest on a particular Vesting Date will depend on the percentage of
the Performance Measure target amount the Company achieved for the previous
Fiscal Year based on the following percentage thresholds:


 





















 


	
  If this % of the
  Performance Measure is achieved

  (without rounding):

  	
   

  	
  This % of one third
  (1/3) of the restricted stock units

  will become vested on the Vesting Date:

  
	
  Less than 80%

  	
   

  	
  0.00%

  
	
  80%

  	
   

  	
  30.0%

  
	
  81%

  	
   

  	
  33.5%

  
	
  82%

  	
   

  	
  37.0%

  
	
  83%

  	
   

  	
  40.5%

  
	
  84%

  	
   

  	
  44.0%

  
	
  85%

  	
   

  	
  47.5%

  
	
  86%

  	
   

  	
  51.0%

  
	
  87%

  	
   

  	
  54.5%

  
	
  88%

  	
   

  	
  58.0%

  
	
  89%

  	
   

  	
  61.5%

  
	
  90%

  	
   

  	
  65.0%

  
	
  91%

  	
   

  	
  68.5%

  
	
  92%

  	
   

  	
  72.0%

  
	
  93%

  	
   

  	
  75.5%

  
	
  94%

  	
   

  	
  79.0%

  
	
  95%

  	
   

  	
  82.5%

  
	
  96%

  	
   

  	
  86.0%

  
	
  97%

  	
   

  	
  89.5%

  
	
  98%

  	
   

  	
  93.0%

  
	
  99%

  	
   

  	
  96.5%

  
	
  100%

  	
   

  	
  100%

  



 


For purposes of this Section 3, the “Performance Measure” shall
mean, for any Fiscal Year, the quotient obtained by dividing (x) the
difference between (a) the Company’s earnings before interest, taxes,
depreciation and amortization (EBITDA) for such Fiscal Year, less (b) the
Company’s interest expense and capital expenditures for such Fiscal Year, by (y) the
weighted average number of shares of Stock outstanding for such Fiscal Year
determined on a diluted basis using the treasury stock method, all as
determined by reference to the Company’s audited financial statements for such
Fiscal Year.  The Committee shall review
the Company’s audited financial statements promptly after their preparation
each year to determine the percentage of the Performance Measure target amount
that was achieved for purposes of this Section 3.


 


If on any Vesting Date all or some of the Restricted Stock Units do not
vest because the conditions of this Section 3 are not fully satisfied,
then such unvested Restricted Stock Units shall automatically and without
notice terminate, be forfeited and become null and void, and neither the
Grantee nor any of his or her successors, heirs, assigns, or personal
representatives will thereafter have any further rights or interests in such
forfeited Restricted Stock Units.


 


2

















 


4.                                       Dividend Equivalents.


 


(a)                                  If on any date the Company shall pay any
dividend on shares of Stock of the Company, the number of Restricted Stock
Units credited to the Grantee shall, as of such date, be increased by an amount
determined by the following formula:


 


W = (X multiplied by Y) divided by Z, where:


 


W = the number of additional Restricted Stock Units to be credited to
the Grantee on such dividend payment date;


 


X = the aggregate number of Restricted Stock Units (whether vested or
unvested) credited to the Grantee as of the record date of the dividend;


 


Y = the cash dividend per share amount; and


 


Z = the Fair Market Value per share of Stock (as determined under the
Plan) on the dividend payment date.


 


(b)                                 In the case of a dividend paid on Stock
in the form of Stock, including without limitation a distribution of Stock by
reason of a stock dividend, stock split or otherwise, the number of Restricted
Stock Units credited to the Grantee shall be increased by a number equal to the
product of (i) the aggregate number of Restricted Stock Units that have
been awarded to the Grantee through the related dividend record date, and (ii) the
number of shares of Stock (including any fraction thereof) payable as dividend
on one share of Stock.  Any additional
Restricted Stock Units shall be subject to the vesting and restrictions of this
Agreement in the same manner and for so long as the Restricted Stock Units
granted pursuant to this Agreement to which they relate remain subject to such
vesting and restrictions, and shall be promptly forfeited to the Company if and
when such Restricted Stock Units are so forfeited.


 


5.                                       Receipt of Shares of Stock.


 


(a)                                  As soon as practicable following each
vesting date, the Company shall issue to the Grantee a certificate representing
the number of shares of Stock equal to the aggregate number of Restricted Stock
Units credited to the Grantee that have vested pursuant to Section 3 of
this Agreement on such date and the Grantee shall thereafter have all the
rights of a stockholder of the Company with respect to such shares, including
voting and dividend rights, and such shares of Stock shall not be restricted by
the provisions hereof.


 


(b)                                 Upon a Sale Event, the Company shall
issue to the Grantee the number of shares of Stock equal to the aggregate
number of Restricted Stock Units credited to the Grantee on such date in full
satisfaction of such Restricted Stock Units; provided, however, that in the
event the Company is involved in a transaction in which shares of Stock will be
exchanged for cash or other consideration, the Grantee shall receive cash or
other consideration equal in value to the aggregate number of Restricted Stock
Units credited to the Grantee on the date of the Sale Event.


 


3





















 


6.                                       Incorporation of Plan. 
Notwithstanding anything herein to the contrary, this Agreement shall be
subject to and governed by all the terms and conditions of the Plan, including
the powers of the Administrator set forth in Section 2(b) of the
Plan.  Capitalized terms in this
Agreement shall have the meaning specified in the Plan, unless a different
meaning is specified herein.


 


7.                                       Tax Withholding.  The Grantee
shall, not later than the date as of which the receipt of this Award becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal, state,
and local taxes required by law to be withheld on account of such taxable
event.  The Grantee may elect to have
such minimum tax withholding obligation satisfied, in whole or in part, by (i) authorizing
the Company to withhold from shares of Stock to be issued, or (ii) transferring
to the Company, a number of shares of Stock with an aggregate Fair Market Value
that would satisfy the withholding amount due.


 


8.                                       No Obligation to Continue Employment. 
Neither the Company nor any Subsidiary is obligated by or as a result of
the Plan or this Agreement to continue the Grantee in employment and neither
the Plan nor this Agreement shall interfere in any way with the right of the
Company or any Subsidiary to terminate the employment of the Grantee at any time.


 


9.                                       Notices.  Notices
hereunder shall be mailed or delivered to the Company at its principal place of
business and shall be mailed or delivered to the Grantee at the address on file
with the Company or, in either case, at such other address as one party may
subsequently furnish to the other party in writing.


 


 


	
   

  	
  MAC-GRAY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name; Stewart G. MacDonald

  
	
   

  	
   

  	
  Title:
  Chief Executive Officer

  



 


4

















 


The foregoing Agreement is hereby accepted and the
terms and conditions thereof hereby agreed to by the undersigned.


 


 




	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grantee’s Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grantee’s name and address:

  






 


 


 


 


5