Document:

Exhibit 10.3

FORM OF
RESTRICTED STOCK UNIT AGREEMENT

 

UNDER THE
MAC-GRAY CORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

 

Name
of Grantee: _______________________

No. of
Restricted Stock Units Granted: _______________________

Grant
Date: _______________________

Final
Acceptance Date: _______________________

 

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

 

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

 

2.             Restrictions on Transfer of Award.

 

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

 

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

 

3.             Vesting of Restricted Stock Units. 
The restrictions and conditions in Section 2 of this Agreement
shall lapse on up to one third (1/3) of the Restricted Stock Units following
each of the Company’s fiscal years ended December 31, 2008, 2009 and 2010
(each, a “Fiscal Year”) on the date (the “Vesting Date”) on which the Committee
makes a determination that the Company has achieved the Performance Measure (as
defined below) target amount established by the Committee for such Fiscal Year,
provided that the Grantee is an employee of the Company or a Subsidiary on such
Vesting Date.  The actual number of
Restricted Stock Units that will vest on a particular Vesting Date will depend
on the percentage of the Performance Measure target amount the Company achieved
for the previous Fiscal Year based on the following percentage thresholds:

 

 

 

	
  If this % of the Performance Measure target amount

  is achieved (without rounding):

  	
   

  	
  Grantee will earn this % of one third (1/3) of the

  Restricted Stock Units on the Vesting Date:

  	
   

  
	
  Less than 90%

  	
   

  	
  0%

  	
   

  
	
  90%

  	
   

  	
  50%

  	
   

  
	
  91%

  	
   

  	
  55%

  	
   

  
	
  92%

  	
   

  	
  60%

  	
   

  
	
  93%

  	
   

  	
  65%

  	
   

  
	
  94%

  	
   

  	
  70%

  	
   

  
	
  95%

  	
   

  	
  75%

  	
   

  
	
  96%

  	
   

  	
  80%

  	
   

  
	
  97%

  	
   

  	
  85%

  	
   

  
	
  98%

  	
   

  	
  90%

  	
   

  
	
  99%

  	
   

  	
  95%

  	
   

  
	
  100%

  	
   

  	
  100%

  	
   

  

 

For purposes of this Section 3, the “Performance Measure” shall
mean, for any Fiscal Year, (a) the Company’s earnings before interest,
taxes, depreciation and amortization (EBITDA) for such Fiscal Year, less (b) the
Company’s interest expenses and capital expenditures for such Fiscal Year, as
determined by reference to the Company’s audited financial statements for such
Fiscal Year.  The Committee shall review
the Company’s audited financial statements promptly after their preparation
each year to determine the percentage of the Performance Measure target amount
that was achieved for purposes of this Section 3.

 

If on any Vesting Date all or some of the Restricted Stock Units do not
vest because the conditions of this Section 3 are not satisfied at the
100% level, then such unvested Restricted Stock Units shall automatically and
without notice terminate, be forfeited and become null and void, and neither
the Grantee nor any of his or her successors, heirs, assigns, or personal
representatives will thereafter have any further rights or interests in such
forfeited Restricted Stock Units.

 

4.             Dividend Equivalents.

 

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

 

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

 

 

2

 

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

 

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

 

Y = the cash dividend per share amount; and

 

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

 

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

 

5.             Receipt of Shares of Stock.

 

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

 

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

 

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 

 

 

3

 

Grantee may elect
to have such minimum tax withholding obligation satisfied, in whole or in part,
by (i) authorizing the Company to withhold from shares of Stock to be
issued, or (ii) transferring to the Company, a number of shares of Stock
with an aggregate Fair Market Value that would satisfy the withholding amount
due.

 

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

 

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

 

	
   

  	
  MAC-GRAY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  Grantee’s Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Grantee’s name and address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

4Exhibit
10.4

 

Mac-Gray
Senior Executive Incentive Plan

(Amended and
Restated January 17, 2008)

 

 

	
  Name of Plan:

  	
  Mac-Gray Senior
  Executive Incentive Plan (the “Plan)

  
	
   

  	
   

  
	
  Objectives:

  	
  1.

  	
  Drive revenue growth
  and accountability.

  
	
   

  	
  2.

  	
  Tie senior management
  compensation to performance.

  
	
   

  	
  3.

  	
  Motivate and inspire
  senior executives to contribute at peak performance.

  
	
   

  	
   

  
	
  Eligibility:

  	
  The Company’s named
  executive officers (“NEO’s”) are eligible to participate in the Plan.

  
	
   

  	
   

  
	
  Target Awards:

  	
  Each year, the
  Compensation Committee of the Board of Directors (the “Committee”)
  establishes a target cash bonus award for each NEO, expressed as a dollar
  amount or percentage of the NEO’s base salary. The target award is based on a
  combination of financial goals and individual (personal) factors. The target
  award shall indicate the potential cash bonus to be attained upon the
  (i) NEO’s attaining a specified percentage of the goals, (ii) NEO’s
  attaining 100% of the goals, and (ii) NEO’s exceeding the goals.

  
	
   

  	
   

  
	
  Financial Goals:

  	
  Financial goals
  comprise 80% (or such other percentage that may be established by the
  Compensation Committee from time to time in its discretion) of the target
  award. The financial goals consist of any one or more of the following in any
  combination: (i) revenue, pre-tax or after-tax profit levels of the
  Company or any subsidiary, or a division, an operating unit or a business
  segment of the Company or any subsidiary, or any combination of the
  foregoing; and (ii) earnings before interest, taxes, depreciation and
  amortization or cash flow of the Company or any subsidiary, or a division, an
  operating unit or a business segment of the Company or any subsidiary,
  (iii) financial ratios tied to the balance sheet of the Company or any
  subsidiary, or a division, an operating unit or a business segment of the
  Company or any subsidiary. The financial goals may be adjusted by the
  Committee to take into account significant events such as corporate
  acquisitions.

  
	
   

  	
   

  
	
  Individual Factors:

  	
  Individual (personal)
  factors comprise 20% (or such other percentage that may be established by the
  Compensation Committee from time to time in its discretion) of the target
  award. The individual factors that are established by the Committee are
  specific to each NEO.

  
	
   

  	
   

  
	
  Payment of Awards:

  	
  At the end of the
  fiscal year, the determination of the cash bonus amounts to be paid shall be
  determined based on the Company’s actual financial results under the
  financial goals and the Committee’s determination of 

  

 

 

 

	
   

  	
  each NEO’s performance
  under the individual factors. Bonus awards will not be paid if neither the
  financial goals nor the individual factors are attained. If either the
  financial goals or the individual factors are attained for a fiscal year, the
  applicable bonus awards will be paid no later than the March 15th
  following the end of such fiscal year.

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