Document:

exv10w1

EXHIBIT 10.1

RESTRICTED STOCK AGREEMENT

(Employee — Performance Vesting)

     This RESTRICTED STOCK AGREEMENT (this “Agreement”) is made and entered into as of the ___ day
of ___, 201___ (the “Grant Date”), 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, as amended and restated (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 Payout Percentage of the number of Restricted
Shares will vest on the last day of the Company’s 2013 fiscal year (the “Vesting Date”). The
Payout Percentage shall be the sum of the EBIT Percentage and the Net Income Percentage.

          (b) The EBIT Percentage shall be based on the Company’s EBIT margin for the Company’s 2013
fiscal year compared to the EBIT margin of the Baird Industrial Company Composite for calendar year
2012 as follows:

	 	 	 	 	 

	EBIT Margin

	 	Performance Share Payout
	 	EBIT Percentage

[Insert Table For Individual Awards]

 

 

If the EBIT Margin is equal to or greater than the level to have some EBIT Percentage, but less
than or equal to the maximum level, and the EBIT Margin actually attained is not represented in the
table set forth above, then the EBIT Percentage shall be determined by straight-line interpolation
from the amounts specified in such table immediately less than and greater than the EBIT Margin
actually attained.

          (c) The Net Income Percentage shall be based on the Company’s net income for the Company’s
2013 fiscal year as follows:

	 	 	 	 	 

	FY13 Net Income

	 	Performance Share Payout
	 	Net Income Percentage

[Insert Table For Individual Awards]

If the FY13 Net Income is equal to or greater than the level to have some Net Income Percentage,
but less than or equal to the maximum level, and the FY13 Net Income actually attained is not
represented in the table set forth above, then the Net Income Percentage shall be determined by
straight-line interpolation from the amounts specified in such table immediately less than and
greater than the FY13 Net Income actually attained.

          (d) (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 the Restricted Shares that would
vest upon the Retirement of the RSA Holder on such date pursuant to Section 2(d)(ii). The Company
shall deduct and apply the shares that so vest to cover the tax withholding. 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.

               (ii) Upon the death, Disability or Retirement of the RSA Holder:

                    (A) the EBIT Margin shall be deemed to have met performance at the Target level, and the EBIT
Percentage shall be 25%;

                    (B) the FY13 Net Income shall be deemed to have met performance at the Target level, and the
Net Income Percentage shall be 25%; and

                    (C) the number of Restricted Shares that vest shall be equal to the number of outstanding
Restricted Shares under this Agreement, multiplied by the Payout Percentage, multiplied by a
fraction, the numerator of which shall be the number of days from the Grant Date through the date
of the RSA Holder’s death, Disability or Retirement, over the number of days from the Grant Date
through the last day of the Company’s 2013 fiscal year.

          (c) Except as otherwise provided by Section 2(b), or unless the Committee determines
otherwise, if the RSA Holder’s employment terminates before the 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 Vesting Date, whether by operation of law or otherwise, except by will or the laws of
descent and distribution. The RSA Holder agrees that until the Vesting Date, 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
performance is 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 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
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:exv10w2

Exhibit 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), is made and entered into as
of July 29, 2010, by and between Graham Corporation, a Delaware corporation with its principal
place of business at 20 Florence Avenue, Batavia, New York 14020 (the “Company”), and Jeffrey F.
Glajch, (the “Executive”).

     WHEREAS, the Company and the Executive desire amend and restate that certain Employment
Agreement dated as of March 2, 2009 and enter into this Agreement to describe the employment
relationship and obligations of the parties.

     NOW, THEREFORE, the parties hereto, intending to be legally bound and in consideration of the
mutual covenants herein contained, agree as follows:

1. Employment. The Company hereby agrees to continue to employ the Executive and the
Executive hereby agrees to continue employment as the Company’s Vice President, Finance and
Administration and Chief Financial Officer, upon the terms and conditions hereinafter set
forth.

2. Duties.

          (a) The Executive shall have authority and responsibility for all aspects of the Company’s
financial reporting and analysis, accounting and control systems, information technology and human
resources and shall report directly to the Company’s President and Chief Executive Officer. The
Executive shall perform such duties generally consistent with Executive’s title and as may from
time to time be required of the Executive by the President and Chief Executive Officer or by the
Board of Directors (the “Board”) of the Company. The Executive’s office shall be located at the
Company’s principal place of business in Batavia, New York. The Executive agrees to travel to the
extent reasonably necessary for the performance of his duties. The Executive shall devote his full
time to the business and affairs of the Company and shall use his best efforts, skill and ability
in performing his duties on behalf of the Company.

          (b) The Executive agrees that the Company, in its discretion, may apply for and procure in its
own name and for its own benefit, life insurance on the life of the Executive in any amount or
amounts considered advisable, and that he shall have no right, title or interest therein. The
Executive further agrees to submit to any medical or other examination and to execute and deliver
any application or other instrument in writing, reasonably necessary to effectuate such insurance,
provided such actions do not materially harm the Executive’s ability to otherwise obtain or retain
personal life insurance.

3. Term.

          (a) Except as otherwise provided in this Agreement to the contrary, this Agreement shall be
and remain in effect during the period of employment (the “Term”) established under this Section 3.

          (b) Except as provided in Section 3(c), beginning on the effective date of this Agreement, the
Term shall be for one year and shall be automatically extended each day that this Agreement is in
effect (such that while this Agreement is in effect the remaining Term shall never be less or
greater than one year), unless either the Company, or the Executive, respectively,

 

 

elects not to extend the Term further by giving written notice to the other party, in which case
the Term shall end on the first anniversary of the date on which such written notice is given;
provided, however, that in any event, the Term shall end on the last day of the month in which the
Executive attains the age of 65.

          (c) Notwithstanding anything herein contained to the contrary, (i) this Agreement may be
terminated during the Term as provided for herein and (ii) nothing in this Agreement shall mandate
or prohibit a continuation of the Executive’s employment following the expiration of the Term upon
such terms and conditions as the Company and the Executive may mutually agree upon.

     4. Base Compensation. As the base compensation for all services to be rendered by the
Executive to the Company, the Company agrees to pay to the Executive, and the Executive accept, a
salary at a rate of $216,300 per annum, payable in arrears in equal monthly installments of $18,025
each, subject to such deductions and withholdings as may be required by law. Periodically, the
Board will review the salary of the Executive, taking into consideration such factors as the
Executive’s performance and such other matters as it deems relevant and, in its discretion alone,
may increase the salary of the Executive to such rate as the Board deems proper; provided that the
Company shall in no event be required to grant any such increase.

     5. Incentive Compensation.

          (a) Bonus. The Executive shall be eligible to receive bonuses and awards under the Company’s
bonus plans or arrangements as may be in effect from time to time, including the Company’s Annual
Executive Cash Bonus Program, as may be from time to time determined by the Board or a committee
thereof.

          (b) Long-Term Incentive Compensation. The Executive shall be eligible to participate in any
long-term incentive compensation plan generally made available to similarly situated executive
officers of the Company in accordance with and subject to the terms of such plans, including the
Company’s Annual Stock-Based Incentive Award Plan for Senior Executives, as may from time to time
be determined by the Board of a committee thereof.

          (c) Other Compensation. The Company may, upon recommendation of the Board or a committee
thereof, award to the Executive such other bonuses and compensation as it deems appropriate and
reasonable.

     6. Benefits. During the term of this Agreement, the Company shall provide the
following benefits to the Executive:

 

 

          (a) Medical. The Company will provide the Executive health coverage for himself and his family
in accordance with the Company’s health and medical insurance plans, as the same may be in effect
from time to time. The Executive shall be responsible for paying the employee portion of the
premiums for such health and medical insurance plans.

          (b) Vacation. Executive shall be entitled to vacation in accordance with the Company’s general
vacation policies and practices as may be in effect from time to time. For vacation policy purposes
only, the Executive shall be credit with 15 years of service as of the date his employment with the
Company commenced.

          (c) General Benefits. The Executive shall be entitled to participate in all employee benefit plans
and arrangements of the Company that may be in effect from time to time

 

 

and as may from time to time be made available to the other similarly situated executive officers
of the Company, subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements.

          (d) No Limitation of Company’s Rights. Nothing in this Section 6 shall be construed to limit
or restrict the complete discretion of the Company to amend, modify or terminate any employee
benefit plan or plans of the Company where such action generally affects plan participants or
employees, including the Executive.

          (e) Insurance. The Company shall provide Executive with $2,500 per annum for the purpose of
Executive procuring a term insurance policy that names such person(s) of Executive’s choosing as
beneficiary(ies).

     7. Travel Expenses. The Company shall pay or reimburse the Executive for all
reasonable and necessary travel and other expenses incurred or paid by the Executive in connection
with the performance of his duties under this Agreement upon presentation of expense statements or
vouchers and such other supporting information as the Company may from time to time reasonably
request. However, the amount available for such travel and other expenses may be fixed in advance
by the Company.

     8. Termination. This Agreement shall terminate prior to the Term expiration date,
hereinabove set forth, in the event that the Executive shall die or the Board shall reasonably
determine that the Executive has become disabled, or if the Executive’s employment shall be
terminated for cause or without cause, as hereinafter provided.

          (a) Disability. The Board may determine that the Executive has become disabled, for purposes
of this Agreement, in the event that the Executive shall fail, because of illness or incapacity, to
render for three successive months, or for shorter periods aggregating three months or more in any
period of twelve months, services of the character contemplated by this Agreement; and thereupon
this Agreement and all rights of the Executive hereunder shall be deemed to have been terminated as
of the end of the calendar month in which such determination is made.

          (b) For Cause. The Board may dismiss the Executive for cause in the event that it determines
that there has been willful misconduct by the Executive in connection with the performance of his
duties hereunder, or any other conduct on the part of the Executive which has been materially
injurious to the Company; and thereupon this Agreement shall terminate effective upon the delivery
to the Executive of 30-day written notice that the Board has made such determination. For purposes
of this Agreement, “cause” shall be determined only by a good faith finding thereof by the Board,
which shall afford the Executive the opportunity to appear before it prior to finalizing any such
determination.

          (c) Without Cause. The Executive may resign without cause at any time upon 30 days’ written
notice to the Company, in which event the Company’s obligation to compensate him ceases on the
effective date of his termination except as to amounts due to him under Section 8(c)(i). In the
event that the Company dismisses the Executive other than for cause, or if the Executive resigns
because of a material breach of this Agreement by the Company (which Executive may do only if such
breach remains materially uncured after the Executive has provided 30 days prior written notice to
the Board), and the Executive’s dismissal or resignation qualifies as a “separation from service”
for purposes of Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations and other official guidance issued thereunder (collectively, “Section 409A”), then the
Company shall provide to the Executive:

 

 

               (i) payment of the compensation due to him through the effective date of the termination of
the Executive’s employment, within ten business days following such effective date of the
termination of the Executive’s employment;

               (ii) continuation of the Executive’s salary for twelve months following the effective date of
the termination of the Executive’s employment at the higher of the rate specified in Section 4 or
the highest salary rate in effect for the Executive during the one-year period preceding the
termination of his employment, which salary continuation shall be paid monthly in accordance with
the Company’s regular payroll practices

               (iii) payment of any Accrued Bonus (as defined below), to be paid as soon as administratively
practicable after the six-month anniversary of the effective date of the termination of the
Executive’s employment. Accrued Bonus shall mean any amount of bonus with respect to any year prior
to the year in which dismissal without cause occurs (“Prior Bonus Year”) calculable by applying the
formula prescribed by the Company’s incentive compensation plan as it existed on December 31 of
such Prior Bonus Year and employing in the application of such formula the goals, ratios and
weighting percentages and other variable figures which the bonus plan calls for the Company’s Board
or any committee thereof to determine annually (“Bonus Plan Variables”) which the Company’s Board
of Directors or any committee thereof adopted for purposes of the bonus plan prior to December 31
of such Prior Bonus Year. Notwithstanding any other provision of this Section, no Accrued Bonus
shall be payable pursuant to this Section 8© for any Prior Bonus Year with respect to which a bonus
amount was paid to and accepted by the Executive.

               (iv) Notwithstanding anything to the contrary, to the extent that any payments under Section
8(c) are subject to a six-month waiting period under Section 409A, any such payments that would be
payable before the expiration of six months following the Executive’s separation from service but
for the operation of this sentence shall be made during the seventh month following the Executive’s
separation from service

          (d) In the event that the provisions of this Section 8(c) are triggered, the Executive shall
resign from all offices and directorships of the Company and of all subsidiaries and affiliates of
the Company, upon payment to the Executive of the amount referred to in Section 8(c)(i).

          (e) Release of Claims. The Company’s obligation to provide the payments under this Section 8
is conditioned upon the Executive’s execution of an enforceable release of all claims (and upon the
expiration of all applicable rescission periods contained in such release) and his compliance with
all provisions of this Agreement. If the Executive chooses not to execute such a release (or
rescinds such release) or fails to comply with these provisions, then the Company’s obligation to
compensate him ceases on the effective date of his termination except as to amount due to him under
Section 8(c)(i).

          (f) Return of Confidential Documentation. Upon termination of his employment for any reason
whatsoever, the Executive shall return to the Company all working papers, computer equipment,
notebooks, strategic plans and other confidential documents and information, in any form
whatsoever.

 

 

     9. Change in Control.

          (a) Continuation by Executive of Employment Pending Change in Control. In the event a person
begins a tender or exchange offer, circulates a proxy to stockholders, or takes other steps seeking
to effect a Change in Control (as hereinafter defined), the Executive agrees that he will not
voluntarily leave the employ of the Company, and will render the services contemplated in this
Agreement, until such person has either abandoned or terminated his or its efforts to effect a
Change in Control or until three months after a Change in Control has occurred.

          (b) Post-Change in Control Termination Benefits. In addition to the benefits otherwise payable
to the Executive (other than Sections 8(c)(ii) and (iii)) pursuant to this Agreement, upon the
event of a Termination (as hereinafter defined) of the Executive’s employment with the Company
within two years after a Change in Control

               (i) The Company will pay to the Executive as compensation for services rendered to the Company
a lump sum (subject to any applicable payroll or other taxes required to be withheld) in an amount
equal to (i) one dollar less than three times the Executive’s annualized tax-includable
compensation, including bonus compensation, for the five most recent taxable years ending before
the date of the Change in Control; or (ii) if the Executive was employed by the Company for less
than five years, one dollar less than three times the Executive’s annualized tax includable
compensation including bonus compensation for the period during which the individual was
continuously employed by the Company and ending on the date of the Change in Control of the
Company. The payment shall be made as soon as administratively practicable after the six-month
anniversary of the effective date of the termination of the Executive’s employment. In the event
the Executive dies prior to receiving the lump sum payment, but following the occurrence of any
event requiring the Company to make the payment required by this Section 9(b)(i), the payment
provided for by this Section 9(b)(i) shall be paid to the Executive’s estate as soon as
administratively practicable after the date of the Executive’s death. The payment under this
Section 9(b)(i) shall be made in lieu of the payments provided for by Sections 8(c)(ii) and (iii).

               (ii) The Company shall accelerate and make immediately exercisable in full any unvested stock
options or shares of restricted stock that the Executive then holds. Accelerated stock options
shall be exercisable by the Executive in accordance with their terms.

               (iii) The Company shall pay and provide to the Executive (or, in the event of his death, to
his estate) as soon as administratively practicable after the six-month anniversary of the
effective date of the termination of the Executive’s employment (or, in the event of his death, as
soon as administratively practicable after the date of his death), a lump sum payment in an amount
equal to the excess, if any, of:

                    (1) the value of the aggregate benefits to which he would be entitled under any and all
qualified and non-qualified defined contribution pension plans maintained by, or covering employees
of, the Company if he were 100 percent vested thereunder, such benefits to be determined as of the
date of termination of employment; or

                    (2) the value of the benefits to which he is actually entitled under such defined contribution
pension plans as of the date of his termination.

               (iv) The Executive shall not be obligated to seek other employment in mitigation of the
amounts payable or arrangements made under any provision of this Agreement, nor shall any payments
under this Agreement be reduced on account of any compensation,

 

 

               benefits or service credits for benefits from any employment that the Executive may obtain
following his Termination.

               (v) The Company’s obligation to provide the payments under this Section 9(b) is conditioned
upon the Executive’s execution of an enforceable release of all claims (and upon the expiration of
all applicable rescission periods contained in such release) and his compliance with all provisions
of this Agreement. If the Executive chooses not to execute such a release (or rescinds such
release) or fails to comply with these provisions, then the Company’s obligation to compensate him
ceases on the effective date of his termination except as to amount due to him under Section
8(c)(i).

     (c) Definitions.

          (i) For the purposes of this Agreement, the term “Change in Control” shall mean:

               (1) any “person” within the meaning of Section 14(d) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), other than the Company, a subsidiary, or any employee benefit
plan(s) sponsored by the Company or any subsidiary, acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or persons) 30 percent or
more of the combined voting power of the outstanding securities of the Company ordinarily having
the right to vote at the election of directors;

               (2) individuals who constitute the Board on the effective date of this Agreement (the
“Incumbent Board”) have ceased for any reason to constitute at least a majority thereof (or a
majority of the Board as then constituted), provided that any person becoming a director subsequent
to the effective date of this Agreement whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in
which such person is named as a nominee for director without objection to such nomination) shall
be, for purposes of this Plan, considered as though such person were a member of the Incumbent
Board;

               (3) the closing of a reorganization, merger or consolidation of the Company, other than one
with respect to which all or substantially all of those persons who were the beneficial owners,
immediately prior to such reorganization, merger or consolidation, of outstanding securities of the
Company ordinarily having the right to vote in the election of directors own, immediately after
such transaction, more than three-quarters of the outstanding securities of the resulting
corporation ordinarily having the right to vote in the election of directors;

               (4) the closing of a sale or other disposition of all or substantially all of the assets of
the Company, other than to a subsidiary; or

               (5) the complete liquidation and dissolution of the Company.

          (ii) For the purposes of this Section 9, the term “Termination” shall mean termination by the
Company of the employment of the Executive with the Company (including its subsidiaries) for any
reason other than death, disability or cause (as defined herein), or resignation of the Executive,
that qualifies as a “separation from service” for purposes of Section 409A, upon the occurrence of
either of the following events:

 

 

               (1) A change in the nature or scope of the Executive’s authority from that prior to a Change
in Control, a reduction in the Executive’s total compensation (including all and any base
compensation, bonuses, incentive compensation and benefits of any kind or nature whatsoever) from
that prior to a Change in Control, or failure of the Company to make any increase in compensation
to which the Executive may be entitled under any employment agreement, or a change requiring the
Executive to perform services other than in Batavia, New York or in any location more than thirty
miles distant from Batavia, New York by road, except for required travel on the Company’s business
to an extent substantially consistent with the Executive’s present business travel obligations; or

               (2) A reasonable determination (as defined below) by the Executive that, as a result of a
Change in Control and a change in circumstances thereafter significantly affecting his position, he
is unable to exercise the authority, powers, function or duties attached to his position.

          (iii) Termination of employment by the Executive in his “reasonable determination” shall mean
termination based on:

               (1) subsequent to a Change in Control of the Company, and without the Executive’s express
written consent, the assignment to him of any duties inconsistent with his positions, duties,
responsibilities and status with the Company immediately prior to a Change in Control, or a change
in the Executive’s reporting responsibilities, titles, or offices as in effect immediately prior to
a Change in Control, or any removal of the Executive from or any failure to re-elect him to any of
such positions, except in connection with the termination of his employment for cause, disability
or retirement or as a result of his death or by the Executive other than in a reasonable
determination; or

               (2) subsequent to a Change in Control of the Company, a reduction by the Company in the
Executive’s base salary as in effect on the date hereof or as the same may be increased from time
to time, or failure of the Company to make an increase in compensation to which the Executive may
be entitled under any employment agreement; or

               (3) subsequent to a Change in Control of the Company, a failure by the Company to continue any
bonus plans in which the Executive is presently entitled to participate (the “Bonus Plans”) as the
same may be modified from time to time but substantially in the forms currently in effect, or a
failure by the Company to continue the Executive as a participant in the Bonus Plans on at least
the same basis as he presently participates in accordance with the Bonus Plans; or

               (4) subsequent to a Change in Control of the Company, the failure by the Company to continue
in effect (subject to such changes as may be required by law from time to time) any benefit or
compensation plan, stock ownership plan, stock purchase plan, stock option plan, life insurance
plan, health-and-accident plan or disability plan in which the Executive is participating at the
time of Change in Control of the Company (or plans providing him with substantially similar
benefits), the taking of any action by the Company which would adversely affect the Executive’s
participation in or materially reduce his benefits under any of such plans or deprive him of any
material fringe benefit enjoyed by him at the time of the Change in Control, or the failure by the
Company to provide him with the number of paid vacation days to which he is then entitled in
accordance with the Company’s normal vacation policy in effect on the date hereof; or

 

 

               (5) prior to a Change in Control of the Company, the failure by the Company to obtain the
assumption of the agreement to perform this Agreement by any successor as contemplated in Section
17.

     (d) Golden Parachute Limitation.

          (i) In the event that the independent auditors most recently selected by the Board (the
“Auditors”) determine that any payment by the Company under this Section 9(d) to or for the benefit
of the Executive would be nondeductible by the Company for federal income tax purposes because of
the provisions concerning “excess parachute payments” in Section 280G of the Code, then the total
amount of all payments under this Section 9(d) shall be reduced (but not below zero) to the Reduced
Amount. For purposes of this Section 9(d), the “Reduced Amount” shall be the amount that maximizes
the total amount of the payments without causing any payment to be nondeductible by the Company
because of Section 280G of the Code.

          (ii) If the Auditors determine that any payment under this Section 9(d) would be nondeductible
by the Company because of Section 280G of the Code, then the Company shall promptly give the
Executive notice to that effect and a copy of the detailed calculation thereof and of the Reduced
Amount, and the Executive may then elect, in his sole discretion, which and how much of the
payments shall be eliminated or reduced (as long as after such election the aggregate present value
of the payments equals the Reduced Amount) and shall advise the Company in writing of his election
within ten days of receipt of notice. If no such election is made by the Executive within such
ten-day period, then the Company may elect which and how much of the payments under this Section
9(d) shall be eliminated or reduced (as long as after such election the aggregate present value of
the payments equals the Reduced Amount) and shall notify the Executive promptly of such election.
All determinations made by the Auditors under this Section 9(d) shall be binding upon the Company
and the Executive and shall be made within 60 days of the date when a payment becomes payable.

As a result of uncertainty in the application of Section 280G of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that payments will have been made by the
Company that should not have been made (an “Overpayment”) or that additional payments that will not
have been made by the Company could have been made (an “Underpayment”), consistent in each case
with the calculation of the Reduced Amount hereunder. In the event that the Auditors, based upon
the assertion of a deficiency by the Internal Revenue Service against the Company or the Executive
that the Auditors believe has a high probability of success, determine that an Overpayment has been
made, such Overpayment shall be treated for all purposes as a loan to the Executive which he or she
shall repay to the Company, together with interest at the applicable federal rate provided in
Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Executive
to the Company if and to the extent that such payment would not reduce the amount subject to
taxation under Section 4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Executive, together with interest at the applicable federal rate
provided in Section 7872(f)(2) of the Code.

          (e) Notwithstanding anything to the contrary, to the extent that any payments under Section 9
are subject to a six-month waiting period under Section 409A, any such payments that would be
payable before the expiration of six months following the Executive’s separation from service but
for the operation of this sentence shall be made during the seventh month following the Executive’s
separation from service

 

 

     (10) Covenants of Executive. The Executive acknowledges that: (i) the business of the
Company and its affiliates, as currently conducted and as conducted from time to time throughout
the term of this Agreement (collectively, the “Business”), is conducted by and is proposed to be
conducted by the Company on a world-wide basis (the “Company’s Market”); (ii) the Business involves
providing design, engineering and manufacture of certain vacuum and heat transfer equipment,
including but not limited to steam condensers, steam jet ejectors, shell and tube heat exchangers,
plate and frame heat exchangers, Heliflow heat exchangers, liquid ring vacuum pumps and rotary
piston pumps; (iii) the Company has developed trade secrets and confidential information concerning
the Business; and (iv) the agreements and covenants contained in this Section 10 are essential to
protect the Business. In order to induce the Company to enter into this Employment Agreement, the
Executive covenants and agrees that:

          (a) Agreement Not To Compete. For a period of 18 months after the termination of Executive’s
employment with the Company for any reason (such period of time hereinafter referred to as the
“Restricted Period”), neither the Executive nor any entity of which 20 percent or more of the
beneficial ownership is held by the Executive or a person related to the Executive by blood or
marriage (“Controlled Entity”) will, anywhere in the Company’s Market, directly or indirectly own,
manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in,
whether as a proprietor, partner, stockholder, director, officer, member manager, employee or
otherwise any business which competes in the Company’s Market with the Business, without the prior
written consent of the Company. Notwithstanding any other provisions of this Agreement, the
Executive may make a passive investment in any publicly-traded company or entity in an amount not
to exceed five percent of the voting stock of any such company or entity.

          (b) Agreement Not To Interfere in Business Relationships.

               (i) During the Restricted Period, neither the Executive nor any Controlled Entity will
directly or indirectly solicit, induce or influence any customer, or any other person which has a
business relationship with the Company or any affiliate, or which had on the date of this Agreement
such a relationship with the Company or any affiliate, to discontinue or reduce the extent of such
relationship with the Company or any affiliate in the Company’s Market.

               (ii) During the Restricted Period, neither the Executive nor any Controlled Entity will (1)
directly or indirectly recruit, solicit or otherwise induce or influence any stockholder or
employee of the Company or any of its affiliates to discontinue such employment or other
relationship with the Company or any affiliate, or (2) employ or seek to employ, or cause any
business which competes in the Company’s Markets to employ or seek to employ for any reason, any
person who is then (or was at any time within six months prior to the date the Executive or such
business employs or seeks to employ such person) employed by the Company or any affiliate without
the prior written consent of the Company.

          (c) Confidentiality. During the Restricted Period, neither the Executive nor any Controlled Entity
will directly or indirectly disclose to anyone, or use or otherwise exploit for the Executive’s or
any Controlled Entity’s own benefit or for the benefit of anyone other than the Company, any
confidential information, including, without limitation, any confidential “know-how”, trade
secrets, customer lists, details of customer contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business acquisition plans
and new personnel acquisition plans of the Company or any affiliate related to the Business or any
portion or phase of any scientific, engineering or technical information, design, process,
procedure, formula, improvement, discovery, invention, machinery or device of

 

 

the Company or any affiliate, whether or not in written or tangible form (all of the preceding is
hereinafter referred to as “Confidential Information”). The term “Confidential Information” does
not include, and there shall be no obligation hereunder with respect to, information that becomes
generally available to the public or the Company’s competitors other than as a result of a
disclosure by the Executive or a Controlled Entity or any agent or other representative thereof.
Neither the Executive nor any Controlled Entity shall have any obligation hereunder to keep
confidential any Confidential Information to the extent disclosure is required by law, or
determined in good faith by the Executive to be necessary or appropriate to comply with any legal
or regulatory order, regulation or requirement; provided, however, that in the event disclosure is
required by law, the Executive or the Controlled Entity concerned shall provide the Company with
prompt advance written notice of such requirement so that the Company may seek an appropriate
protective order. It is understood that in any new employment, the Executive may use his ordinary
skill and non-confidential knowledge, even though said skill and non-confidential knowledge may
have been gained at the Company. The Executive’s obligations under this Section 10(c) shall be in
addition to, not in substitution for, any common law fiduciary duties the Executive has to the
Company regarding information acquired during the course of his employment.

          (d) Intellectual Property. The Executive shall communicate to the Company full information
concerning all inventions, improvements, discoveries, formulas, processes, systems of organization,
management procedures, software or computer applications (hereinafter, collectively, “Intellectual
Property”) made or conceived by him either solely or jointly with others while in the employ of the
Company, whether or not perfected during his period of employment and which shall be within the
existing or contemplated scope of the Company’s business during his employment. The Executive will
assist the Company and its nominees in every way at the Company’s expense in obtaining patents for
such Intellectual Property as may be patentable in any and all countries and the Executive will
execute all papers the Company may desire and assignments thereof to the Company or its nominees
and said Intellectual Property shall be and remain the property of the Company and its nominees, if
any, whether patented or not or assigned or not.

          (e) Survival of Covenants. In the event of a termination of this Agreement, the covenants and
agreements contained in this Section 10 and in Section 9 and Sections 12 through 20 shall survive,
shall continue thereafter, and shall not expire unless and except as expressly set forth in this
Section.

          (f) Remedies. The parties to this Agreement agree that (i) if either the Executive or any
Controlled Entity breaches any provision of this Section 10, the damage to the Company and its
affiliates will be substantial, although difficult to ascertain, and money damages will not afford
an adequate remedy, and (ii) if either the Executive or any Controlled Entity is in breach of this
Agreement, or threatens a breach of this Agreement, the Company shall be entitled in its own right
and/or on behalf of one or more of its affiliates, in addition to all other rights and remedies as
may be available at law or in equity, to (1) injunctive and other equitable relief to prevent or
restrain a breach of this Agreement and (2) may require the breaching party to pay damages as the
result of any transactions constituting a breach hereof.

     (11) Indemnification of Executive. In the event the Executive is terminated for any reason,
(a) the Company will hold harmless and indemnify the Executive for all third party claims, actions
or other proceedings against the Executive initiated either prior to the termination of employment
or thereafter which relate to duties performed in good faith by the Executive while employed by the
Company; and (b) the Company will retain the Executive as named insured under any directors’ and
officers’ insurance policies it may have, for acts of the

 

 

Executive during the time he served as an officer of the Company. Additionally, all reasonable
legal and other costs incurred by the Executive to defend himself will be paid by the Company, as
the Executive is billed for such costs, within ten days of periodic submission to the Company of
statements of charges of attorneys and statements of other expenses incurred by the Executive in
connection with such defense.

     (12) Effect of Waiver. The waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.

     (13) Notice. Any and all notices provided for herein shall be in writing and shall be
physically delivered or mailed by registered or certified mail, return receipt requested to the
parties at their respective addresses set forth hereinabove. Either party may from time to time
designate a different address for notices to be sent to such party by giving the other party due
notice of such different address.

     (14) Modification and Assignment. This Agreement shall not be modified or amended
except by an instrument in writing signed by the parties hereto. This Agreement and all of its
terms and conditions shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, legal representatives, successors and assigns, including but not limited to
any corporation or other entity with or into which the Company is merged or consolidated or any
other successor of the Company. The Executive agrees that he will not and may not assign, transfer
or convey, pledge or encumber this Agreement or his right, title or interest therein, or his power
to execute the same or any monies due or to become due hereunder, this Agreement being intended to
secure the personal services of the Executive, and the Company shall not recognize any such
assignment, transfer, conveyance, pledge or encumbrance.

     (15) Applicable Law. This Agreement and the rights and obligations of the parties
hereunder shall be construed and interpreted in accordance with the laws of the State of New York,
without giving effect to the conflict of laws provisions thereof. Any action or proceeding brought
by either party against the other arising out of or related to the Agreement shall be brought only
in a state court of competent jurisdiction located in the County of Monroe, State of New York or
the Federal District Court for the Western District of New York located in Monroe County, New York
and the parties hereby consent to the personal jurisdiction and venue of said courts.

     (16) Prior Agreements. This Agreement shall supersede any prior employment agreement,
arrangement or understanding between the Company and the Executive, without limitation, and shall
be effective from the date specified hereinabove.

     (17) Business Combinations. In the event of any sale, merger or any form of business
combination affecting the Company, including without limitation the purchase of assets or any other
form of business combination, the Company will obtain the express written assumption of this
Agreement by the acquiring or surviving entity from such combination, and failure of the Company to
obtain such an assumption will constitute a breach of this Agreement, entitling the Executive to
all payments and other benefits to be provided in the event of termination without cause provided
in Section 9(c).

     (18) Section 409A. This Agreement is intended to comply with Section 409A to the extent its
provisions are subject to that law. The parties agree that they will negotiate in good faith
regarding amendments necessary to bring this Agreement into compliance with the terms of that
Section or an exemption therefrom as interpreted by guidance issued by the Internal Revenue
Service, taking into account any limitations on amendments imposed by Section 409A or Internal

 

 

Revenue Service guidance. The parties further agree that to the extent the terms of this Agreement
fail to qualify for exemption from or satisfy the requirements of Section 409A, this Agreement may
be operated in compliance with Section 409A pending amendment to the extent authorized by the
Internal Revenue Service. In such circumstances the Company and the Executive will administer the
Agreement in a manner which adheres as closely as possible to the existing terms and intent of the
Agreement while complying with Section 409A.

     (19) Headings. The section headings of this Agreement are for convenience of reference
only and are not to be considered in the interpretation of the terms and conditions of this
Agreement.

     (20) Invalidity or Unenforceability. If any term or provision of this Agreement is
held to be invalid or unenforceable, for any reason, such invalidity or unenforceability shall not
affect any other term or provision hereof and this Agreement shall continue in full force and
effect as if such invalid or unenforceable term or provision (to the extent of the invalidity or
unenforceability) had not been contained herein. If any court determines that any provision of
Section 10 hereof is unenforceable because of the duration or geographic scope of such provision,
such court shall have the power to reduce the scope or duration of such provision, as the case may
be, and, in its reduced form, such provision shall then be enforceable.

     (21) Counterparts. This Agreement may be executed in any number of counterparts, each
of which for all purposes shall be deemed to be an original.

[Remainder of page intentionally left blank]

 

 

[Signature page to Jeffrey Glajch Employment Agreement]

          IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of the day and
year first above written.

	 	 	 	 	 
	 	GRAHAM CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	James R. Lines 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 
	 
	 		Jeffrey Glajch 	 
	 	 	 
	 	 	 
	 	 	 
	 

	 	 	 

	STATE OF NEW YORK
	 	)
	 
	 	) ss.:
	COUNTY OF MONROE
	 	)

     On this ___ day of July, 2010, before me personally came James R. Lines, to me known, who,
being by me duly sworn did depose and say that the above-named person resides in Lancaster, New
York, that said person is the President and the Chief Executive Officer of Graham Corporation, the
corporation described in and which executed the foregoing instrument; and that the above-named
person signed thereto by order of the Board of Directors of said corporation.

	 	 	 	 	 
	 	Notary Public

 	 
	 
	 	[Notary Stamped] 	 
	 

	 	 	 

	STATE OF NEW YORK
	 	)
	 
	 	) ss.:
	COUNTY OF MONROE
	 	)

     On the ___ day of July, 2010, before me came Jeffrey Glajch, who, being by me duly sworn did
depose and say that the above-named person resides in                     , New York, and such person
proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to
the above agreement and acknowledged to me that he executed the same in his individual.

	 	 	 	 	 
	 
	 	Notary Public

 	 
	 
	 	[Notary Stamped]

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