UFP TECHNOLOGIES, INC.
(a Delaware Corporation)
1993 STOCK OPTION PLAN
(As Amended on April 16, 1998)
1. Statement of Purpose. The purpose of this Stock Option Plan (the
"Plan") is to benefit UFP TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), through the maintenance and development of its businesses by
offering certain present and future key individuals a favorable opportunity to
become holders of stock in the Company over a period of years, thereby giving
them a permanent stake in the growth and prosperity of the Company and
encouraging the continuance of their involvement with the Company and/or its
subsidiaries.
2. Administration. The Plan shall be administered by the Stock Option
Committee (the "Committee") of the Board of Directors or any other committee of
the Board of Directors selected by the Board of Directors. If no Committee shall
be appointed, this Plan shall be administered by the full Board of Directors,
which Board shall be deemed the Committee for purposes of this Plan. The
Committee shall have full and plenary authority to interpret the terms and
provisions of the Plan.
3. Eligibility. Options shall be granted only to key employees of the
Company and its subsidiaries (including officers, and including directors of the
Company and its subsidiaries who are also employees), and consultants and
advisors of the Company and its subsidiaries (where bona fide services were
rendered and such services were not in connection with the offer and sale of
securities in a capital raising transaction), but excluding the Directors of the
Company who are not employees of the Company, selected initially and from time
to time thereafter by the Committee on the basis of their importance to the
business of the Company or its subsidiaries.
4. Granting of Options. The Committee may grant options under which a
total of not in excess of 1,050,000 Shares of the $.01 par value Common Stock of
the Company ("Common Stock") may be purchased from the Company, subject to
adjustment as provided in Section 12 hereof. The Committee may, in its
discretion grant under the Plan either non-qualified stock options or incentive
stock options as defined in Section 422 of the Internal Revenue Code of 1986
(the "Code"), provided, however, that incentive stock options may only be
granted to employees of the Company or its subsidiaries. A maximum of 525,000
shares (subject to adjustment as provided in Section 12 hereof) may be subject
to options granted to Directors of the Company and/or its subsidiaries who also
serve as employees. The grant of a non-qualified stock option shall be evidenced
by a written Non-Qualified Stock Option Agreement, executed by the Company and
the holder of a
non-qualified stock option, stating the number of shares of Common Stock subject
to such non-qualified stock option evidenced thereby and in such form as the
Committee may from time to time determine. The grant of an incentive stock
option shall be evidenced by a written Incentive Stock Option Agreement,
executed by the Company and the holder of the incentive stock option, stating
the number of shares of Common Stock subject to such incentive stock option
evidenced thereby and in such form as the Committee may from time to time
determine.
In the event that an option expires or is terminated or cancelled
unexercised as to any shares, such released shares may again be optioned
(including a grant in substitution for a cancelled option). Shares subject to
options may be made available from unissued or reacquired shares of Common
Stock.
Nothing contained in the Plan or in any option granted pursuant thereto
shall confer upon any optionee any right to be continued in the employment of
the Company or any subsidiary of the Company, or interfere in any way with the
right of the Company or its subsidiaries to terminate an employee's employment
at any time, or interfere in any way with the right of the Company or its
subsidiaries to terminate any consulting or other compensation arrangement
between the Company or any subsidiary of the Company, and any consultant or
advisor of the Company or such subsidiary.
5. Exercise Price. The exercise price shall be determined by the
Committee in its discretion, and may be greater than, or less than the fair
market value, at the time the option is granted, of the shares of Common Stock
subject to the option, provided, however, that the exercise price of an
incentive stock option shall be not less than the fair market value, at the time
the option is granted, of the shares of Common Stock subject to the option. If
one or more incentive stock options are granted to an employee who, at the time
of grant, owns more than ten percent (10%) of the total voting power of all
classes of stock of the Company (a "10% Owner"), the exercise price under such
incentive stock option shall be not less than 110% of said fair market value.
Such fair market value shall be deemed to be the last trading price of the
Common Stock on the trading day next preceding the date of the grant of the
option except that if the Common Stock is then listed on any national exchange,
fair market value shall be the mean between the high and low sales price on the
trading day next preceding the date of grant of the option. If shares of the
Common Stock shall not have been traded on any national exchange or interdealer
quotation system for more than 10 days immediately preceding the date of grant
of such option or if deemed appropriate by the Committee for any other reason,
the fair market value of shares of Common Stock shall be determined by the
Committee in such other manner as it may deem appropriate. In no event shall the
exercise price of any share of Common Stock be less than its par value.
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6. Duration of Options, Increments, and Extensions. Subject to the
provisions of Section 8 hereof, each option shall be for a term of not more than
ten years, provided, however, that incentive stock options granted to employees
who, at the time of the grant, are 10% Owners shall be for a term of not more
than five years. Each option shall become exercisable with respect to 25% of the
total number of shares subject to the option twelve months after the date of its
grant and, with respect to each additional 25%, at the end of each twelve-month
period thereafter during the succeeding three years. Notwithstanding the
foregoing, the Committee may, in its discretion (i) specifically provide at the
date of grant of another time or times of exercise; (ii) accelerate the
exercisability of such option subject to such terms as the Committee deems
necessary and appropriate to effectuate the purpose of the Plan, including,
without limitation, a requirement that the optionee grant to the Company an
option to repurchase all or a portion of the number of shares acquired upon
exercise of the accelerated option for their fair market value on the date of
grant; or (iii) at any time prior to the expiration or termination of any
non-qualified stock option previously granted, extend the term of any such
option (including such non-qualified stock options held by officers or
directors) for such period as the Committee in its discretion shall determine.
In no event, however, shall the aggregate option period with respect to any
option, including the original term of the option and any extensions thereof,
exceed ten years. Subject to the foregoing, all or any part of the shares to
which the right to purchase has accrued may be purchased at the time of such
accrual or at any time or times thereafter during the option period.
7. Exercise of Option. Each stock option agreement shall set forth the
procedure governing the exercise of the stock option granted thereunder, and
shall provide that, upon such exercise in respect of any shares of common Stock
subject thereto, the optionee shall pay the Company, in full, the option price
for such shares with cash or its equivalent or with previously owned Common
Stock, or by a combination of these methods of payment. In the discretion of the
Committee, payment may also be made by delivery (including delivery by facsimile
transmission) to the Company or its designated agent of an executed irrevocable
option exercise form together with irrevocable instructions to a broker-dealer
to sell a sufficient portion of the shares and deliver the sale proceeds
directly to the Company to pay for the exercise price, or by any other means
which the Committee determines to be consistent with the Plan's purpose and
applicable law. Alternatively the option may provide that the optionee may elect
to direct the Company to withhold such number of shares issuable upon exercise
of the option as is necessary to fund the exercise price. For the purpose of
this paragraph, the per share value of the Common Stock of the Company shall be
the fair market value on the date of exercise. Any optionee holding two or more
options that are partially or wholly exercisable at the same time may exercise
said options (to the extent they are then
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exercisable) in any order the optionee chooses, regardless of the order in which
said options were granted.
At the time of exercise of any option, the Company may, if it shall
determine it necessary or desirable for any reason, require the optionee (or his
heirs, legatees, or legal representative, as the case may be) as a condition
upon the exercise thereof to deliver to the Company a written representation of
present intention to purchase the shares for investment and not for
distribution. In the event such representation is required to be delivered, an
appropriate legend may be placed upon each certificate delivered to the optionee
upon his exercise of part or all of the option and a stop transfer order may be
placed with the transfer agent. Each option shall also be subject to the
requirement that, if at any time the Company determines, in its discretion, that
the listing, registration or qualification of the shares subject to the option
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body is necessary or desirable as a
condition of or in connection with, the issue or purchase of shares thereunder,
the option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
8. Termination of Relationship - Exercise Thereafter. In the event the
relationship between the Company and a director, officer, other employee,
consultant or advisor who is an optionee is terminated for any reason other than
death, permanent disability or retirement, such optionee's option may be
exercised (to the extent exercisable by the optionee on the date of such
termination) by the optionee, or if he or she is not living, by his or her
heirs, legatees or legal representatives, as the case may be, during its
specified term but not later than three (3) months after the date of such
termination, and in any event not later than ten (10) years after the date the
option was granted. Temporary absences because of illness, vacation, approved
leaves of absence, and transfers among the Company and its subsidiaries, shall
not be considered to terminate the employment or consulting relationship with
the optionee or to interrupt continuous employment.
In the event of termination of said relationship because of death,
permanent disability (as that term is defined in Section 22(e)(3) of the Code,
as now in effect or as subsequently amended), or retirement (at age 65 or
earlier as may be permitted by the Company), the option may be exercised in
full, without regard to any installments established under Section 6 hereof, by
the optionee or, if he is not living, by his heirs, legatees, or legal
representative, as the case may be, during its specified term, but not later
than one (1) year after the date of death, permanent disability, or retirement,
and in any event not later than ten (10) years after the date the option was
granted.
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9. Withholding Taxes. Whenever the Company is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the right
to require the grantee to remit to the Company an amount sufficient to satisfy
any federal, state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. In the discretion
of the Committee, payment of such withholding taxes may be made by delivery
(including delivery by facsimile transmission) to the Company or its designated
agent of irrevocable instructions to a broker-dealer to sell a sufficient
portion of the shares and deliver the sale proceeds directly to the Company to
pay for the withholding taxes. Alternatively, the Company may, in its
discretion, issue or transfer such shares of Common Stock net of the number of
shares sufficient to satisfy the withholding tax requirements. For withholding
tax purposes, the shares of Common Stock shall be valued on the date the
withholding obligation is incurred.
10. Non-Transferability of Options. No option shall be transferable by
the optionee otherwise than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by Code, Title I of
the Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and each option shall be exercisable during an optionee's lifetime
only by the optionee.
11. Limitation on Amounts of Incentive Stock Options Granted. The
aggregate fair market value (determined as of the date of grant) of stock for
which incentive stock options granted to an optionee under this Plan become
first exercisable shall not exceed One Hundred Thousand Dollars ($100,000)
during any calendar year.
12. Adjustment. The number of shares subject to the Plan and to options
granted under the Plan shall be adjusted as follows: (a) in the event that the
outstanding shares of Common Stock of the Company is changed by any stock
dividend, stock split or combination of shares, the number of shares subject to
the Plan and to options granted thereunder shall be proportionately adjusted;
(b) in the event of any merger, consolidation or reorganization of the Company
with any other corporation or corporations, there shall be substituted, on an
equitable basis as determined by the Committee, for each share of Common Stock
then subject to the Plan, whether or not at the time subject to outstanding
options, the number and kind of shares of Stock or other securities to which the
holders of shares of Common Stock of the Company will be entitled pursuant to
the transaction; and (c) in the event of any other relevant change in the
capitalization of the Company, the Committee shall provide for an equitable
adjustment in the number of shares of Common Stock then subject to the Plan,
whether or not then subject to outstanding options. In the event of any such
adjustment, the purchase price per share shall be proportionately adjusted.
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13. Termination and Amendment of Plan. This Plan shall terminate ten
years from the effective date of this Plan, and an option shall not be granted
under the Plan after that date. The Plan may at any time or from time to time be
terminated, modified, or amended by the affirmative vote of a majority in
interest of the voting stock of the Company. The Board of Directors may at any
time and from time to time modify or amend the Plan in respects as it shall deem
advisable to conform to any change in the law, or in any other respect, provided
that any amendment by the Board of Directors which would (a) materially increase
the benefits accruing to participants under the Plan, (b) increase the number of
securities which may be issued under the plan (other than an increase pursuant
to Section 12 hereof), or (c) materially modify the requirements as to
eligibility for participation in the plan must be approved by a majority vote of
the stockholders within twelve months before or after the effective date of such
increase or change. In no event shall any amendment of the Plan (i) change or
impair any options previously granted without the consent of the optionee, or
(ii) extend the term of the plan.
14. Effective Date. This Plan as originally adopted, became effective
on October 15, 1993. The Plan was amended on April 4, 1995 and on April 16,
1998.
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