Document:

EXHIBIT
10.31

 

TOOTSIE
ROLL INDUSTRIES, INC.

CAREER ACHIEVEMENT PLAN

 

(As Amended and
Restated Effective as of January 1, 2005)

 

1.             Purpose.  The purpose of the Career Achievement Plan
(the “Plan”) of Tootsie Roll Industries, Inc. (the “Company”) is to promote
the financial interests and growth of the Company by increasing motivation on
the part of its senior officers and key employees by creating an incentive for
them to remain in the long term employ of the Company and to work to the best
of their abilities for the achievement of the Company’s strategic growth
objectives.

 

2.             Participation.  Participation in the Plan will be limited to
those senior officers and other key employees of the Company as the Board of
Directors (the “Board”) in its sole discretion shall designate from time to
time to be eligible to receive Career Achievement Awards hereunder.  The Board may, in its sole discretion,
delegate to the Administrative Committee (as defined in Section 8) the
power to designate those key employees of the Company who shall be selected for
participation in this Plan, provided that the Board reserves the sole right to
determine participation with respect to any key employee of the Company who is
required to comply with the requirements of Section 16 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).

 

3.             Career Achievement Awards.  As of the date determined by the Board for
any calendar year during the term of the Plan, the Board may, but shall not be
required to, grant an award to any or all of the participants of the Plan. Each
such award (a “Career Achievement Award”) shall be for a fixed dollar amount,
and shall be calculated based on such formulas or other criteria as may be
established by the Board in its sole discretion. Each Career Achievement Award
shall be communicated in a written notice to the affected participant within
ninety (90) 

 

 

days of the beginning of the
applicable calendar year, setting forth the performance criteria and the award
amount.  Such notice shall be provided to
the participant as soon as practicable after the amount of the Career
Achievement Award has been determined by the Board.  Except as otherwise provided in Section 5
hereof, once an award has been communicated to a participant pursuant to this Section 3,
such award may not be canceled, reduced or diminished in any manner without the
written consent of the participant.  The
Board may, in its sole discretion, delegate to the Administrative Committee its
powers and duties under this Section 3 with respect to any participant
herein other than a participant who is required to comply with the requirements
of Section 16 of the Exchange Act.

 

4.             Career Achievement Account.

 

(a)           Establishment of Accounts.  There shall be established on the books of
the Company a Career Achievement Account in the name of each participant in the
Plan. Career Achievement Awards made under the Plan shall be credited to a
participant’s Career Achievement Account as of the January 1st specified
in the written notice of the award delivered to the participant. Each
participant’s Career Achievement Account shall consist of the aggregate amount
of such Career Achievement Awards credited thereto, and earnings and losses on
such amounts determined in the manner prescribed by Section 4(b). Nothing
contained in this Section 4 shall require the Company to invest any assets
of the Company in any particular investment vehicle, or to set aside any assets
to provide for the payment of benefits hereunder.

 

(b)           Career Achievement Account
Earnings and Losses.

 

(1)           Deemed Investment of Account.  For bookkeeping purposes only, each
participant may from time to time direct that the balance of his or her Career
Achievement 

 

 

Account be deemed to be
invested in certain investment alternatives described in Section 4(b)(2).
Each such direction made by the participant shall be effective until a new
direction is filed by him or her with the Company. If the participant fails to
direct the manner in which any portion of his or her Career Achievement Account
is deemed to be invested, the balance credited to such account shall be deemed
to be invested in any investment alternative designed by the Board in its sole
discretion. The Board shall prescribe rules governing a participant’s
deemed investment direction of his or her Career Achievement account hereunder,
including, but not limited to, the time and manner pursuant to which a
participant may provide deemed investment directions to the Company, and the
frequency at which a participant may make changes with respect to such
investment directions as they relate to the existing balance of his or her
Career Achievement Account as well as to future Career Achievement Awards.  Although the Company might actually invest
assets of the Company according to a participant’s investment directions, it is
not required to do so nor to set aside an amount equal to all or any portion of
a Participant’s Career Achievement Account, The balance in the participant’s
Career Achievement Account shall be increased by gains or decreased by losses
that would be realized or paid by the Company as if assets of the Company in an
amount equal to such balance were actually invested in the investment
alternatives specified by the participant.

 

(2)           Investment Alternatives.  The Company shall make available a number of
investment alternatives for purposes of determining the deemed earnings to be
credited and the deemed losses to be debited to a participant’s Career
Achievement Account under Section 4(b)(1). 
Such investment alternatives shall be designated from time to time by
the Board, including, but not limited to, (i) for periods prior to a
participant’s termination of employment, an investment alternative the
performance of which is based on the yield of the 

 

 

Moody’s Seasoned Bond Index,
(ii) for periods after a participant’s termination of employment, the
yield on five-year United States Treasury Notes, and (iii) for all periods
hereunder, investment alternatives the performance of which is based on
publicly traded mutual funds and other investments designated by the
Board.  The Company also may make
available for all periods hereunder an investment alternative the performance
of which is based on the price of the Company’s common stock (referred to
herein as the “Company Stock Alternative”). Each participant’s proportional
interest in the Company Stock Alternative shall be represented by units of
participation, each of which shall be equivalent to one share of common stock
of the Company. The Board shall prescribe rules relating to the deemed investment
of a participant’s Career Achievement Account among the available investment
alternatives, including, but not limited to, a maximum limitation on the amount
that a participant can direct to be deemed invested in any particular
investment alternative, restrictions on a participant’s ability to direct a
deemed transfer from any particular investment alternative to another, and the
manner in which any deemed cash dividends that are paid with respect to a
participant’s units of participation in the Company Stock Alternative shall
deemed to be invested.

 

(3)           Delegation of Powers.  The Board may, in its sole discretion,
delegate to the Administrative Committee its powers and duties under this Section 4(b).

 

5.             Payment of Career Achievement
Account Upon Termination of Employment. 
A participant’s Career Achievement Account shall be paid to the
participant’s designated beneficiary in the event of the participant’s death,
or shall be forfeited, depending upon the time and circumstances of the
participant’s termination of employment, as provided below:

 

 

(a)           Termination of Employment Other
than for Retirement, Death or Disability. 
Subject to Sections 5(c), 5(d), 5(e) and 5(f) hereof, if a
participant’s employment with the Company terminates other than as a result of
the participant’s retirement, death or permanent disability, the participant
shall be entitled to receive, on the “date of distribution”, a lump sum payment
equal to the “vested” portion of the participant’s Career Achievement Account
as for the date of termination of employment (as such “vested portion is
determined below), plus any earnings credited, and minus any losses debited, to
the participant’s account under Section 4(b)(2) following such date
of termination of employment.  For
purposes of this Section 5(a), the “date of distribution” means the later
of (1) the first anniversary of the date of the participant’s termination
of employment or (ii) sixty (60) days after the earlier of the participant’s
65th birthday or his or her death. The portion of a participant’s Career
Achievement Account which has not “vested” as of the date of the participant’s
termination of employment shall be forfeited, and the participant shall not be
entitled to any payment of such forfeited amount or any earnings or losses
thereon.

 

The “vested” portion of a
participant’s Career Achievement Account as of the date of termination shall
equal the aggregate of the “vested” portions of each Career Achievement Award
previously granted to the participant. The “vested’ portion of each Career
Achievement Award shall be separately determined and shall equal the product of
the Career Achievement Award (plus any earnings previously credited, and minus
any losses previously debited, to the participant’s account with respect to such
Career Achievement Award under Section 4(b) hereof) multiplied by the
Vested Percentage of such award.  The
Vested Percentage of a Career Achievement Award shall be determined according
to the number of the participant’s consecutive full calendar years of
employment with the Company beginning with the calendar year in which 

 

 

such award was credited to
the participant’s Career Achievement Account and ending with the calendar year
immediately prior to the year in which termination occurs, pursuant to the
following table:

 

	
  Years of 

  Continuous Employment

  	
   

  	
  Vested

  Percentage

  
	
  1

  	
   

  	
  20%

  
	
  2

  	
   

  	
  40%

  
	
  3

  	
   

  	
  60%

  
	
  4

  	
   

  	
  80%

  
	
  5 or more

  	
   

  	
  100%

  

 

For purposes of this Section 5(a),
if a participant first becomes an employee of the Company during the calendar
year in which a Career Achievement Award is credited to such participant’s
account, such year shall count as a full calendar year of employment.

 

(b)           Termination of Employment by
Reason of Retirement, Death or Disability. 
Subject to Section 5(a), 5(e) and 5(f) hereof, if a participant’s
employment with the Company terminates by reason of the participant’s
retirement, death or permanent disability, the Company shall pay to the
participant or the beneficiary designated by the participant pursuant to Section 9(a) hereof,
as the case may be, a lump sum amount equal to the full balance of the
participant’s Career Achievement Account as of the date of termination, plus
any earnings credited, and minus any losses debited, to the participant’s
account under Section 4(b)(2) following such termination of
employment. Such payment shall be made not later than sixty (60) days after the
date of the participant’s termination of employment. For purposes of this Plan,
(i) a participant shall be considered to have retired if the participant’s
employment with the Company terminates on or after the participant’s 65th
birthday and (ii) a participant shall be deemed to be permanently disabled
if such participant is unable to perform any substantial gainful activity by 

 

 

reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months.

 

(c)           Termination of Employment for
Cause.  Notwithstanding any provision
of this Plan to the contrary, if the Board, in its sole discretion, shall
determine that the participant’s employment with the Company was terminated for
“cause” (as defined below), the participant’s Career Achievement Account shall
be forfeited in its entirety, and the participant shall not be entitled to any
payments under this Plan. For purposes of this Plan, “cause” shall mean any act
or conduct by a participant that consists of or constitutes fraud, theft,
dishonesty, alcohol or drug use on the job, willful injury to or destruction of
the Company’s property or property of any person dealing with the Company, any
act or conduct injurious to the goodwill of the Company or its relations with
its customers or any other person dealing with the Company or derogatory of any
of the Company’s methods or products, any violation of the duty imposed upon
employees by contract or by law in their relationship with the Company, or
engaging in any activities described in Section 7(1), 7(2), 7(3) or 7(4) hereof.

 

(d)           Election of Alternative Payment
Option.  Notwithstanding Sections 5(a) and
5(b), within sixty (60) days of the receipt of the Career Achievement Award
Notice a participant may elect to receive payment of his or her Career
Achievement Account in the form of annual installment payments in lieu of a
lump sum distribution.  The participant
may elect that such installment payments be made over any whole number of years
not less than two nor more than ten.  The
first such installment payment shall be made at the same time as the lump sum payment
described in Section 5(a) or 5(b), as the case may be, would have
been made.  The amount of each
installment payment shall be equal to the balance of the Participant’s Career
Achievement Account determined as near as practicable to the date of payment
divided by the 

 

 

number of annual installment
payments remaining to be made.  For the
period during which such installment payments are being made until the date as
near as practicable to the date on which the final installment payment is made,
a participant’s remaining Career Achievement Account shall continue to be
adjusted for earnings and losses pursuant to Section 4(b) hereof.

 

The failure to elect the
annual installment payment option, shall be treated as a deemed election to
receive payment in the form of a lump sum.

 

Notwithstanding any
provision contained herein to the contrary, payment to a participant’s
beneficiary in the event of the participant’s death shall be made only in the
form of a  lump sum payment. In the case
of a participant who had commenced receiving installment payments prior to the
date of his or her death, such lump sum payment shall be equal to the remaining
balance of the participant’s Career Achievement Account, and shall be paid
within ninety (90) days after the date of the participant’s death.

 

(e)           Forfeiture for Career Achievement
Account.  Notwithstanding any
provision of this Plan to the contrary, a participant will forfeit all rights
to any amounts previously credited to his or her Career Achievement Account if,
after the termination of the participant’s employment, the participant engages
in any activities in violation of Section 7 hereof or fails to enter into
the agreement described in Section 7 hereof as provided in such Section 7.

 

(f)            Further Deferral.  To the extent determined by the Board in its
sole discretion, the Board shall have the authority (i) to delay any
payments otherwise due under this Plan to the extent necessary to avoid a
limitation on the deductibility of compensation paid to a participant pursuant
to Section 162(m) of the Internal Revenue Code of 1986 (the “Code”),
or 

 

 

any successor provision, and
(ii) to take such action as it shall deem appropriate to specifically
approve or delay any payments otherwise due under this Plan to a participant who
is subject to Section 16 of the Exchange Act in order to enable such
participant to comply with such Section 16. To the extent any payments
under this Plan are deferred under this Section 5(f), such amounts shall
continue to be adjusted for earnings and losses pursuant to Section 4(b) hereof,
and shall be paid at such time or from time to time to the extent such payments
would not cause or increase a limitation on deductibility under such Section 162(m),
or would not result in a participant subject to Section 16 of the Exchange
Act failing to comply with such Section 16, as the case may be.

 

6.             Immediate Distribution of Career
Achievement Accounts Upon Change of Control of the Company.  Notwithstanding any provision of this Plan to
the Contrary, and provided that the participant enters into the agreement
described in Section 7 hereof as provided in such Section 7, the
Company shall pay the entire balance of a participant’s Career Achievement
Account to such participant in a lump sum payment within three business days
after the occurrence of a “change of control” of the Company. A “change of
control” of the Company shall occur when: (1) any person, including a “group,”
as described in Section 13(d)(3) of the Exchange Act, acquires after
the effective date of this Plan when taken together with equity securities
already held by such Persons the beneficial ownership of, and the right to
vote, shares having the right to cast more than fifty percent (50%) of the
votes permitted to be cast in any election of members to the Board; (2) any
person, including a “group,” as described in Section 13(d)(3) of the
Exchange Act,  acquires (or have acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) ownership of the equity securities of the Company
possessing 30% or more of the total voting power of the equity 

 

 

securities of the Company;
or (3) as the result of any tender or exchange offer, substantial purchase
of the Company’s equity securities, merger, consolidation, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were directors of the Company immediately prior to such transaction
or transactions (together with any new or replacement directors whose election
by the Board, or whose nomination for election by the Company’s shareholders
was approved by a vote of at least a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) do not
constitute a majority of the Board (or of the board of directors of any
successor to or assignee of the Company) at any time within the twelve (12)
month period following such transaction; except that no event described in
clause (1) or (2) above shall constitute a “change of control” if
immediately after such event Melvin J. Gordon or Ellen R. Gordon, their
descendants (and spouses of such descendants) and any trusts or estates in
which such persons have an interest own, directly or indirectly, shares having
the right to cast at least fifty percent (50%) of the votes permitted to be
cast in any election of members of the Board.

 

7.             Noncompetition.  As a condition to the payment of any portion
of the participant’s Career Achievement Account following a change of control
of the Company pursuant to Section 6 or upon the participant’s termination
of employment with the Company pursuant to Section 5 (other than by reason
of the participant’s death), the participant shall be required to enter into an
agreement with the Company which provides that, for the period commencing on
the effective date of the change of control of the Company or the effective
date of the participant’s termination of employment with the Company, as the
case may be and ending on the first anniversary of the participant’s
termination of employment with the Company, the participant will not:

 

 

(1)           directly or indirectly engage in,
own, manage, operate, participate in, render advice to or have any interest in
any person, firm, corporation, or business (whether as an owner, partner,
employee, officer, director, agent, security holder, creditor, consultant, or
otherwise) that engages in any activity which is the same as, similar to, or
competitive with any activity then, or within the prior twelve (12) months,
engaged in by the Company or any affiliate of the Company; or

 

(2)           directly or indirectly solicit for
employment or employ or become employed by any person then, or within the prior
twelve (12) months, employed by the Company or any affiliate of the Company, or
request, influence or advise any person who is or shall be employed by or is in
the service of the Company or any affiliate of the Company to leave such
employment or service of the Company or any affiliate of the Company; or

 

(3)           directly or indirectly influence or
advise any competitor of or anyone intending to compete with the Company any
affiliate of the Company to employ or otherwise engage the services of any
person who is or shall be employed by or is in the service of the Company or
any affiliate of he Company; or

 

(4)           directly or indirectly solicit or
accept any business which is the same as, similar to or competitive with that
of the Company or any affiliate of the Company from customers of the Company or
any affiliate of the Company or request, induce or advise customers of the
Company or any affiliate of the Company to withdraw, curtail or cancel their
business with the Company or any affiliate of the Company.

 

 

For purposes of this
Plan, the term “affiliate” means any entity engaged in the same or similar
business as the Company or a related business, which is controlled by or under
common control with the Company.

 

8.             Administration of the Plan.

 

(a)           Powers and Duties of the Board.  The Plan shall be administered and
interpreted by the Board. The Board shall, subject to the terms of the Plan,
make or refrain from making Career Achievement Awards, determine the amount of
Career Awards, establish rules and regulations for the administration of
the Plan, impose conditions with respect to competitive employment or other
activities with respect to any such award, and establish the written form to be
used to evidence such awards pursuant to Section 3 hereof.  The Board shall have full authority to
construe and interpret the terms and provisions of the Plan, to adopt, alter
and repeal such administrative rules, guidelines and practices governing this
Plan and to perform all acts,  including
the delegation of its administrative responsibilities as it shall, from time to
time, deem advisable, and to otherwise supervise the administration of this
Plan.  All such rules, regulations and
interpretations relating to the Plan which are adopted by the Board shall be
conclusive and binding on all parties. 
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any award granted hereunder, in the manner and
to the extent it shall deem necessary to carry the Plan into effect.

 

(b)           Administrative Committee.  The Board may, in its sole discretion,
appoint a committee of two or more employees of the Company which shall be
designated the “Administrative Committee.” 
The Administrative Committee shall have such powers and responsibilities
under this Plan as shall be delegated to such committee by the Board from time 

 

 

to time pursuant to
resolutions adopted by the Board.  The
Board, in its sole discretion, may remove any member of the Administrative
Committee at any time, may appoint additional employees of the Company to be
members of the Administrative Committee from time to time, and may fill any
vacancies that arise upon the death, resignation or removal of any member of
the Administrative Committee.  The Board
also shall have the power, in its sole discretion, to discontinue the existence
of the Administrative Committee at any time and assume any powers and duties
which it previously delegated to such committee.

 

9.             Miscellaneous.

 

(a)           Designation of Beneficiary.  In the event of the death of a participant,
the amount payable under Section 5 hereof shall, unless the participant
shall designate to the contrary as provided below, thereafter be made to such
person or persons who, as of the date payment is to be made under this Plan,
would receive distribution of the participant’s account balance under the terms
of the Tootsie Roll Employee’s Pension Plan. 
Notwithstanding the preceding sentence, a participant may specifically
designate the person or persons (who may be designate successively or
contingently) to receive payments under this Plan following the participant’s
death by filing a written beneficiary designation with the Company during the
participant’s lifetime.  Such beneficiary
designation shall be in such form as may be prescribed by the Company and may
be amended from time to time or may be revoked by the participant pursuant to
written instruments filed with the Company during his or her lifetime.

 

Beneficiaries designated
by a participant may be any natural or legal person or persons, including a
fiduciary, such as a trustee of a trust or the legal representative of an
estate.  Unless otherwise provided by the
beneficiary designation filed by a participant, if all of the persons so 

 

 

designated die before a
participant on the occurrence of a contingency not contemplated in such
beneficiary designation, then the amount payable under this Plan shall be paid
to the person or persons determined in accordance with the first sentence of
this Section 9(a).

 

(b)           Assets.  No assets shall be segregated or earmarked in
respect of any Career Achievement Award or Career Achievement Account and no
participant shall have any right to assign, transfer, pledge or hypothecate his
or her interest, or any portion thereof, in his or her Career Achievement
Account.  The Plan and the crediting of
Career Achievement Accounts hereunder shall not constitute a trust and shall be
structured solely for the purpose of recording an unsecured contractual
obligation.  All amounts payable pursuant
to the terms of this Plan shall be paid from the general assets of the Company.

 

(c)           Reports.  Until a participant’s entire Career
Achievement Account shall have been paid in full or forfeited, the Company will
furnish to the participant a report, at least annually, setting forth
transactions in such account and the status of such account with respect to the
vested and unvested portions thereof and the earnings and losses related
thereto.

 

(d)           Acceleration of Vesting.
Notwithstanding any other provision of this Plan to the contrary, the Board, in
its sole discretion, is empowered to accelerate the vesting of all or a portion
of a participant’s Career Achievement Account for any reason the Board may
determine to be appropriate. Neither the Company nor the Board shall have any
obligation to make any such acceleration for any reason whatsoever.

 

(e)           Liability.  No member of the Board or of the
Administrative Committee shall be liable for any act or action hereunder,
whether of omission or commission, by any other member or employee or by any
agent to whom duties in connection with the administration of 

 

 

the Plan have been delegated
or, member’s bad faith, gross negligence or fraud, for such member. The Company
will fully indemnify hold each member of the Board and of the Administrative
Committee harmless from any liability hereunder, except in circumstances
involving such member’s bad faith, gross negligence or fraud. The Company, the
Board or the Administrative Committee may consult with legal counsel, who may
be counsel for the Company, with respect to its obligations or duties
hereunder, or with respect to any action or proceeding or any question of law,
and shall not be liable with respect to any action taken or omitted by it in
good faith pursuant to the advice of such counsel.

 

(f)            Amendment or Termination.

 

(1) General Rule.  This Plan may be amended or terminated in any
respect at any time by the Board; provided, however, that except as otherwise
provided in Section 9(1) hereof, no amendment or termination of the
Plan shall be effective to reduce any benefits that accrue before the adoption
of such amendment or termination.  If and
to the extent permitted without violating the requirements of Section 409A
of the Code, the Board may require that all of the participant’s Career
Achievement Account (including, without limitation, any remaining benefits
payable to participants or beneficiaries receiving distributions in
installments at the time of the termination) be distributed as soon as
practicable after such termination, notwithstanding any elections by
participants or beneficiaries with regard to the timing or form in which their
benefits are to be paid.  If and to the
extent that the Board does not accelerate the timing of distributions on
account of the termination of the Plan pursuant to the preceding sentence,
payment of any remaining benefits under the Plan shall be made at the same
times and in the same manner as such distributions would have been made based
upon the most recent effective 

 

 

elections made by participants and beneficiaries, and the terms of the
Plan, as in effect at the time the Plan is terminated.

 

(2)           Termination
and Liquidation Subject to Certain Conditions. 
If and to the extent otherwise permitted by Section 409A of the
Code and the Treasury Regulations thereunder, the Company may terminate and
liquidate the Plan if the following requirements are met:

 

(i) the
termination and liquidation does not occur proximate to a downturn in the
financial health of the Company;

 

(ii) the
Company terminates and liquidates all agreements, methods, programs and other
arrangements sponsored by the Company that would be aggregated with any
terminated and liquidated agreements, methods, programs, and other arrangements
under Section 1.409A-1(c) of the Treasury Regulations if the
participant had deferrals of compensation under all of the agreements, methods,
programs, and other arrangements that are terminated and liquidated;

 

(iii) no
payments in liquidation of the Plan are made within twelve (12) months of the
date the Company takes all necessary action to irrevocably terminate and
liquidate the Plan, other than payments that would be payable under the terms
of the Plan if the action to terminate and liquidate the Plan had not been
taken;

 

(iv) all
payments are made within twenty-four (24) months of the date the Company takes
all necessary action to irrevocably terminate and liquidate the Plan; and

 

 

(v) the
Company does not adopt a new plan that would be aggregated with any terminated
and liquidated plan under applicable Treasury Regulations if the same
participant participated in both plans, at any time within three (3) years
following the date that the Company takes all necessary action to irrevocably
terminate and liquidate the Plan.

 

(g)           Expenses. The Company will
bear all expenses incurred by it in administering this Plan.

 

(h)           Withholding. The Company shall
have the right to deduct from any payment to be made pursuant to this Plan or
to otherwise require prior to the payment of any amount hereunder, payment by the
participant of any Federal, state or local taxes rewired by law to be withheld.

 

(i)            No Obligation. The
designation by the Board or the Administrative Committee of an individual as a
participant in any year shall not require the Board or the Administrative
Committee to designate such person to receive a Career Achievement Award in any
other year. Neither this Plan nor any Career Achievement Awards made hereunder
shall create any obligation on the Company to continue any other existing award
plans or policies or to establish or continue any other programs, plans or
policies of any kind. Neither this Plan nor any Career Achievement Award made
pursuant to this Plan shall give any participant or other employee any right
with respect to continuance of employment by the Company or any of its
affiliates or of any specific aggregate amount of compensation, nor shall there
be a limitation in any way on the right of the Company or any of its affiliates
by which an employee is employed to terminate such employee at any time for any
reason whatsoever, nor shall this Plan or any Career Achievement Award made
hereunder create a contract of employment.

 

 

(j)            No Assignment Resolution of
Disputes. Except as otherwise permitted under Section 9(a), no right
or interest in any Career Achievement Account under this Plan shall be
assignable or transferable, and no right or interest of any participant in any
Career Achievement Account hereunder shall be subject to any lien, obligation
or liability of such participant. In the event any conflicting demands are made
upon the Company with respect to any payments due as a result of this Plan,
provided that the Company shall not have received prior written notice that
said conflicting demands have been finally settled by court adjudication,
arbitration, joint order or otherwise, the Company may pay to the participant
any and all amounts due hereunder and thereupon the Company shall stand fully
relieved and discharged of any further duties or liabilities under this Plan.

 

(k)           Governing Law. This Plan and
all actions taken in connection herewith shall be governed and construed in
accordance with the laws of the State of Illinois (regardless of the law that
might otherwise govern under applicable Illinois principles of conflict of
laws).

 

(1)           Compliance with Section 409A. 
This Plan shall be construed in an manner consistent with the
applicable requirements of Section 409A of the Code, and the Board, in its
sole discretion and without the consent of any participant or beneficiary, may
amend the provisions of this Plan if and to the extent that the Board
determines that such amendment is necessary or appropriate to comply with the
applicable requirements of Section 409A of the Code.

 

 

IN WITNESS WHEREOF, Tootsie Roll Industries, Inc.
has caused this instrument to be executed in its name and its corporate seal to
be hereunder affixed on this       day of
                ,
2008.

 

	
  TOOTSIE ROLL INDUSTRIES, INC.

  
	
   

  
	
  By:

  	
   

  
	
   

  
	
  Title:

  	
   

  
			

 

	
  (Corporate Seal)

  
	
   

  
	
  ATTEST:

  
	
   

  
	
   

  
	
   

  
	
  Title:Exhibit 10.50

 

STOCK UNIT
AWARD AGREEMENT

 

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

 

This Stock Unit Award Agreement is entered into as of the 24th day of February, 2009 by and between UFP
Technologies, Inc. (hereinafter the “Company”) and
                          
(the “Awardee”).  Capitalized terms used
but not defined herein shall have the meanings assigned to them in the Company’s
2003 Incentive Plan (the “Plan”).  Stock
Unit Awards (SUA’s represent the Company’s unfunded and unsecured promise to
issue shares of Common Stock at a future date, subject to the terms of this
Award Agreement, including, without limitation, the performance objectives set
forth in Schedule A hereto, and the Plan.  Awardee has no rights under the SUAs other
than the rights of a general unsecured creditor of the Company.

 

1.                                       Grant of Stock
Unit Awards; Performance Objectives; Vesting.

 

(a)           The
Company, in the exercise of its sole discretion pursuant to the Plan, does
hereby award to the Awardee the number of SUAs set forth on Schedule A
hereto 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 each
awarded subject to attainment during the Performance Cycle described on Schedule
A of the Performance Objectives set forth on Schedule A .

 

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

 

(c)           As
soon as possible after the end of the Performance Cycle, the Committee will
certify in writing whether and to what extent the Performance Objectives have
been met for the Performance Cycle.  The
date of the Committee’s certification pursuant to this subsection (c) shall
hereinafter be referred to as the “Certification Date”.  The Company will notify the Awardee of the
Committee’s certification following the Certification Date (such notice, the “Determination
Notice”).  The Determination Notice shall
specify (i) the Performance Objective, as derived from the Company’s
audited financial statements; and (ii) the extent, if any, to which the
Performance Objectives were satisfied with respect to the Threshold Award, the
Target Award and the Exceptional Award.

 

2.                                       Change in
Control.

 

(a)           Notwithstanding
the vesting schedule set forth in Schedule A: if there is a Change in Control
of the Company (as defined below) following the end of the Performance 

 

1

 

Cycle,
and the Awardee’s Continuous Status as an employee, as contemplated by Section 4
hereof, shall not have been terminated as of the date immediately prior to the
effective date of such Change in Control, then subject to attainment during the
Performance Cycle described on Schedule A of the Performance Objectives
set forth on Schedule A, and subject to the provisions of Section 21
of this Award Agreement, any SUA’s representing the Threshold, Target and the
Exceptional Award, which are not already vested shall become vested in full as
of the effective date of such Change in Control.

 

(b)           For
the purpose of this Agreement, a “Change
in Control” shall mean  (i) the
consummation of a reorganization, merger or consolidation or sale or
disposition of all or substantially all of the assets of the Company (a “Business
Combination”), unless, in each case following such Business Combination, (A) all
or substantially all of the individuals and entities who were the beneficial
owners of the Common Stock of the Company immediately before the consummation
of such Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation that as a result of the transaction owns the Company
or all or substantially all of the assets of the Company either directly or
indirectly through one or more subsidiaries); and (B) no person or group
(as defined in Section 13(d) or 14(d)(2) of the Securities
Exchange Act of 1934) of the Company or the corporation resulting from the
Business Combination) beneficially owns, directly or indirectly, more than 50%
of the then outstanding shares of the common stock of the corporation resulting
from the Business Combination;  (ii) Individuals
who, as of the date of this Agreement, constitute the Board of Directors of the
Company (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors of the Company, provided, however, that any
individual’s becoming a director after the date of this Agreement whose
election, or nomination for election by the stockholders of the Company, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board will be considered as though the individual were a member of
the Incumbent Board, but excluding, for this purpose, any individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or (iii) any person (as defined in Section 13(d) or
14(d)(2) of the Securities Exchange Act of 1934) shall become at any time
or in any manner the beneficial owner of capital stock of the Company
representing more than 50% of the voting power of the Company.

 

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

 

4.                                       Termination of
Awardee’s Continuous Status as an Employee.   Except as
otherwise specified in Section 5 and 6 below, in the event of termination
of Awardee’s Continuous Status as an employee of the Company, Awardee’s rights
under this Award Agreement in any unvested SUAs shall terminate.  For purposes of this Award Agreement, an 

 

2

 

Awardee’s
Continuous Status as an employee shall mean the absence of any interruption or
termination of service as an employee. 
Continuous Status as an employee shall not be considered interrupted in
the case of sick leave or leave of absence for which Continuous Status is not
considered interrupted as determined by the Company in its sole discretion.

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)           Provided
Awardee has satisfied the requirements of Section 8(b) below, and
subject 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 of
Common Stock that will be distributed to Awardee or, in the event of Awardee’s
death, to Awardee’s legal representative, as soon as practicable.  The distribution to the Awardee, or in the
case of the Awardee’s death, to the Awardee’s legal representative, of shares
of Common Stock in respect of the vested SUAs shall be evidenced by a stock
certificate, appropriate entry on the books of the Company or of a duly 

 

3

 

authorized
transfer agent of the Company, or other appropriate means as determined by the
Company.

 

(b)           Regardless
of any action the Company takes with respect to any or all income tax
(including federal, state and local taxes), social security, payroll tax or
other tax-related withholding (“Tax Related Items”), Awardee acknowledges that
the ultimate liability for all Tax Related Items legally due by Awardee is and
remains Awardee’s responsibility and that the Company (i) makes no
representations or undertakings regarding the treatment of any Tax Related
Items in connection with any 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 of any shares of Common Stock acquired at vesting
and the receipt of any dividends; and (ii) does not commit to structure
the terms of the grant or any aspect of the SUAs to reduce or eliminate the
Awardee’s liability for Tax Related Items. 
Prior to the issuance of shares 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 to satisfy all withholding obligations
of the Company.  In this regard, Awardee
authorizes the Company to withhold all applicable Tax Related Items legally
payable by Awardee from Awardee’s wages or other cash compensation payable to
Awardee by the Company.  Alternatively,
the Awardee may elect to satisfy an applicable withholding requirement, in
whole or in part, by having the Company withhold shares of Common Stock to
satisfy such tax obligations.  The
Awardee may only elect to have such shares withheld having a Market Value on
the date the tax is to be determined equal to the minimum statutory total tax
which could be imposed on the transaction. All elections shall be irrevocable,
made in writing and signed by the Awardee. 
Awardee shall pay to the Company any amount of Tax Related Items that the
Company may be required to withhold as a result of Awardee’s receipt of SUAs,
the vesting of SUAs, or the conversion of vested SUAs to shares of Common Stock
that cannot be satisfied by the means previously described.  The Company may refuse to deliver shares of
Common Stock to Awardee if Awardee fails to comply with Awardee’s obligation in
connection with the Tax Related Items as described herein.

 

(c)           In
lieu of issuing fractional shares of Common Stock, on the vesting of a fraction
of a SUA, the Company shall round the shares to the nearest whole share and any
such share which represents a fraction of a SUA will be included in a
subsequent vest date.

 

(d)           Until
the distribution to Awardee of the shares of Common Stock in respect to the
vested SUAs is evidenced by a stock certificate, appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company, or other
appropriate means, Awardee shall have no right to vote or receive dividends or
any 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
cause such distribution to Awardee to occur promptly upon the vesting of
SUAs.  No adjustment will be made for a
dividend or other right for which the record date is prior to the date Awardee
is recorded as the owner of the shares of Common Stock, except as provided in Section 8
of the Plan.

 

(e)           By
accepting the Award of SUAs evidenced by this Award Agreement, Awardee agrees
not to sell any of the shares of Common Stock received on account of vested 

 

4

 

SUAs
at a time when applicable laws or Company policies prohibit a sale.  This restriction shall apply so long as
Awardee is an Employee, Consultant or outside director of the Company or a
Subsidiary of the Company.

 

9.                                       Non-Transferability
of SUAs.   Awardee’s right in the SUAs awarded under this Award
Agreement and any interest therein may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner, other than by will or
by the laws of descent or distribution, prior to the distribution of the shares
of Common Stock in respect of such SUAs. 
SUAs shall not be subject to execution, attachment or other process.

 

10.                                 Acknowledgment
of Nature of Plan and SUAs.   In accepting
the Award, Awardee acknowledges that:

 

(a)           the
Plan is established voluntarily by the Company, it is discretionary in nature
and may be modified, amended, suspended or terminated by the Company at any
time, as provided in the Plan;

 

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

 

(c)           all
decisions with respect to future awards, if any, will be at the sole discretion
of the Company;

 

(d)           Awardee’s participation in the Plan
is voluntary;

 

(e)           the
future value of the underlying shares of Common Stock is unknown and cannot be
predicted with certainty;

 

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

 

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

 

5

 

(h)           Awardee
acknowledges and agrees that, regardless of whether Awardee is terminated with
or without cause, notice or pre-termination procedure or whether Awardee
asserts or prevails on a claim that Awardee’s employment was terminable only
for cause or only with notice or pre-termination procedure, Awardee has no
right to, and will not bring any legal claim or action for, (a) any
damages for any portion of the SUAs that have been vested and converted into
Common Shares, or (b) termination of any unvested SUAs under this Award
Agreement.

 

11.                                 No Employment
Right.   Awardee acknowledges that neither the fact of this Award
of SUAs nor any provision of this Award Agreement or the Plan or the policies
adopted pursuant to the Plan shall confer upon Awardee any right with respect
to employment or continuation of current employment with the Company, or to
employment that is not terminable at will. 
Awardee further acknowledges and agrees that neither the Plan nor this
Award of SUAs makes Awardee’s employment with the Company for any minimum or
fixed period, and that such employment is subject to the mutual consent of
Awardee and the Company, and subject to any written employment agreement that
may be in effect from time to time between the Company and the Awardee, may be
terminated by either Awardee or the Company at any time, for any reason or no
reason, with or without cause or notice or any kind of pre- or post-termination
warning, discipline or procedure.

 

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

 

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

 

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

 

15.                                 Electronic
Delivery.   The Company may, in its sole
discretion, decide to deliver any documents related to SUAs awarded under the
Plan or future SUAs that may be awarded under the Plan by electronic means or
request Awardee’s consent to participate in the Plan by electronic means.  Awardee hereby consents to receive such
documents by electronic delivery and agrees to participate in the Plan through
an on-line or electronic system established and maintained by the Company or
another third party designated by the Company.

 

6

 

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

 

17.                                 [Intentionally
Omitted]

 

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 under
applicable 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 and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby and the invalid, illegal or unenforceable provisions shall be
deemed null and void; however, to the extent permissible by law, any provisions
which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Award Agreement to be construed so as to
foster the intent of this Award Agreement and the Plan.

 

20.                                 Complete Award
Agreement and Amendment.   This Award Agreement and the
Plan constitute the entire agreement between Awardee and the Company regarding
SUAs.  Any prior agreements, commitments
or negotiations concerning these SUAs are superseded.  This Award Agreement may be amended only by
written agreement of Awardee and the Company, without consent of any other
person.  Awardee agrees not to rely on
any oral information regarding this Award of SUAs or any written materials not
identified in this Section 20.

 

21.                                 Section 409A.

 

(a)                                  This Award
Agreement is intended to be in compliance with the provisions of Section 409A
of the Internal Revenue Code to the extent applicable, and the Regulations
issued thereunder. Anything in this Agreement to the contrary notwithstanding,
if at the time of the Awardee’s separation from service within the meaning of Section 409A
of the 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 to the extent any payment or benefit that the Awardee becomes entitled to
under this Agreement would be considered deferred compensation subject to the
20 percent additional tax imposed pursuant to Section 409A(a) of the
Code as a result of the application of Section 409A(a)(2)(B)(i) of
the Code, such payment shall not be payable and such benefit shall not be
provided until the date that is the earlier of (A) six months and one day
after the Awardee’s separation from service, or (B) the Awardee’s
death.  The determination of whether and
when a separation from service has occurred shall be made in accordance with
the presumptions set forth in Treasury Regulation Section 1.409A-1(h).

 

7

 

(b)           To the extent that
any provision of this Agreement is ambiguous as to its compliance with Section 409A
of the Code, the provision shall be read in such a manner so that all payments
hereunder comply with Section 409A of the Code.  The parties agree that this Agreement may be
amended, as reasonably requested by either party, and as may be necessary to
fully comply with Section 409A of the Code and all related rules and
regulations in order to preserve the payments and benefits provided hereunder
without additional cost to either party.

 

(c)           Solely for the
purposes of Section 409A of the Code, the share increments issuable on
each vesting date on Schedule A shall be considered a separate payment.

 

(d)           The Company makes no
representation or warranty and shall have no liability to the Awardee or any
other person if any provisions of this Agreement are determined to constitute
deferred compensation subject to Section 409A of the Code but do not
satisfy an exemption from, or the conditions of, such Section.

 

 

EXECUTED the day and year first above written.

 

 

	
   

  	
  UFP
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  R.
  Jeffrey Bailly

  
	
   

  	
   

  	
  Chief
  Executive Officer

  

 

 

AWARDEE’S
ACCEPTANCE:

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

 

8

 

SCHEDULE A

 

The SUA’s issuable under
this Agreement shall consist of a Threshold Performance Award, a Target
Performance Award and an Exceptional Performance Award, each in the amounts set
forth below, each such award issuable in one-third increments on the vesting
dates set forth below, provided the respective performance objective is
satisfied.

 

The Performance Objective
established by the Committee with respect to the Threshold Performance Award,
the Target Performance Award and Exceptional Performance Award is

 

	
   

  	
   

  	
  Performance

  	
   

  	
  Performance

  	
   

  	
  Number of

  Shares of

  Common

  	
   

  	
  Vesting

  	
   

  
	
   

  	
   

  	
  Objective

  	
   

  	
  Cycle

  	
   

  	
  Stock

  	
   

  	
  */2011

  	
   

  	
  */2012

  	
   

  	
  */2013

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a.
  Threshold Performance Award

  	
   

  	
   

  	
   

  	
  Calendar Year 2009

  	
   

  	
   

  	
   

  	
  33.33

  	
  %

  	
  33.33

  	
  %

  	
  33.34

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b.
  Target Performance Award

  	
   

  	
   

  	
   

  	
  Calendar Year 2009

  	
   

  	
  (in addition to (a) above)

  	
   

  	
  33.33

  	
  %

  	
  33.33

  	
  %

  	
  33.34

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c.
  Exceptional Performance Award

  	
   

  	
   

  	
   

  	
  Calendar Year 2009

  	
   

  	
  (in addition to (a) and (b) above)

  	
   

  	
  33.33

  	
  %

  	
  33.33

  	
  %

  	
  33.34

  	
  %

  

 

* this date shall be the
anniversary date of the date of determination by the Compensation Committee of
satisfaction of the Performance Objectives. 
Such determination date is expected to be in either February or
March, 2010.

 

9

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