Exhibit 10.4


 


Cash-Settled


 


 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 101%

  	
   

  	
  0.00%

  	
   

  
	
  101%

  	
   

  	
  10%

  	
   

  
	
  102%

  	
   

  	
  20%

  	
   

  
	
  103%

  	
   

  	
  30%

  	
   

  
	
  104%

  	
   

  	
  40%

  	
   

  
	
  105%

  	
   

  	
  50%

  	
   

  
	
  106%

  	
   

  	
  60%

  	
   

  
	
  107%

  	
   

  	
  70%

  	
   

  
	
  108%

  	
   

  	
  80%

  	
   

  
	
  109%

  	
   

  	
  90%

  	
   

  
	
  110%

  	
   

  	
  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.


 


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;


 


2

















 


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.             Settlement
of Restricted Stock Units.


 


(a)           As
soon as practicable following each vesting date, the Company shall make a cash
payment to the Grantee in an amount equal to the value of  the aggregate number of Restricted Stock
Units  credited to the Grantee that have
vested pursuant to Section 3 of this Agreement on such date, based on the
closing price of a share of Stock on such date.


 


(b)           Upon
a Sale Event, the Company shall make a cash payment  to the Grantee in an amount equal in value
to  the aggregate number of Restricted
Stock Units credited to the Grantee on the date of the Sale Event  based on the amount payable to the
shareholders for a share of Stock upon the Sale Event.


 


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.


 


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 


 


3





















 


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:

  



 


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:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


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