Document:

Exhibit
10.11

 

Attachment A

 

INDEMNIFICATION AGREEMENT

 

This
INDEMNIFICATION AGREEMENT is made and entered into as of the 8th day of
December, 2008 (the “Agreement”), by and between United Stationers Inc., a
Delaware corporation (the “Company”), the director or executive officer of the
Company whose name appears on the signature page of this Agreement (“Indemnitee”),
and for purposes of Section 9 only, United Stationers Supply Co., an
Illinois corporation and wholly-owned subsidiary of the Company (“USSCO”).

 

WHEREAS,
highly competent persons are becoming more reluctant to serve publicly-held
corporations as directors or executive officers or in other capacities unless
they are provided with reasonable protection through insurance or
indemnification against risks of claims and actions against them arising out of
their service to and activities on behalf of the corporations.

 

WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that the
Company should act to assure its directors and executive officers that there
will be increased certainty of such protection in the future.

 

WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify such persons to the fullest extent permitted by
applicable law so that they will serve or continue to serve the Company free
from undue concern that they will not be so indemnified.

 

WHEREAS, Indemnitee
is willing to serve, to continue to serve and to take on additional service for
or on behalf of the Company on the condition that Indemnitee be so indemnified.

 

WHEREAS,
in consideration of the benefits received and to be received by the Company in
connection with actions taken and to be taken by the Board and by the officers
of the Company, the Company has determined that it is in the best interest of
the Company for the reasons set forth above to be a party to this Agreement and
to provide indemnification to the directors and executive officers of the
Company in connection with their service to and activities on behalf of the
Company and its subsidiaries.

 

WHEREAS,
the Company acknowledges that for purposes of this Agreement the directors and
executive officers of the Company who enter into this Agreement are serving in
such capacities at the request of the Company.

 

WHEREAS,
the Company further acknowledges that such directors and executive officers are
willing to serve, to continue to serve and to take on additional service for or
on behalf of the Company, thereby benefiting the Company and its subsidiaries,
on the condition that the Company enter into, and provide indemnification
pursuant to, this Agreement.

 

 

NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
the Company and Indemnitee do hereby covenant and agree as follows:

 

1.             Definitions.

 

(a)           For purposes of this Agreement:

 

(i)            “Affiliate” shall mean any
corporation, partnership, joint venture, trust or other enterprise in respect
of which Indemnitee is or was or will be serving directly or indirectly at the
request of the Company.

 

(ii)           “Disinterested Director” shall mean a
director of the Company who is not or was not a party to the Proceeding in
respect of which indemnification is being sought by Indemnitee.

 

(iii)          “Expenses” shall include all
reasonable attorneys’ fees and costs, retainers, court costs, transcripts, fees
of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees and all other
disbursements or expenses incurred in connection with asserting or defending
claims.

 

(iv)          “Independent Counsel” shall mean a law
firm or lawyer that neither is presently nor in the past calendar year has been
retained to represent: (i) the Company or Indemnitee in any matter
material to any such party or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder in any matter material to
such other party. Notwithstanding the foregoing, the term “Independent Counsel”
shall not include any law firm or person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing any of the Company or Indemnitee in an action to determine
Indemnitee’s right to indemnification under this Agreement. All Expenses of the
Independent Counsel incurred in connection with acting pursuant to this
Agreement shall be borne by the Company.

 

(v)           “Losses” shall mean all liabilities,
losses and claims (including judgments, fines, penalties and amounts to be paid
in settlement) incurred in connection with any Proceeding.

 

(vi)          “Proceeding” shall include any
threatened, pending or completed action, suit, arbitration, mediation,
alternate dispute resolution mechanism, investigation, administrative hearing
or any other proceeding, whether civil, criminal, administrative or
investigative.

 

2.             Service by Indemnitee.  Indemnitee agrees to begin or continue to
serve the Company or any Affiliate as a director or an executive officer.
Notwithstanding anything contained herein, this Agreement shall not create a
contract of employment between the Company and Indemnitee, and the termination
of Indemnitee’s relationship with the Company or an Affiliate by either party
hereto shall not be restricted by this Agreement.

 

3.             Indemnification.  The Company agrees to indemnify Indemnitee
for, and hold Indemnitee harmless from and against, any Losses or Expenses at
any time incurred by or assessed 

 

2

 

against
Indemnitee arising out of or in connection with the service of Indemnitee as a
director or an executive officer of the Company or in any capacity for an
Affiliate at the request of the Company (collectively referred to as a “Director
or an Officer of the Company”) to the fullest extent permitted by the laws of
the State of Delaware in effect on the date hereof or as such laws may from
time to time hereafter be amended to increase the scope of such permitted
indemnification. Without diminishing the scope of the indemnification provided
by this Section 3, the rights of indemnification of Indemnitee provided
hereunder shall include but shall not be limited to those rights set forth
hereinafter.

 

4.             Action or Proceeding Other Than
an Action by or in the Right of the Company.  Indemnitee shall be entitled to the indemnification
rights provided herein if Indemnitee is a person who was or is made a party or
is threatened to be made a party to or is involved (including, without
limitation, as a witness) in any Proceeding, other than an action by or in the
right of the Company, as the case may be, by reason of (a) the fact that
Indemnitee is or was a Director or an Officer of the Company or (b) anything
done or not done by Indemnitee in any such capacity.

 

5.             Actions by or in the Right of
the Company.  Indemnitee shall be
entitled to the indemnification rights provided herein if Indemnitee is a
person who was or is a party or is threatened to be made a party to or is
involved (including, without limitation, as a witness) in any Proceeding
brought by or in the right of the Company to procure a judgment in its favor by
reason of (a) the fact that Indemnitee is or was a Director or an Officer
of the Company or (b) anything done or not done by Indemnitee in any such
capacity. Pursuant to this Section, Indemnitee shall be indemnified
against Losses or Expenses incurred or suffered by Indemnitee or on Indemnitee’s
behalf in connection with the defense or settlement of any Proceeding if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company. Notwithstanding
the foregoing provisions of this Section, no such indemnification shall be made
in respect of any claim, issue or matter as to which Delaware law expressly
prohibits such indemnification by reason of an adjudication of liability of
Indemnitee to the Company unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such Losses and Expenses which
the Court of Chancery or such other court shall deem proper.

 

6.             Indemnification for Losses and
Expenses of Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been wholly successful on the
merits or otherwise in any Proceeding referred to in Section 3, 4 or 5
hereof on any claim, issue or matter therein, Indemnitee shall be
indemnified against all Losses and Expenses incurred by Indemnitee or on
Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company agrees to indemnify Indemnitee to the maximum extent permitted by
law against all Losses and Expenses incurred by Indemnitee in connection with
each successfully resolved claim, issue or matter. In any review or Proceeding
to determine the extent of indemnification, the Company shall bear the burden
of proving any lack of success and which amounts sought in indemnity are
allocable to claims, issues or matters which were not successfully resolved.
For purposes of this Section and without limitation, the termination of
any such claim, issue or matter 

 

3

 

by
dismissal with or without prejudice shall be deemed to be a successful
resolution as to such claim, issue or matter.

 

7.             Payment for Expenses of a
Witness.  Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of the
fact that Indemnitee is or was a Director or an Officer of the Company, a
witness in any Proceeding, the Company agrees to pay to Indemnitee all Expenses
actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in
connection therewith.

 

8.             Advancement of Expenses.  All Expenses incurred by or on behalf of
Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee
within three months) in connection with any Proceeding shall be paid by the
Company in advance of the final disposition of such Proceeding within twenty
days after the receipt by the Company of a statement or statements from
Indemnitee requesting from time to time such advance or advances, whether or
not a determination to indemnify has been made under Section 10.
Indemnitee’s entitlement to such advancement of Expenses shall include those
incurred in connection with any Proceeding by Indemnitee seeking an
adjudication or award in arbitration pursuant to this Agreement. The financial
ability of Indemnitee to repay an advance shall not be a prerequisite to the
making of such advance. Such statement or statements shall reasonably evidence
such Expenses incurred (or reasonably expected to be incurred) by Indemnitee in
connection therewith and shall include or be accompanied by a written
undertaking by or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that Indemnitee is not entitled to be indemnified
therefor pursuant to the terms of this Agreement.

 

9.             Guarantee.  In the event that the Company fails or is
unable to perform any of its payment obligations under the terms of this
Agreement, USSCO hereby unconditionally guarantees that it will perform the
obligations of the Company and pay Indemnitee for any Losses or Expenses for
which Indemnitee is entitled to be indemnified or for Expenses to be advanced
hereunder.  Such payment will be made
promptly upon request and without the necessity of a demand.

 

10.           Procedure for Determination of
Entitlement to Indemnification.

 

(a)           When seeking indemnification under
this Agreement (which shall not include in any case the right of Indemnitee to
receive payments pursuant to Section 7 and Section 8 hereof, which
shall not be subject to this Section 10), Indemnitee shall submit a
written request for indemnification to the Company. Determination of Indemnitee’s
entitlement to indemnification shall be made promptly, but in no event later
than 30 days after receipt by the Company of Indemnitee’s written request for
indemnification. The Secretary of the Company shall, promptly upon receipt of
Indemnitee’s request for indemnification, advise the Board that Indemnitee has
made such request for indemnification.

 

(b)           The entitlement of Indemnitee to
indemnification under this Agreement shall be determined in the specific case (1) by
the Board by a majority vote of the Disinterested Directors, even though less
than a quorum, or (2) if there are no Disinterested Directors, or if such
Disinterested Directors so direct, by Independent Counsel or (3) by the
stockholders.

 

4

 

(c)           In the event the determination of
entitlement is to be made by Independent Counsel, such Independent Counsel
shall be selected by the Indemnitee, subject to the approval of the Board, such
approval not to be unreasonably withheld. 
Upon failure of the Indemnitee to so select such Independent Counsel or
upon failure of the Board to so approve, such Independent Counsel shall be
selected by the American Arbitration Association of New York, New York or such
other person as such Association shall designate to make such selection.

 

(d)           If the determination made pursuant to
Section 10(b) is that Indemnitee is not entitled to indemnification
to the full extent of Indemnitee’s request, Indemnitee shall have the
right to seek entitlement to indemnification in accordance with the procedures
set forth in Section 11 hereof.

 

(e)           If the person or persons empowered
pursuant to Section 10(b) to make a determination with respect to
entitlement to indemnification shall have failed to make the requested
determination within 30 days after receipt by the Company of such request, the
requisite determination of entitlement to indemnification shall be deemed to
have been made and Indemnitee shall be absolutely entitled to such
indemnification, absent (i) misrepresentation by Indemnitee of a material
fact in the request for indemnification or (ii) a final judicial
determination that all or any part of such indemnification is expressly
prohibited by law.

 

(f)            The termination of any Proceeding by
judgment, order, settlement or conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, adversely affect the rights of Indemnitee
to indemnification hereunder except as may be specifically provided herein, or
create a presumption that Indemnitee did not act in good faith and in a manner
which Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, as the case may be, or create a presumption that
(with respect to any criminal action or proceeding) Indemnitee had reasonable
cause to believe that Indemnitee’s conduct was unlawful.

 

(g)           For purposes of any determination of
good faith hereunder, Indemnitee shall be deemed to have acted in good
faith if in taking such action Indemnitee relied on the records or books of
account of the Company or an Affiliate, including financial statements, or on
information supplied to Indemnitee by the officers of the Company or an
Affiliate in the course of their duties, or on the advice of legal counsel for
the Company or an Affiliate or on information or records given or reports made
to the Company or an Affiliate by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care to the Company or
an Affiliate. The Company shall have the burden of establishing the absence of
good faith. The provisions of this Section 10(g) shall not be deemed
to be exclusive or to limit in any way the other circumstances in which
Indemnitee may be deemed to have met the applicable standard of conduct set
forth in this Agreement.

 

(h)           The knowledge and/or actions, or
failure to act, of any other director, officer, agent or employee of the
Company or an Affiliate shall not be imputed to Indemnitee for purposes of
determining the right to indemnification under this Agreement.

 

5

 

11.           Remedies in Cases of Determination
Not to Indemnify or to Advance Expenses.

 

(a)           In the event that (i) a
determination is made that Indemnitee is not entitled to indemnification
hereunder, (ii) advances are not made pursuant to Section 8 hereof or
(iii) payment has not been timely made following a determination of
entitlement to indemnification pursuant to Section 10 hereof, Indemnitee
shall be entitled to seek a final adjudication either through an arbitration
proceeding or in an appropriate court of the State of Delaware or any other
court of competent jurisdiction of Indemnitee’s entitlement to such
indemnification or advance.

 

(b)           In the event a determination has been
made in accordance with the procedures set forth in Section 10 hereof, in
whole or in part, that Indemnitee is not entitled to indemnification, any
judicial proceeding or arbitration referred to in Section 11(a) shall
be de novo and Indemnitee shall not be prejudiced by reason of any such prior
determination that Indemnitee is not entitled to indemnification, and the
Company shall bear the burdens of proof specified in Sections 6 and 10 hereof
in such proceeding.

 

(c)           If a determination is made or deemed
to have been made pursuant to the terms of Section 10 hereof or this Section 11
that Indemnitee is entitled to indemnification, the Company shall be bound by
such determination in any judicial proceeding or arbitration in the absence of (i) a
misrepresentation of a material fact by Indemnitee or (ii) a final
judicial determination that all or any part of such indemnification is
expressly prohibited by law.

 

(d)           To the extent deemed appropriate by
the court, interest shall be paid by the Company to Indemnitee at a rate equal
to the rate paid by the Company or its subsidiaries to the principal senior
secured lender thereto for amounts which the Company indemnifies or is obliged
to indemnify Indemnitee for the period commencing with the date on which
Indemnitee requested indemnification (or reimbursement or advancement of any
Expenses) and ending with the date on which such payment is made to Indemnitee
by the Company.

 

12.           Expenses Incurred by Indemnitee to
Enforce this Agreement.  All Expenses
incurred by Indemnitee in connection with the preparation and submission of
Indemnitee’s request for indemnification hereunder shall be borne by the
Company. In the event that Indemnitee is a party to or intervenes in any
proceeding in which the validity or enforceability of this Agreement is at
issue or seeks an adjudication to enforce Indemnitee’s rights under, or to
recover damages for breach of, this Agreement, Indemnitee, if Indemnitee
prevails in whole in such action, shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any Expenses incurred
by Indemnitee. If it is determined that Indemnitee is entitled to
indemnification for part (but not all) of the indemnification so requested,
Expenses incurred in seeking enforcement of such partial indemnification shall
be reasonably prorated among the claims, issues or matters for which Indemnitee
is entitled to indemnification and for claims, issues or matters for which
Indemnitee is not so entitled.

 

13.           Non-Exclusivity.  The rights of indemnification and to receive
advances as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under any law,
certificate of incorporation, by-law, other agreement, vote of stockholders or resolution
of directors or otherwise, both as to action in Indemnitee’s official capacity
and as to action in another capacity while holding such directorship or office.
To the

 

6

 

extent
Indemnitee would be prejudiced thereby, no amendment, alteration, rescission or
replacement of this Agreement or any provision hereof shall be effective as to
Indemnitee with respect to any action taken or omitted by such Indemnitee in
Indemnitee’s position with the Company or an Affiliate or any other entity
which Indemnitee is or was serving at the request of the Company prior to such
amendment, alteration, rescission or replacement.

 

14.           Duration of Agreement.  This Agreement shall apply to any claim
asserted and any Losses and Expenses incurred in connection with any claim
asserted on or after the effective date of this Agreement and shall continue
until and terminate upon the later of: (a) ten years after Indemnitee has
ceased to occupy any of the positions or have any of the relationships
described in Section 3, 4 or 5 hereof; or (b) one year after the
final termination of all pending or threatened Proceedings of the kind
described herein with respect to Indemnitee. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisee, executors,
administrators or other legal representatives.

 

15.           Maintenance of D&O Insurance.

 

(a)           The Company hereby covenants and
agrees with Indemnitee that, so long as Indemnitee shall continue to serve as a
Director or an Officer of the Company and thereafter so long as Indemnitee
shall be subject to any possible claim or threatened, pending or completed
Proceeding, whether civil, criminal or investigative, by reason of the fact
that Indemnitee was a Director or an Officer of the Company or any other entity
which Indemnitee was serving at the request of the Company, the Company shall
maintain in full force and effect (i) the directors’ and officers’
liability insurance issued by the insurer and having the policy amount and
deductible as currently in effect with respect to directors and officers of the
Company or any of its subsidiaries and (ii) any replacement or substitute
policies issued by one or more reputable insurers providing in all respects
coverage at least comparable to and in the same amount as that currently
provided under such existing policy (collectively, “D&O Insurance”).

 

(b)           In all policies of D&O Insurance, Indemnitee
shall be named as an insured in such a manner as to provide Indemnitee the same
rights and benefits, subject to the same limitations, as are accorded to the
Company’s directors or officers most favorably insured by such policy.

 

(c)           Notwithstanding anything to the
contrary set forth in (a) above, the Company shall have no obligation to
maintain D&O Insurance if the Company determines in good faith that such
insurance is not reasonably available, the premium cost for such insurance is
disproportionate to the amount of coverage provided or the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit.

 

(d)           If the Company ceases to maintain
D&O Insurance, the Company shall notify Indemnitee in writing of such
cessation within three (3) calendar days of the earlier of (i) the date
the Company determines to cease D&O Insurance or (ii) the date D&O
Insurance ceases.

 

16.           Severability. Should any part,
term or condition hereof be declared illegal or unenforceable or in conflict
with any other law, the validity of the remaining portions or provisions

 

7

 

hereof
shall not be affected thereby, and the illegal or unenforceable portions hereof
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions hereof intact.

 

17.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.

 

18.           Headings.  Section headings are for convenience
only and do not control or affect meaning or interpretation of any terms or
provisions hereof.

 

19.           Modification and Waiver.  No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by each of the
parties hereto.

 

20.           No Duplicative Payment.  The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable hereunder if
and to the extent that Indemnitee has otherwise actually received such payment
(net of Expenses incurred in collecting such payment) under any insurance
policy, contract, agreement or otherwise.

 

21.           Notices.  All notices, requests, demands and other
communications provided for by this Agreement shall be in writing (including
telecopier or similar writing) and shall be deemed to have been given at the
time when mailed, enclosed in a registered or certified postpaid envelope, in
any general or branch office of the United States Postal Service, or sent by
Federal Express or other similar overnight courier service, addressed to the
address of the parties stated below or to such changed address as such party
may have fixed by notice or, if given by telecopier, when such telecopy is
transmitted and the appropriate answer back is received.

 

(a)           If to Indemnitee, to the address
appearing on the signature page hereof.

 

(b)           If to the Company, to:

 

United
Stationers Inc.

2200
East Golf Road

Des
Plaines, Illinois 60016-1267

Attention:
General Counsel

 

22.           Governing Law.  The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the internal
laws of the State of Delaware without regard to its conflicts of law rules.

 

23.           Construction.  The parties acknowledge that this Agreement
is the result of arm’s-length negotiations between sophisticated parties each
afforded representation by legal counsel. 
Each and every provision of this Agreement shall be construed as though
both parties participated equally in the drafting of same, and any rule of
construction that a document shall be construed against the drafting party
shall not be applicable to this Agreement.

 

24.           Entire Agreement.  Subject to the provisions of Section 13
hereof, this Agreement constitutes the entire understanding between the parties
and supersedes all proposals,

 

8

 

commitments, writings, negotiations and understandings, oral and
written, and all other communications between the parties relating to the
subject matter hereof. This Agreement may not be amended or otherwise modified
except in writing duly executed by all of the parties. A waiver by any party of
any breach or violation of this Agreement shall not be deemed or construed as a
waiver of any subsequent breach or violation thereof.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.

 

	
   

  	
  UNITED STATIONERS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard W. Gochnauer

  
	
   

  	
  Name: 

  	
  Richard W. Gochnauer

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric A. Blanchard

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Eric
  A. Blanchard

  
	
   

  	
  Address:

  	
   

  
	
   

  	
  City
  and State:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For
  the purposes of Section 9 only,

  
	
   

  	
   

  
	
   

  	
  UNITED
  STATIONERS SUPPLY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard W. Gochnauer

  
	
   

  	
  Name: 

  	
  Richard W. Gochnauer

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  

 

9Exhibit 10.2

 

RESTRICTED STOCK UNIT AGREEMENT

 

UNDER THE MAC-GRAY CORPORATION

2009 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 2009 Stock Option and Incentive Plan as amended
through the date hereof (the “Plan”), 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.  Neither this Award nor any underlying
Restricted Stock Units may be sold, transferred, pledged, assigned or otherwise
encumbered or disposed of by the Grantee until (a) such Restricted Stock
Units have vested as provided in Section 3 of this Agreement and (b) shares
of Stock have been issued to the Grantee in respect of such vested Restricted
Stock Units.

 

3.             Vesting
of Restricted Stock Units.  The Restricted Stock Units shall vest in
accordance with the schedule set forth below, provided in each case that the
Grantee is then, and since the Grant Date has continuously been, serving as a
Director of the Company.

 

	
  Incremental (Aggregate)

  Number of

  Restricted Stock Units Vested

  	
   

  	
  Vesting
  Date

  
	
   

  	
  (33
  1/3 %)

  	
   

  	
   

  
	
   

  	
  (66
  2/3 %)

  	
   

  	
   

  
	
   

  	
  (100
  %)

  	
   

  	
   

  

 

The Administrator may at any
time accelerate the vesting schedule specified in this Section 3.  Notwithstanding the foregoing, the Grantee
shall become vested in all unvested Restricted Stock Units upon (a) a Sale
Event and (b) Grantee’s retirement or other separation from service as a
Director of the Company, other than a separation from service at any time
following a resolution by the Company’s Board of Directors that the Grantee (i) committed
a material breach of any agreement between the Grantee and the Company; (ii) has
been convicted of or entered a plea of nolo contendere to a felony or a crime
involving moral turpitude; or (iii) 

 

 

committed any material misconduct or willful and
deliberate non-performance (other than by reason of disability) of the Grantee’s
duties to the Company.  If the Grantee’s
service as a Director of the Company is terminated with cause, any Restricted
Stock Units that have not vested as of such date under this Section 3
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.

 

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 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 

 

2

 

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.

 

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 authorizing the
Company to withhold from shares of Stock to be issued a number of shares of
Stock with an aggregate Fair Market Value that would satisfy the withholding
amount due.

 

8.             Continuation of Service as Director.  This Agreement shall not confer upon the
Grantee any right to continue service with the Company, nor shall this
Agreement interfere in any way with the Company’s right to terminate the
Grantee’s service 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, Jr.

  
	
   

  	
   

  	
   

  	
  Title:
  Chief Executive Officer

  

 

3

 

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

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grantee’s
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grantee’s
  name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

4

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