**Exhibit 10.54**

 

**STOCK UNITAWARD AGREEMENT**

 

(Granted under the UFP Technologies, Inc.2003 Incentive Plan)

 

This Stock Unit Award Agreement is entered into as of the 19th day of February, 2010 by and between UFPTechnologies, Inc. (hereinafter the “Company”) and                          (the “Awardee”).  Capitalized terms usedbut not defined herein shall have the meanings assigned to them in the Company’s2003 Incentive Plan (the “Plan”).  StockUnit Awards (SUA’s represent the Company’s unfunded and unsecured promise toissue shares of Common Stock at a future date, subject to the terms of thisAward Agreement, including, without limitation, the performance objectives setforth in Schedule A hereto, and the Plan.  Awardee has no rights under the SUAs otherthan the rights of a general unsecured creditor of the Company.

 

1.             Grant of StockUnit Awards; Performance Objectives; Vesting.

 

(a)           TheCompany, in the exercise of its sole discretion pursuant to the Plan, doeshereby award to the Awardee the number of SUAs set forth on Schedule Ahereto upon the terms and subject to the conditions hereinafter contained.  The SUA’s shall consist of a Threshold Award,a Target Award and an Exceptional Award. The Threshold Award, The Target Award and the Exceptional Award are eachawarded subject to attainment during the Performance Cycle described on ScheduleA of the Performance Objectives set forth on Schedule A .

 

(b)           Subjectto attainment of any applicable Performance Objectives, payment with respect tovested SUA’s shall be made entirely in the form of shares of Common Stock ofthe Company on each respective vesting date as set forth on Schedule A.

 

(c)           Assoon as possible after the end of the Performance Cycle, the Committee willcertify in writing whether and to what extent the Performance Objectives havebeen met for the Performance Cycle.  Thedate of the Committee’s certification pursuant to this subsection (c) shallhereinafter be referred to as the “Certification Date”.  The Company will notify the Awardee of theCommittee’s certification following the Certification Date (such notice, the “DeterminationNotice”).  The Determination Notice shallspecify (i) the Performance Objective, as derived from the Company’saudited financial statements; and (ii) the extent, if any, to which thePerformance Objectives were satisfied with respect to the Threshold Award, theTarget Award and the Exceptional Award.

 

2.             Change inControl.

 

(a)           Notwithstandingthe vesting schedule set forth in Schedule A: if there is a Change in Controlof the Company (as defined below) following the end of the Performance Cycle,and the Awardee’s Continuous Status as an employee, as contemplated by Section 4hereof, shall not have been terminated as of the date immediately prior to theeffective date of such Change in Control, then subject to attainment during thePerformance Cycle described on

 

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ScheduleA of the Performance Objectives set forth on Schedule A, andsubject to the provisions of Section 21 of this Award Agreement, any SUA’srepresenting the Threshold, Target and the Exceptional Award, which are notalready vested shall become vested in full as of the effective date of suchChange in Control.

 

(b)           Forthe purpose of this Agreement, a “Changein Control” shall mean  (i) theconsummation of a reorganization, merger or consolidation or sale ordisposition of all or substantially all of the assets of the Company (a “BusinessCombination”), unless, in each case following such Business Combination, (A) allor substantially all of the individuals and entities who were the beneficialowners of the Common Stock of the Company immediately before the consummationof such Business Combination beneficially own, directly or indirectly, morethan 50% of, respectively, the then outstanding shares of common stock and thecombined voting power of the then outstanding voting securities entitled tovote generally in the election of directors, as the case may be, of thecorporation resulting from such Business Combination (including, withoutlimitation, a corporation that as a result of the transaction owns the Companyor all or substantially all of the assets of the Company either directly orindirectly through one or more subsidiaries); and (B) no person or group(as defined in Section 13(d) or 14(d)(2) of the SecuritiesExchange Act of 1934) of the Company or the corporation resulting from theBusiness Combination) beneficially owns, directly or indirectly, more than 50%of the then outstanding shares of the common stock of the corporation resultingfrom the Business Combination;  (ii) Individualswho, as of the date of this Agreement, constitute the Board of Directors of theCompany (the “Incumbent Board”) cease for any reason to constitute at least amajority of the Board of Directors of the Company, provided, however, that anyindividual’s becoming a director after the date of this Agreement whoseelection, or nomination for election by the stockholders of the Company, wasapproved by a vote of at least a majority of the directors then comprising theIncumbent Board will be considered as though the individual were a member ofthe Incumbent Board, but excluding, for this purpose, any individual whoseinitial assumption of office occurs as a result of an actual or threatenedelection contest with respect to the election or removal of directors or otheractual or threatened solicitation of proxies or consents by or on behalf of aPerson other than the Board; or (iii) any person (as defined in Section 13(d) or14(d)(2) of the Securities Exchange Act of 1934) shall become at any timeor in any manner the beneficial owner of capital stock of the Companyrepresenting more than 50% of the voting power of the Company.

 

3.             Termination.  Unless terminated earlier under Section 4, 5 or 6 below, an Awardee’srights under this Award Agreement with respect to the SUAs issued under thisAward Agreement shall terminate at the time such SUAs are converted into sharesof Common Stock.

 

4.             Termination ofAwardee’s Continuous Status as an Employee.   Except as otherwisespecified in Section 5 and 6 below, in the event of termination of Awardee’sContinuous Status as an employee of the Company, Awardee’s rights under thisAward Agreement in any unvested SUAs shall terminate.  For purposes of this Award Agreement, anAwardee’s Continuous Status as an employee shall mean the absence of anyinterruption or termination of service as an employee.  Continuous Status as an employee shall not beconsidered interrupted in the case of sick leave or leave of absence for whichContinuous Status is not considered interrupted as determined by the Company inits sole discretion.

 

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5.             Disability ofAwardee.   Notwithstanding the provisions of Section 4above, in the event of termination of Awardee’s Continuous Status as anemployee as a result of disability (within the meaning of Section 409A ofthe Internal Revenue Code, and hereinafter referred to as “Disability”), theSUAs which would have vested during the twelve (12) months following the dateof such termination, set out in Schedule A, shall become vested as ofthe date of such termination, subject, however, to the provisions of Section 21of this Award Agreement.  If Awardee’sDisability originally required him or her to take a short-term disability leavewhich was later converted into long-term disability, then for the purposes ofthe preceding sentence the date on which Awardee ceased performing servicesshall be deemed to be the date of commencement of the short-term disabilityleave.  The Awardee’s rights in anyunvested SUAs that remain unvested after the application of this Section 5shall terminate at the time Awardee ceases to be in Continuous Status as anemployee.

 

6.             Death of Awardee.  Notwithstanding the provisions of Section 4 above, in the event of thedeath of Awardee:

 

(a)           Ifthe Awardee was, at the time of death, in Continuous Status as an employee, theSUAs which would have vested during the twelve (12) months following the dateof death of Awardee, set out in Schedule A, shall become vested as ofthe date of death.

 

(b)           TheAwardee’s rights in any unvested SUAs that remain after the application of Section 6(a) shallterminate at the time of the Awardee’s death.

 

7.             Value ofUnvested SUAs.   In consideration of the award of these SUAs,Awardee agrees that upon and following termination of Awardee’s ContinuousStatus as an employee for any reason (whether or not in breach of applicablelaws), and regardless of whether Awardee is terminated with or without cause,notice, or pre-termination procedure or whether Awardee asserts or prevails ona claim that Awardee’s employment was terminable only for cause or only withnotice or pre-termination procedure, any unvested SUAs under this AwardAgreement shall be deemed to have a value of zero dollars ($0.00).

 

8.             Conversion ofSUAs to shares of Common Stock; Responsibility for Taxes.

 

(a)           ProvidedAwardee has satisfied the requirements of Section 8(b) below, andsubject to the provisions of Section 21 below, on the vesting of any SUAs,such vested SUAs shall be converted into an equivalent number of shares ofCommon Stock that will be distributed to Awardee or, in the event of Awardee’sdeath, to Awardee’s legal representative, as soon as practicable.  The distribution to the Awardee, or in thecase of the Awardee’s death, to the Awardee’s legal representative, of sharesof Common Stock in respect of the vested SUAs shall be evidenced by a stockcertificate, appropriate entry on the books of the Company or of a dulyauthorized transfer agent of the Company, or other appropriate means as determinedby the Company.

 

(b)           Regardlessof any action the Company takes with respect to any or all income tax(including federal, state and local taxes), social security, payroll tax orother tax-related 

 

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withholding(“Tax Related Items”), Awardee acknowledges that the ultimate liability for allTax Related Items legally due by Awardee is and remains Awardee’sresponsibility and that the Company (i) makes no representations orundertakings regarding the treatment of any Tax Related Items in connection withany aspect of the SUAs, including the grant of the SUAs, the vesting of SUAs,the conversion of the SUAs into shares of Common Stock, the subsequent sale ofany shares of Common Stock acquired at vesting and the receipt of anydividends; and (ii) does not commit to structure the terms of the grant orany aspect of the SUAs to reduce or eliminate the Awardee’s liability for TaxRelated Items.  Prior to the issuance ofshares of Common Stock upon vesting of SUAs as provided in Section 8(a) above,Awardee shall pay, or make adequate arrangements satisfactory to the Company tosatisfy all withholding obligations of the Company.  In this regard, Awardee authorizes theCompany to withhold all applicable Tax Related Items legally payable by Awardeefrom Awardee’s wages or other cash compensation payable to Awardee by theCompany.  Alternatively, the Awardee mayelect to satisfy an applicable withholding requirement, in whole or in part, byhaving the Company withhold shares of Common Stock to satisfy such tax obligations.  The Awardee may only elect to have suchshares withheld having a Market Value on the date the tax is to be determinedequal to the minimum statutory total tax which could be imposed on thetransaction. All elections shall be irrevocable, made in writing and signed bythe Awardee.  Awardee shall pay to theCompany any amount of Tax Related Items that the Company may be required towithhold as a result of Awardee’s receipt of SUAs, the vesting of SUAs, or theconversion of vested SUAs to shares of Common Stock that cannot be satisfied bythe means previously described.  TheCompany may refuse to deliver shares of Common Stock to Awardee if Awardeefails to comply with Awardee’s obligation in connection with the Tax RelatedItems as described herein.

 

(c)           Inlieu of issuing fractional shares of Common Stock, on the vesting of a fractionof a SUA, the Company shall round the shares to the nearest whole share and anysuch share which represents a fraction of a SUA will be included in asubsequent vest date.

 

(d)           Untilthe distribution to Awardee of the shares of Common Stock in respect to thevested SUAs is evidenced by a stock certificate, appropriate entry on the booksof the Company or of a duly authorized transfer agent of the Company, or otherappropriate means, Awardee shall have no right to vote or receive dividends orany other rights as a shareholder with respect to such shares of Common Stock,notwithstanding the vesting of SUAs. Subject to the provisions of Section 21 below, the Company shall causesuch distribution to Awardee to occur promptly upon the vesting of SUAs.  No adjustment will be made for a dividend orother right for which the record date is prior to the date Awardee is recordedas the owner of the shares of Common Stock, except as provided in Section 8of the Plan.

 

(e)           Byaccepting the Award of SUAs evidenced by this Award Agreement, Awardee agreesnot to sell any of the shares of Common Stock received on account of vestedSUAs at a time when applicable laws or Company policies prohibit a sale.  This restriction shall apply so long asAwardee is an Employee, Consultant or outside director of the Company or aSubsidiary of the Company.

 

9.             Non-Transferabilityof SUAs.   Awardee’s right in the SUAs awarded under this AwardAgreement and any interest therein may not be sold, pledged, assigned,hypothecated, 

 

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transferred,or disposed of in any manner, other than by will or by the laws of descent ordistribution, prior to the distribution of the shares of Common Stock inrespect of such SUAs.  SUAs shall not besubject to execution, attachment or other process.

 

10.           Acknowledgment ofNature of Plan and SUAs.   In accepting the Award, Awardeeacknowledges that:

 

(a)           thePlan is established voluntarily by the Company, it is discretionary in natureand may be modified, amended, suspended or terminated by the Company at anytime, as provided in the Plan;

 

(b)           theAward of SUAs is voluntary and occasional and does not create any contractualor other right to receive future awards of SUAs, or benefits in lieu of SUAseven if SUAs have been awarded repeatedly in the past;

 

(c)           alldecisions with respect to future awards, if any, will be at the sole discretionof the Company;

 

(d)           Awardee’s participation in the Planis voluntary;

 

(e)           thefuture value of the underlying shares of Common Stock is unknown and cannot bepredicted with certainty;

 

(f)            ifAwardee receives shares of Common Stock, the value of such shares of CommonStock acquired on vesting of SUAs may increase or decrease in value;

 

(g)           notwithstandingany terms or conditions of the Plan to the contrary and consistent with Section 4and Section 7 above, in the event of involuntary termination of Awardee’semployment (whether or not in breach of applicable laws), Awardee’s right toreceive SUAs and vest under the Plan, if any, will terminate effective as ofthe date that Awardee is no longer actively employed and will not be extendedby any notice period mandated under applicable law; furthermore, in the eventof involuntary termination of employment (whether or not in breach ofapplicable laws), Awardee’s right to receive shares of Common Stock pursuant tothe SUAs after termination of employment, if any, will be measured by the dateof termination of Awardee’s active employment and will not be extended by anynotice period mandated under applicable law. The Committee shall have the exclusive discretion to determine whenAwardee is no longer actively employed for purposes of the award of SUAs; and

 

(h)           Awardeeacknowledges and agrees that, regardless of whether Awardee is terminated withor without cause, notice or pre-termination procedure or whether Awardeeasserts or prevails on a claim that Awardee’s employment was terminable onlyfor cause or only with notice or pre-termination procedure, Awardee has noright to, and will not bring any legal claim or action for, (a) anydamages for any portion of the SUAs that have been vested and converted intoCommon Shares, or (b) termination of any unvested SUAs under this AwardAgreement.

 

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11.           No EmploymentRight.   Awardee acknowledges that neither the fact of this Awardof SUAs nor any provision of this Award Agreement or the Plan or the policiesadopted pursuant to the Plan shall confer upon Awardee any right with respectto employment or continuation of current employment with the Company, or toemployment that is not terminable at will. Awardee further acknowledges and agrees that neither the Plan nor thisAward of SUAs makes Awardee’s employment with the Company for any minimum orfixed period, and that such employment is subject to the mutual consent ofAwardee and the Company, and subject to any written employment agreement thatmay be in effect from time to time between the Company and the Awardee, may beterminated by either Awardee or the Company at any time, for any reason or noreason, with or without cause or notice or any kind of pre- or post-terminationwarning, discipline or procedure.

 

12.           Administration.  The authority to manage and control the operation and administration of thisAward Agreement shall be vested in the Committee (as such term is defined in Section 2of the Plan), and the Committee shall have all powers and discretion withrespect to this Award Agreement as it has with respect to the Plan.  Any interpretation of the Award Agreement bythe Committee and any decision made by the Committee with respect to the AwardAgreement shall be final and binding on all parties.

 

13.           Plan Governs.  Notwithstanding anything in this Award Agreement to the contrary, the terms of thisAward Agreement shall be subject to the terms of the Plan, and this AwardAgreement is subject to all interpretations, amendments, rules andregulations promulgated by the Committee from time to time pursuant to thePlan.

 

14.           Notices.  Any written notices provided for in this Award Agreement which are sent by mailshall be deemed received three business days after mailing, but not later thanthe date of actual receipt.  Noticesshall be directed, if to Awardee, at the Awardee’s address indicated by theCompany’s records and, if to the Company, at the Company’s principal executiveoffice.

 

15.           ElectronicDelivery.   The Company may, in its sole discretion, decide todeliver any documents related to SUAs awarded under the Plan or future SUAsthat may be awarded under the Plan by electronic means or request Awardee’sconsent to participate in the Plan by electronic means.  Awardee hereby consents to receive suchdocuments by electronic delivery and agrees to participate in the Plan throughan on-line or electronic system established and maintained by the Company oranother third party designated by the Company.

 

16.           Acknowledgment.  By Awardee’s acceptance as evidenced below, Awardee acknowledges that Awardeehas received and has read, understood and accepted all the terms, conditionsand restrictions of this Award Agreement and the Plan.  Awardee understands and agrees that thisAward Agreement is subject to all the terms, conditions, and restrictionsstated in this Award Agreement and the Plan, as the latter may be amended fromtime to time in the Company’s sole discretion.

 

17.           [IntentionallyOmitted]

 

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18.           Governing Law.  This Award Agreement shall be governed by the laws of the State of Delaware,without regard to Delaware laws that might cause other law to govern underapplicable principles of conflicts of law.

 

19.           Severability.  If one or more of the provisions of this Award Agreement shall be held invalid,illegal or unenforceable in any respect, the validity, legality andenforceability of the remaining provisions shall not in any way be affected orimpaired thereby and the invalid, illegal or unenforceable provisions shall bedeemed null and void; however, to the extent permissible by law, any provisionswhich could be deemed null and void shall first be construed, interpreted orrevised retroactively to permit this Award Agreement to be construed so as tofoster the intent of this Award Agreement and the Plan.

 

20.           Complete AwardAgreement and Amendment.   This Award Agreement and the Plan constitutethe entire agreement between Awardee and the Company regarding SUAs.  Any prior agreements, commitments ornegotiations concerning these SUAs are superseded.  This Award Agreement may be amended only bywritten agreement of Awardee and the Company, without consent of any otherperson.  Awardee agrees not to rely onany oral information regarding this Award of SUAs or any written materials notidentified in this Section 20.

 

21.           Section 409A.  This Award Agreement is intended to be incompliance with the provisions of Section 409A of the Internal RevenueCode to the extent applicable, and the Regulations issued thereunder. Anythingin this Agreement to the contrary notwithstanding, if at the time of theAwardee’s separation from service within the meaning of Section 409A ofthe Internal Revenue Code of 1986, as amended, and the regulations thereunder(the “Code”), the Company determines that the Awardee is a “specified employee”within the meaning of Section 409A(a)(2)(B)(i) of the Code, then tothe extent any payment or benefit that the Awardee becomes entitled to underthis Agreement would be considered deferred compensation subject to the 20percent additional tax imposed pursuant to Section 409A(a) of theCode as a result of the application of Section 409A(a)(2)(B)(i) ofthe Code, such payment shall not be payable and such benefit shall not beprovided until the date that is the earlier of (A) six months and one dayafter the Awardee’s separation from service, or (B) the Awardee’sdeath.  The determination of whether andwhen a separation from service has occurred shall be made in accordance withthe presumptions set forth in Treasury Regulation Section 1.409A-1(h). Tothe extent that any provision of this Agreement is ambiguous as to itscompliance with Section 409A of the Code, the provision shall be read insuch a manner so that all payments hereunder comply with Section 409A ofthe Code.  The parties agree that thisAgreement may be amended, as reasonably requested by either party, and as maybe necessary to fully comply with Section 409A of the Code and all relatedrules and regulations in order to preserve the payments and benefitsprovided hereunder without additional cost to either party. Solely for thepurposes of Section 409A of the Code, the share increments issuable oneach vesting date on Schedule A shall be considered a separate payment.   The Company makes no representation orwarranty and shall have no liability to the Awardee or any other person if anyprovisions of this Agreement are determined to constitute deferred compensationsubject to Section 409A of the Code but do not satisfy an exemption from,or the conditions of, such Section.

 

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EXECUTED the day and year first above written.

 
|   | UFP TECHNOLOGIES, INC. |
|--------|------------------------|
|   |                   |
|   |                   |
|   |                   |
|   | By:                    |   |
|   |                   | R. Jeffrey Bailly |
|   |                   | Chief  Executive Officer |

 

 

 

AWARDEE’SACCEPTANCE:

 

Ihave read and fully understood this Award Agreement and, as referenced in Section 16above, I accept and agree to be bound by all of the terms, conditions andrestrictions contained in this Award Agreement and the other documentsreferenced in it.

 

 

 
|              |   |
|-------------------|--------|
| [name of Awardee] |   |

 

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SCHEDULE A

 

The SUA’s issuable underthis Agreement shall consist of a Threshold Performance Award, a TargetPerformance Award and an Exceptional Performance Award, each in the amounts setforth below, each such award issuable in one-third increments on the vestingdates set forth below, provided the respective performance objective issatisfied.

 

The Performance Objectiveestablished by the Committee with respect to the Threshold Performance Award,the Target Performance Award and Exceptional Performance Award is AdjustedOperating Income** for 2010

 
| ** **                                 | ** ** | **Performance**                         | ** ** | **Performance**    | ** ** | **Number of  Shares of**                                  | ** ** | **Vesting** |
|--------------------------------------------|------------|-----------------------------------------|------------|--------------------|------------|-----------------------------------------------------------|------------|-------------|
| ** **                                 | ** ** | **Objective**                           | ** ** | **Cycle**          | ** ** | **Common Stock**                                          | ** ** | ***/2012**  | ** ** | ***/2013** | ** ** | ***/2014** |
| **a. Threshold****Performance****Award**   |       |  

of Adjusted Operating  Income** |       | Calendar Year 2010 |       |  

                                             |       | 33.33%      |   | 33.33% |   | 33.34% |
| **b. Target****Performance****Award**      |       |  

of Adjusted Operating  Income** |       | Calendar Year 2010 |       |  

(in addition to  (a) above)                  |       | 33.33%      |   | 33.33% |   | 33.34% |
| **c. Exceptional****Performance****Award** |       |  

of Adjusted Operating  Income** |       | Calendar Year 2010 |       |  

*** (in addition to  (a) and (b) above) |       | 33.33%      |   | 33.33% |   | 33.34% |

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* this date shall be theanniversary date of the date of determination by the Compensation Committee ofsatisfaction of the Performance Objectives. Such determination date is expected to be in either February orMarch, 2011.

 

**Adjusted OperatingIncome is defined herein as Operating Income on the Company’s 10-K, excluding (i) non-recurringrestructuring charges related to plant closings and consolidations; and (ii) theimpact of acquired or disposed of operations during such year.

 

***Between AdjustedOperating Income of                    and                    ,the number of shares of Common Stock to which the Awardee shall be entitledunder the Exceptional Performance Award (in addition to the shares issuableupon attainment of the Threshold and Target Performance Award) shall range from0 to the amount stated under the column entitled “Exceptional” based on straightline interpolation in increments of one fifth the total number of sharesotherwise issuable for achievement of the Exceptional Award  for each full                    of Operating Income in excess of                     (not to exceed                    ).

 

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