Unless the Committee determines otherwise, annual awards under the Plan for the Fiscal Year will consist of shares of time-vesting restricted stock units (“RSUs”) and shares of performance-vesting restricted stock units (“PSUs,”), which awards will be issued under the 2020 Graham Corporation Equity Incentive Plan, or a successor plan thereto or restatement thereof (the “Incentive Plan”) and will be subject to the terms thereof.

RSUs

Unless the Committee determines otherwise, RSUs will vest one-third on each of the first three anniversaries of the date of grant.

The number of shares of RSUs to be issued to an eligible employee for a Fiscal Year will be determined by multiplying 50 percent (or such other percentage as may be determined by the Committee) of the eligible employee’s base salary then in effect by such employee’s long-term incentive percentage (the “Target L-T Percentage”) as listed in Exhibit A, and then dividing by the value of a share of stock on the date of grant, rounded to the nearest whole number.

PSUs

Unless the Committee determines otherwise, PSUs will vest on the third anniversary of the date of grant, depending on the satisfaction of the performance goal matrices for the three-year period commencing with the 2023 Fiscal Year, which matrices will be determined by the Committee. In determining the performance for the three-year period commencing with a Fiscal Year, the Committee shall have the discretion to include or exclude any extraordinary events that positively or negatively affected the Company’s financial performance for the Fiscal Year.

The number of PSUs to be issued to an eligible employee for a Fiscal Year will be determined by multiplying 50 percent (or such other percentage as may be determined by the Committee) of the eligible employee’s base salary then in effect by such employee’s Target L-T Incentive Percentage, and then dividing by the value of a share of stock on the date of grant, rounded to the nearest whole number.

Effect of Certain Events

Notwithstanding any other provision of the Plan, the following terms shall apply to all RSUs and PSUs awarded under the Plan:

•  Except as otherwise provided in an agreement with the executive, upon the death or Disability of the executive, or the termination of the executive’s employment without Cause or the executive’s resignation for Good Reason within the 12 month period following a Change in Control, any outstanding RSUs awarded under the Plan will vest in full, and any outstanding PSUs will vest pro-rata based on the target level of the applicable performance goals. Terms have the meaning given to them by the Incentive Plan.

•  Upon the retirement of the executive at the age of 65 or later, outstanding RSUs awarded under the Plan will vest in accordance with the vesting schedule for the award, and any outstanding PSUs will vest pro-rata based on the satisfaction of the applicable performance goals as determined at the end of the performance period.

Amendment and

Termination

The Plan may be amended or terminated by the Committee at any time. No eligible employee will have any right to an award under the Plan until such award is approved by the Committee.

Neither the existence of the Plan nor the grant of an award in any year shall give an eligible employee any right to an award or similar award in future years or any right to continue such eligible employee’s employment relationship with the Company. All eligible employees shall remain subject to discharge to the same extent as if the Plan were not in effect.

Position

President and Chief Executive Officer

Vice President – Finance, Chief Financial Officer, and Chief Accounting Officer

Vice President and General Managers

Eligible employees shall include the Chief Executive Officer and his direct reports. “Direct reports” means the: (a) Vice President – Finance, Chief Financial Officer and Chief Accounting Officer, (b) Vice Presidents and General Managers, and (c) such other employees of the Company selected by the Chief Executive Officer to participate in this Plan, subject to the approval by the Compensation Committee of such participation.

Target participation levels shall be established by the Compensation Committee.

Newly hired or promoted employees are eligible for participation in the Plan upon employment unless otherwise determined by the Chief Executive Officer for Direct Reports and by the Compensation Committee in the case of the Chief Executive Officer.

Participants who voluntarily terminate employment or whose employment is involuntarily terminated, in each case, for any reason before the end of the fiscal year shall receive no bonus except as approved by the Compensation Committee, in its sole discretion.

Financial goals shall be approved by the Board of Directors.

The Chairman of the Compensation Committee shall approve individual goals for the Chief Executive Officer. The Chief Executive Officer shall approve individual goals for Direct Reports. The Chairman of the Compensation Committee or Chief Executive Officer, as applicable, shall determine the number and weighting of goals.

Participants who change their position during the fiscal year shall receive bonus on a pro rated basis.

Special awards may be made to any person who has made an extraordinary contribution to the Company during the year. Such awards must be recommended by the Chief Executive Officer to the Chairman of the Compensation Committee and may be approved by the Compensation Committee.

Unusual or non-recurring events that either positively or negatively affect financial performance may be included or excluded in financial calculations at the discretion of the Compensation Committee.

Nothing herein shall be construed to limit or affect the normal and usual powers of management, including right to terminate any individual at any time.

The Compensation Committee shall have final and conclusive authority on the existence and administration of this plan.

In the event that the Company is in danger of failing to meet its bank covenants, the Compensation Committee may consider granting equity awards in lieu of paying cash bonuses.

In the event of death, a Participant’s designated beneficiary will be entitled to the Participant’s plan benefits. If the Participant has not designated a beneficiary, the Participant’s beneficiary or beneficiaries will be determined in accordance with the Participant’s will. If there is no will, the beneficiary or beneficiaries shall be determined by the laws of descent and distribution in the state in which the Participant was a resident at the time of death. In the event of death prior to the end of a fiscal year, the Participant will be entitled to a receive plan benefits on a pro rated basis, which shall be paid to a Participant’s designated beneficiary.

Position

Chief Executive Officer

Vice President – Finance, Chief Financial Officer and Chief Accounting Officer

Vice Presidents and General Managers

Position

Chief Executive Officer

Vice President – Finance, Chief Financial Officer and Chief Accounting Officer

Vice Presidents and General Managers

For the Chief Executive Officer and Chief Financial Officer net income includes consolidated net income and for the Vice Presidents and General Managers net income includes consolidated net income (15%) and divisional operating income (35%).

For the Chief Executive Officer and Chief Financial Officer bookings include consolidated bookings and for the Vice Presidents and General Managers bookings include consolidated bookings (6%) and divisional bookings (14%).