<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
UFP TECHNOLOGIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):
__________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
5) Total fee paid:
__________________________________________________________________________
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
__________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
__________________________________________________________________________
3) Filing Party:
__________________________________________________________________________
4) Date Filed:
__________________________________________________________________________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
UFP TECHNOLOGIES, INC.
172 EAST MAIN STREET
GEORGETOWN, MASSACHUSETTS 01833-2107
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
UFP TECHNOLOGIES, INC.
TO BE HELD ON JUNE 6, 1997
----------------
The Annual Meeting of Stockholders of UFP Technologies, Inc. will be held on
June 6, 1997 at 10:00 a.m., local time, at the Ferncroft Tara Hotel, 50
Ferncroft Road, Danvers, Massachusetts 01923, for the following purposes:
1. To elect seven (7) directors to serve for the ensuing year and until
their successors are duly elected.
2. To consider and act upon any matters incidental to the foregoing
purposes and any other matters which may properly come before the
Meeting or any adjourned session thereof.
The Board of Directors has fixed April 28, 1997 as the record date for
determining the stockholders entitled to notice of, and to vote at, the
Meeting.
You are cordially invited to attend the Meeting.
By Order of the Board Of Directors
RICHARD L. BAILLY,
Secretary
Boston, Massachusetts
May 2, 1997
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO VOTE, SIGN, DATE AND RETURN THE ACCOMPANYING ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT
PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, THE PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO THE EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY A
WRITTEN REVOCATION, BY EXECUTING A PROXY WITH A LATER DATE, OR BY ATTENDING
AND VOTING AT THE MEETING.
<PAGE>
UFP TECHNOLOGIES, INC.
172 EAST MAIN STREET
GEORGETOWN, MASSACHUSETTS 01833-2107
----------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 6, 1997
----------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of UFP Technologies, Inc., a Delaware
Corporation (the "Company") with its principal executive offices at 172 East
Main Street, Georgetown, Massachusetts 01833, for use at the Annual Meeting of
Stockholders to be held on June 6, 1997, and at any adjournment or
adjournments thereof (the "Meeting"). The enclosed proxy relating to the
Meeting is solicited on behalf of the Board of Directors of the Company and
the cost of such solicitation will be borne by the Company. It is expected
that this proxy statement and the accompanying proxy will be mailed to
stockholders on or about May 2, 1997. Certain of the officers and regular
employees of the Company may solicit proxies by correspondence, telephone or
in person, without extra compensation. The Company may also pay to banks,
brokers, nominees and certain other fiduciaries their reasonable expenses
incurred in forwarding proxy material to the beneficial owners of securities
held by them.
Only stockholders of record at the close of business on April 28, 1997 will
be entitled to receive notice of, and to vote at, the Meeting. As of that
date, there were outstanding and entitled to vote 4,652,604 shares of Common
Stock, $.01 par value (the "Common Stock"), of the Company. Each such
stockholder is entitled to one vote for each share of Common Stock so held and
may vote such shares either in person or by proxy.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy or, in the absence of such direction, for the election of the
nominees as directors. If any other matters shall properly come before the
Meeting, the enclosed proxy will be voted by the proxies in accordance with
their best judgment. The proxy may be revoked at any time prior to exercise by
filing with the Secretary of the Company a written revocation, by executing a
proxy with a later date, or by attending and voting at the Meeting.
ELECTION OF DIRECTORS
At the Meeting, seven directors are to be elected to serve until the 1998
Annual Meeting of Stockholders and until their respective successors have been
duly elected and qualified. The persons listed below in the following table
have been nominated by the Board of Directors for election as directors.
All nominees are currently directors of the Company. It is the intention of
the persons named as proxies to vote for the election of the nominees. In the
unanticipated event that any such nominee should be unable to serve, the
persons named as proxies will vote the proxy for such substitutes, if any, as
the present Board of Directors may designate. The nominees have not been
nominated pursuant to any arrangement or understanding with any person.
<PAGE>
The following table sets forth certain information with respect to the
nominees. When used below, positions held with the Company include positions
held with the Company's predecessors and subsidiaries.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
---- --- -------- --------------
<S> <C> <C> <C>
R. Jeffrey Bailly....... 35 President, Chief Executive Officer and Director 1995
William H. Shaw(1)(2)... 69 Chairman of the Board of Directors 1963
Richard L. Bailly....... 63 Executive Vice President, Secretary and Director 1963
William C. Cur-
ry(1)(2)(3)............ 63 Director 1990
David L. Friedman....... 49 Director 1994
T. Gordon Roddick....... 55 Director 1994
Kenneth L. Gestal....... 48 Director 1996
</TABLE>
- --------
(1) Member of the Company's Compensation Committee.
(2) Member of the Company's Stock Option Committee.
(3) Member of the Company's Audit Committee.
Mr. R. Jeffrey Bailly has served as the President, Chief Executive Officer
and a director of the Company since January 1, 1995. He joined the Company in
1988 and served as a Division Manager from 1989 to 1992, General Manager
Northeast Operations from 1992 to 1994 and as its Vice President of Operations
from 1994 to 1995. From 1984 through 1988, Mr. Bailly, a certified public
accountant, was employed by Coopers & Lybrand. Mr. Bailly is the son of
Richard L. Bailly, a cofounder and a director of the Company.
Mr. Shaw, a cofounder of the Company and its Chairman of the Board, served
as the Chief Executive Officer, President and Treasurer of the Company from
its organization in 1963 through his retirement at the end of 1994. Mr. Shaw
has also served as a director of the Company since 1963. Mr. Shaw is a member
of the Board of directors of Re-Source America, Inc., a package recycling
company.
Mr. Richard Bailly, a cofounder of the Company, has served as its Executive
Vice President and a director since its organization in 1963. Mr. Bailly is
the author of many of the Company's patents, including patents covering the
forming and lamination of foam plastics, packaging, conversion technology and
moisture transmission. Mr. Bailly is a member of the Board of Directors of the
Family Bank of Haverhill.
Mr. Curry has served as a director of the Company since 1990. From 1986 to
March 1994, Mr. Curry, now semiretired, was the president, chief executive
officer and a director of Discom, Inc., which was acquired by TDK USA Corp. in
1988 and has been a wholly owned subsidiary of TDK since that date.
Mr. Friedman has served as a director of the Company since January 25, 1994.
Mr. Friedman, a cofounder of Moulded Fibre Technology, Inc. ("MFT"), which the
Company acquired on December 23, 1993 (the "MFT Acquisition"), served as MFT's
Chairman from its inception in 1991 until December 1993 and as its President
and Chief Executive Officer from March 1992 until December 1993. Following the
MFT Acquisition, Mr. Friedman served as MFT's interim president from December
1993, until May 1994. In 1986, Mr. Friedman founded Sandy River Group, Inc., a
health care and environmental business development company, and served as a
director and president from its inception to 1995. Mr. Friedman currently
serves as Chairman of Sandy River Health Systems, Inc., a provider of health
care services.
Mr. Roddick has served as a director of the Company since January 25, 1994.
He served as a director of MFT from 1991 until the MFT Acquisition in
December, 1993. Mr. Roddick is a cofounder and chairman of The Body Shop
International PLC, a cosmetic manufacturer and retailer, and has served as its
chairman since its formation in 1976.
Mr. Gestal has served as a director of the Company since 1996. Mr. Gestal is
Chairman of Institutional Global Finance Corp., a money management firm. From
1991 to 1995, Mr. Gestal served Swiss Bank Corporation, a securities firm,
first as president of SBCI Futures, then as president of SBC Government
Securities
2
<PAGE>
Inc. and as a director of both firms. Prior to joining Swiss Bank Corporation,
Mr. Gestal served as the president of Sanwa-BGK, a securities firm, and as
chairman of its futures operations. Mr. Gestal is the brother-in-law of R.
Jeffrey Bailly, the President, Chief Executive Officer and a director of the
Company.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held six meetings during 1996. Each
current director attended at least 75% of the aggregate number of all meetings
of the Board of Directors and committees of which he was a member during such
fiscal year, except for Mr. Roddick.
The Board of Directors has an Audit Committee which met twice in 1996 and is
currently composed of Messrs. Curry and Eliot Sherman. Mr. Sherman is retiring
from the Board of Directors and the Audit Committee following the Annual
Meeting. The functions performed by this Committee include recommending to the
Board of Directors the engagement of the independent auditors, reviewing the
scope of internal controls and reviewing the implementation by management of
recommendations made by the independent auditors.
The Board of Directors has a Compensation Committee which met on three
occasions in 1996 and is currently composed of Messrs. Curry and Shaw. The
functions of the Compensation Committee include determining salaries,
incentive plans, benefits and overall compensation.
The Board of Directors has a Stock Option Committee which acted by unanimous
written consent on three occasions in 1996 and is currently composed of
Messrs. Curry and Shaw. Its functions include determining the individuals to
whom stock options are granted, the terms upon which option grants are made
and the number of shares subject to each option granted under the Company's
1993 Stock Option Plan.
The Board of Directors does not have a nominating committee. Nominations of
directors are considered by the whole Board of Directors.
COMPENSATION OF DIRECTORS
In 1996, nonemployee directors of the Company received (i) an annual $5,000
fee, (ii) if applicable, an annual committee membership fee of $1,500 per year
(with a maximum fee of $3,000) and (iii) a fee of $500 plus reimbursement of
expenses for each meeting physically attended. Mr. Shaw received $12,000 for
his services as Chairman of the Board and $50,000 for his services to the
Company as a consultant pursuant to a letter agreement with the Company dated
January 1, 1995 and an agreement with the Company dated September 1993. See
"Consulting Contract." In addition, each nonemployee director is eligible to
receive stock options pursuant to the 1993 Employee Director Stock Option
Plan. See "1993 Nonemployee Director Stock Option Plan." Employee directors
may be granted options under the 1993 Stock Option Plan.
1993 Nonemployee Director Stock Option Plan. In October, 1993, the Company
adopted the 1993 Nonemployee Director Stock Option Plan (the "Director Plan")
to promote the Company's interests by attracting and obtaining highly skilled,
experienced and knowledgeable independent directors. Only nonemployee
directors are eligible to receive options under the Director Plan. The
Director Plan provides for options for the issuance of up to 110,000 shares of
Common Stock. Commencing July 1, 1994 and on July 1 each year thereafter, each
individual who at the time is serving as a nonemployee director of the Company
receives an automatic grant of options to purchase 2,500 shares of Common
Stock. These options become exercisable in full six months after the date of
grant and expire ten years from the date of grant. The exercise price is the
fair market value of the Common Stock on the date of grant. Options may not be
exercised after three months following the date the holder ceases to be a
member of the Board of Directors of the Company, except in the event of
termination by reason of death or permanent disability, in which event the
options may be exercised for up to one year after the date of death or
permanent disability, but in any event not later than ten years after the date
the option was granted. In 1996, each of the Company's five continuing
nonemployee directors, Messrs. Curry, Friedman, Roddick, Shaw, Sherman and
Gestal received options to purchase 2,500 shares of Common Stock with an
exercise price of $6.13 per share.
3
<PAGE>
Consulting Contract. William H. Shaw retired as the Company's President,
Chief Executive Officer and Treasurer on December 31, 1994. Pursuant to an
agreement between the Company and Mr. Shaw entered into in September 1993, Mr.
Shaw is entitled to an automobile and has agreed to serve as a consultant to
the Company for three years for $50,000 per year beginning January 1, 1995.
Thereafter, Mr. Shaw, or his heirs or beneficiaries, will receive a retirement
benefit of $50,000 per year for an additional 12 years. Mr. Shaw has agreed
that he will not compete with the Company while he is receiving any of these
payments.
Indemnification Agreements. The Company has entered into indemnification
agreements with each of its directors and anticipates that it will enter into
similar agreements with any future directors. Generally, the indemnification
agreements attempt to provide the maximum protection permitted by Delaware law
with respect to indemnification of directors.
The indemnification agreements provide that the Company will pay certain
amounts incurred by a director in connection with any civil or criminal action
or proceeding and specifically including actions by or in the name of the
Company (derivative suits) where the individual's involvement is by reason of
the fact that he is or was a director. Such amounts include, to the maximum
extent permitted by law, attorney's fees, judgments, civil or criminal fines,
settlement amounts, and other expenses customarily incurred in connection with
legal proceedings. Under the indemnification agreements, a director will not
receive indemnification if he is found not to have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the Company.
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of April 11, 1997,
with respect to the beneficial ownership of the Company's Common Stock by each
director, each nominee for director, each named executive officer in the
Summary Compensation Table under "Executive Compensation" below, all executive
officers and directors as a group, and each person known by the Company to be
the beneficial owner of 5% or more of the Company's Common Stock. This
information is based upon information received from or on behalf of the named
individuals.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF
NAME BENEFICIALLY OWNED(1) CLASS
---- ---------------------- ----------
<S> <C> <C>
William H. Shaw(2)(5)......................... 652,164 14.0%
c/o UFP Technologies, Inc.
172 East Main Street
Georgetown, MA 01833
Richard L. Bailly(3)(4)....................... 447,342 9.5%
c/o UFP Technologies, Inc.
172 East Main Street
Georgetown, MA 01833
R. Jeffrey Bailly(3)(10)...................... 399,577 8.1%
c/o UFP Technologies, Inc.
172 East Main Street
Georgetown, MA 01833
Eliot H. Sherman(5) ......................... 307,184 6.6%
c/o UFP Technologies, Inc.
172 East Main Street
Georgetown, MA 01833
David L. Friedman(5)(6)....................... 221,878 4.8%
Paul Greenler (3)(10)......................... 183,245 3.9%
T. Gordon Roddick(5)(7)....................... 161,501 3.5%
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT OF
NAME BENEFICIALLY OWNED(1) CLASS
---- ---------------------- ----------
<S> <C> <C>
Charles W. Casey(3)......................... 67,508 1.4%
Wayne G. Williams(3)........................ 58,521 1.3%
William C. Curry(5)(8)...................... 52,292 1.1%
Kenneth L. Gestal........................... 42,700 *
James J. Cramer(9).......................... 992,900 21.3%
56 Beaver Street
New York, NY 10004
All executive officers and directors as a
group
(11 persons)(2)(3)(4)(5)(6)(7)(8)(10)...... 2,483,822 53.4%
</TABLE>
- --------
* Less than one percent.
(1) Unless otherwise noted, each person identified possesses sole voting and
investment power with respect to the shares listed.
(2) Includes 80,732 shares owned by the wife of Mr. Shaw as to which Mr. Shaw
disclaims beneficial ownership.
(3) Includes shares issuable pursuant to currently exercisable stock options
under the 1993 Plan as follows: 34,500 for Mr. Richard Bailly, 235,000
for Mr. Jeffrey Bailly, 34,500 for Mr. Greenler, 27,000 for Mr. Charles
W. Casey, and 27,000 for Wayne Williams.
(4) Includes 175,924 shares owned by the wife of Mr. Bailly as to which Mr.
Bailly disclaims beneficial ownership. Excludes 349,577 shares
attributable to R. Jeffrey Bailly, a son of Richard Bailly, as to which
he disclaims beneficial ownership.
(5) Includes shares issuable pursuant to currently exercisable stock options
under the Nonemployee Director Stock Option Plan as follows: 5,000 for
Mr. Shaw, 7,500 for Mr. Sherman, 7,500 for Mr. Friedman, 7,500 for Mr.
Roddick, 7,500 for Mr. Curry and 2,500 for Mr. Gestal.
(6) Includes warrants to purchase 44,703 shares held by Mr. Friedman.
(7) Includes warrants to purchase 33,178 shares held by Mr. Roddick.
(8) Includes 40,040 shares owned by the wife of Mr. Curry, as to which he
disclaims beneficial ownership.
(9) Represents an investment group consisting of Mr. Cramer, Karen L. Cramer
and J.J. Cramer & Co.
(10) Includes 120,090 shares owned by the Company's Profit Sharing Trust as to
which Messrs. Bailly and Greenler disclaim beneficial interest in excess
of their respective pecuniary interests in the trust. Messrs. Bailly and
Greenler are co-trustees of the trust.
MANAGEMENT
The names of the Company's executive officers and significant employees who
are not directors of the Company, and certain biographical information
furnished by them, are set forth below:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Paul J. Greenler...................... 51 Chief Financial Officer and Treasurer
Charles W. Casey...................... 57 Vice President
Wayne G. Williams..................... 53 Vice President
</TABLE>
Mr. Greenler has served as the Chief Financial Officer of the Company since
1993 and previously as its controller from 1977 to 1993. Prior to joining the
Company, Mr. Greenler was division controller of EG&G, Inc. from 1968 through
1977.
Mr. Casey joined the Company in 1981 and has served as a Vice President
since 1992. Prior thereto, Mr. Casey served as division manager from 1985
through 1994 and as plant manager from 1981 through 1985.
Mr. Williams initially joined the Company in 1981 and served as sales
manager, division manager and more recently as Vice President of Technology
from 1992 through October 1993. From 1993 through 1994 Mr. Williams served as
an executive officer of Re-Source America. Mr. Williams rejoined the Company
as a Vice President in January 1994. Prior to joining the Company, Mr.
Williams was employed by The Dow Chemical Company (1966-1981) where he held
various technical, sales and project management positions.
5
<PAGE>
Executive officers are chosen by and serve at the discretion of the Board of
Directors of the Company.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation during
the last three fiscal years of each of the executive officers of the Company
whose annual salary and bonus, if any, exceeded $100,000 during the last
fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL YEAR SALARY BONUS COMPEN- UNDERLYING COMPENSATION
POSITION ENDED ($) ($) SATION($)(2) OPTIONS (#) ($)(3)
------------------ ----------- ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
R. Jeffrey Bailly....... 12/31/96 140,000 75,000 16,875 0 6,367
President and Chief 12/31/95 125,000 67,435 16,250 200,000 7,095
Executive Officer (1) 12/31/94 92,404 86,000 0 110,000 4,541
Richard L. Bailly....... 12/31/96 127,400 10,000 0 5,000 6,051
Executive Vice 12/31/95 122,408 10,000 0 0 4,500
President (1) 12/31/94 127,921 0 0 40,000 3,873
Paul J. Greenler........ 12/31/96 95,000 15,000 0 5,000 4,853
Chief Financial Officer 12/31/95 89,846 18,000 0 0 3,820
12/31/94 83,451 17,500 0 40,000 3,577
Charles W. Casey........ 12/31/96 97,262 5,000 0 5,000 4,128
Vice President 12/31/95 87,009 0 0 0 3,279
12/31/94 98,673 6,150 0 30,000 3,124
Wayne G. Williams....... 12/31/96 96,616 10,000 0 5,000 4,525
Vice President 12/31/95 86,252 10,000 0 0 3,740
12/31/94 73,692 20,000 0 30,000 2,231
</TABLE>
- --------
(1) See "Employment Contracts" below.
(2) The Company granted Mr. Bailly 5,000 shares Common Stock in both April
1995 and 1996 at a market price of $3.25 per share and of $3.38,
respectively, in each case based on the closing price of the Company's
Common Stock on the Nasdaq Small Cap Market on the date of grant. See
"Employment Contracts."
(3) Represents Company contributions to the above-named employees' accounts
under the Company's Profit Sharing Retirement Plan and Trust.
EMPLOYMENT CONTRACTS
In April 1995 the Company entered into an employment agreement with R.
Jeffrey Bailly, its President and Chief Executive Officer, which is terminable
by either party at any time, except as provided below. The Agreement provides
that Mr. Bailly will receive a minimum annual salary of $125,000 and
consideration for discretionary bonuses. Mr. Bailly's agreement contains
nondisclosure provisions and prohibits him from competing with the Company
during the term of his employment and for a period of eighteen months
thereafter. Pursuant to the agreement, the Company agreed to grant Mr. Bailly
25,000 shares of its Common Stock at the rate of 5,000 shares per year
commencing April 4, 1995 provided that Mr. Bailly remains employed with the
Company. The employment agreement provides Mr. Bailly with certain other
benefits, including the opportunity to participate in the Company's stock
option plans, insurance plans and other employment benefits as may be
generally available to senior executives of the Company.
Under the terms of the employment agreement, if Mr. Bailly's employment with
the Company is terminated by the Company without cause, or if Mr. Bailly
terminates his employment with the Company for good reason (a reduction in his
base salary, removal from his position as president or chief executive
officer, required relocation outside the greater Boston, Massachusetts area or
a material reduction in his overall level of
6
<PAGE>
responsibility) or due to a change in control of the Company, (i) the Company
is required to continue to pay Mr. Bailly a monthly amount for a period of
eighteen months equal to Mr. Bailly's average monthly salary (including bonus)
for the preceding two years, (ii) all of Mr. Bailly's shares and options
granted pursuant to the employment agreement will vest in full and (iii) the
Company will continue to pay Mr. Bailly's health insurance.
In September 1993, the Company entered into an agreement with Richard L.
Bailly that provides that should Mr. Bailly's employment with the Company be
terminated by the Company for any reason other than for cause, or should Mr.
Bailly terminate his employment for good reason (either a reduction in his
salary below $122,400 or a material reduction in his overall level of
responsibility), Mr. Bailly will receive an automobile and compensation of
$122,400 per year for three years or until he reaches age 65, whichever is
shorter. During this period, he will serve as a consultant to the Company.
After the end of this initial consulting period, or upon Mr. Bailly's
retirement, Mr. Bailly will continue as a consultant to the Company for three
additional years for $45,000 per year. Thereafter, Mr. Bailly, or his heirs or
beneficiaries, will receive a retirement benefit of $40,000 per year for an
additional 12 years. Mr. Bailly has agreed that he will not compete with the
Company while he is receiving any of these payments.
SEVERANCE PLANS
In September 1993, the Company adopted a policy that all executive officers
and certain key employees of the Company not otherwise a party to an
employment arrangement with the Company will receive a severance benefit
should the employee's employment with the Company be terminated by the Company
other than for cause in connection with a change in control of the Company, in
the form of a base salary continuation for a period equal to the sum of (i)
four months plus (ii) one month for each year of service with the Company.
STOCK OPTION PLANS
The following two tables set forth certain information with respect to (i)
the number of options granted to named executive officers in 1996 and (ii) the
aggregate number and value of options exercisable and unexercisable by the
named executive officers during 1996. No options were exercised by any of the
named executive officers in 1996.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------
POTENTIAL
REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM(2)
OPTIONS IN FISCAL BASE PRICE EXPIRATION -----------------
NAME GRANTED (#) YEAR $/SHARE(1) DATE 5%($) 10%($)
---- ----------- ---------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
R. Jeffrey Bailly....... -- -- -- -- -- --
Richard L. Bailly....... 5,000 9.4% 3.125 4/9/01 4,317 9,539
Paul J. Greenler........ 5,000 9.4% 3.125 4/9/01 4,317 9,539
Charles W. Casey........ 5,000 9.4% 3.125 4/9/01 4,317 9,539
Wayne G. Williams....... 5,000 9.4% 3.125 4/9/01 4,317 9,539
</TABLE>
- --------
(1) All options have a term of five years, and vest at the rate of 20% a year
commencing the date of grant.
(2) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming the specified compounded rates of appreciation of
the Company's Common Stock over the term of the options. These numbers are
calculated based on rules promulgated by the Securities and Exchange
Commission. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the time of such exercise and the future
performance of the Company's Common Stock.
7
<PAGE>
AGGREGATED OPTION EXERCISED IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
12/31/96 12/31/96(1)
---------------- ---------------
EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE
NAME (#) ($)
---- ---------------- ---------------
<S> <C> <C>
R. Jeffrey Bailly.............................. 182,500/127,500 470,625/314,375
Richard L. Bailly.............................. 31,000/14,000 63,763/28,588
Paul J. Greenler............................... 31,000/14,000 63,763/28,588
Charles W. Casey............................... 23,500/11,500 43,175/21,750
Wayne G. Williams.............................. 23,500/11,500 43,175/21,750
</TABLE>
- --------
(1) Based upon the closing price of the Company's Common Stock on December 31,
1996 on the Nasdaq National Market of $5.125 minus the respective option
exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions regarding executive compensation are made by the Compensation
Committee of the Board of Directors, which in 1996 was composed of Messrs.
Curry and Shaw. The Board of Directors also maintains a Stock Option
Committee, which in 1996 consisted of Messrs. Curry and Shaw, which is
responsible for administering the 1993 Plan, including determining the
individuals to whom stock options are awarded, the terms upon which option
grants are made, and the number of shares subject to each option granted. Mr.
Shaw was the President of the Company through his retirement at the end of
1994. Mr. Curry is not a former or current officer or employee of the Company.
COMPENSATION COMMITTEE, STOCK OPTION COMMITTEE AND BOARD OF DIRECTORS REPORT
The primary objectives of the Compensation Committee in developing executive
compensation policies are to attract, motivate and retain superior talent to
enable the Company to achieve its business objectives and to align the
financial interests of its executive officers with the stockholders of the
Company.
The compensation of executive officers consists of base compensation, bonus,
the grant of options and participation in benefit plans generally available to
employees. In setting compensation, the Compensation Committee strives to
maintain base compensation for the Company's executive officers at levels
which the Compensation Committee believes are competitive with the
compensation of comparable executive officers in similarly situated companies,
while relying upon stock options and the bonus plan to provide significant
performance incentives.
Executive officers are eligible to participate in the bonus plan which is
administered by the Compensation Committee. Under the plan, executive officers
may receive bonuses derived from a formula tied to the Company's income. In
addition, executive officers, including Jeffrey Bailly, may receive
discretionary bonuses based upon a subjective evaluation of the performance of
the Company and their contributions to the Company.
Each of the executive officers and all key employees are eligible to receive
grants of options under the 1993 Plan. The 1993 Plan is used to align a
portion of the officer's compensation with the stockholders' interests and the
long term success of the Company. In determining the number of options to be
granted to each executive officer, the Stock Option Committee reviews
recommendations provided by R. Jeffrey Bailly and makes a subjective
determination regarding those recommendations based upon the following
criteria: (i) the individual performance and position of responsibility of the
executive officer, (ii) the number of options held by the executive officer,
and (iii) the financial performance of the Company. No particular weight is
given to any of these factors, rather each executive officer's total
compensation package is reviewed as a whole. During the fiscal
8
<PAGE>
year ended December 31, 1996, the Company granted options to purchase 20,000
shares to executive officers as a group under the 1993 Plan. See "Stock Option
Plans."
In 1996, R. Jeffrey Bailly received a salary of $140,000, a bonus of $75,000
and 5,000 shares of Common Stock. This compensation was based upon the
employment agreement negotiated with Mr. Bailly, in conjunction with his
promotion to Chief Executive Officer and President of the Company in January
1995. The Board has conducted a survey of salaries of chief executive
officers. Based upon that information and its experience, the Company believes
that Mr. Bailly's cash compensation was comparable to the compensation of
chief executive officers of similar companies.
Compensation and Stock Option Committee
WILLIAM H. SHAW Board of Directors
WILLIAM C. CURRY WILLIAM H. SHAW
R. JEFFREY BAILLY
RICHARD L. BAILLY
WILLIAM C. CURRY
ELIOT SHERMAN
DAVID FRIEDMAN
T. GORDON RODDICK
KENNETH L. GESTAL
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares the semi-annual change in the Company's
cumulative total shareholder return from December 16, 1993, when the Company's
Common Stock became publicly traded to December 31, 1996 based upon the market
price of the Company's Common Stock with the cumulative total return on the
CRSP Index for the Nasdaq Stock Market (U.S. companies) and the CRSP Index for
NYSE/AMEX/Nasdaq (SIC 3080-3089 U.S.) Miscellaneous Plastics Products for that
period.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Nasdaq NYSE/
Stock Market AMEX/
UFP Index NASDAQ/
Measurement period Technologies, (U.S.) Stocks
(Fiscal Year Covered) Inc. Companies Index
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/17/93 $ 100.0 $ 100.0 $ 100.0
FYE 12/31/93 $ 95.7 $ 102.3 $ 101.1
FYE 12/31/94 $ 52.2 $ 100.0 $ 101.4
FYE 12/31/95 $ 69.6 $ 141.5 $ 111.2
FYE 12/31/96 $ 89.1 $ 174.0 $ 154.2
</TABLE>
Assumes $100 invested on December 16, 1993 in the Company's Common Stock, the
CRSP Index for the Nasdaq Stock Market (U.S. companies) and the CRSP Index for
NYSE/AMEX/Nasdaq (SIC 3080-3089 U.S.) Miscellaneous Plastics Products, and the
reinvestment of any and all dividends.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
UNITED DEVELOPMENT COMPANY LIMITED
The Company owns an approximate 26.3% limited partnership interest in United
Development Company Limited, a real estate limited partnership ("United
Development"), which owns and leases to the Company the Kissimmee, Florida and
Decatur, Alabama properties. William H. Shaw and Richard L. Bailly, both
principals and stockholders of the Company, each owns an approximately 21%
general partnership interest in United Development. Each of Paul J. Greenler,
Charles W. Casey and Wayne G. Williams who are officers and/or stockholders of
the Company, owns an approximately 5.3% limited partnership interest in this
entity.
The Company made a series of loans to United Development from time to time
prior to September 30, 1993 in the total principal amount of $210,000 of which
$141,750 remained outstanding as of December 31, 1996. As of September 30,
1993, these loans were consolidated into one term note bearing interest at the
prime rate of interest as announced by The First National Bank of Boston, plus
2%. The principal amount of the note amortizes on a ten year basis with the
outstanding principal amount repayable on September 30, 1998.
Kissimmee, Florida Property. The Company leases its Kissimmee, Florida
manufacturing facility from United Development on a month-to-month basis.
Monthly rent for the lease is $12,400 plus the payment of certain expenses and
taxes. The Company chose not to exercise its option to purchase the land and
building at a formula price based upon the appraised value of the land and
building multiplied by a discount rate following the recent expiration of its
previous lease for the premises. However, the Company believes that the terms
of its month-to-month lease are comparable to those available in the market
for real estate in Kissimmee, Florida. The Kissimmee, Florida property is
subject to $1,500,000 Osceola County Industrial Development Authority
Industrial Development Revenue Bonds, Series 1985 (United Development Company
Limited Project) dated April 1, 1985, which as of December 31, 1996 had an
aggregate outstanding principal balance of $414,293. Interest on these bonds
accrues at the prime rate of interest as announced by Barnett Bank of Florida
and is payable monthly commencing on June 1, 1986 and ending on May 1, 2000.
In addition to other security for the bonds, including a mortgage on the
property in favor of Barnett Bank and Trust Company, N.A., as trustee, the
Company, William H. Shaw and Richard L. Bailly jointly and severally
unconditionally guaranteed the payment of all principal, interest and premium,
if any, payable on the bonds. The Company, William H. Shaw and Richard L.
Bailly also jointly and severally indemnified the Trustee and Osceola County
Industrial Development Authority, as issuer of the bonds, for all costs, fees
and expenses incurred by them in connection with the bonds.
Decatur, Alabama Property. The Company leases its Decatur, Alabama
manufacturing facility from United Development for an annual rent of $90,000
plus the payment of certain expenses and taxes. The Company believes that the
terms of this lease are comparable to those available in the market for real
estate in Decatur, Alabama. In June, 1990, United Development acquired from
MCP Industries, Inc. the land on which the Decatur, Alabama property is
located, together with the related leasehold interest. This leasehold interest
was acquired subject to an existing leasehold mortgage in the amount of
$227,482. The acquisition of the property was financed by a $130,000 mortgage
loan from First American Bank. This mortgage loan is guaranteed by the
Company.
OTHER MATTERS
VOTING PROCEDURES
The votes of stockholders present in person or represented by proxy at the
Meeting will be tabulated by an inspector of elections appointed by the
Company. The seven nominees for directors of the Company who receive the
greatest number of votes cast by stockholders present in person or represented
by proxy at the Meeting and entitled to vote thereon will be elected directors
of the Company.
11
<PAGE>
Abstentions will have no effect on the outcome on the votes of the election
of directors. Shares held by stockholders, including brokers, who return a
proxy but fail to vote on the proposal will be counted for the quorum for the
Meeting. The "no vote" will have no effect on the proposal for election of
directors.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP as the
independent auditors to audit the Company's consolidated financial statements
for the fiscal year ending December 31, 1997. Such firm and its predecessor
have served continuously in that capacity since 1982.
A representative of KPMG Peat Marwick LLP will be at the Meeting and will be
given an opportunity to make a statement, if so desired. The representative
will be available to respond to appropriate questions.
REPORTING UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership
on Forms 3, 4 and 5 with the Securities and Exchange Commission, the National
Association of Securities Dealers and the Boston Stock Exchange. Executive
officers, directors and greater than 10% stockholders are required to furnish
the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such Forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for specified fiscal years, the Company
believes that all of its executive officers, directors and greater than 10%
stockholders complied with all Section 16(a) filing requirements applicable to
them during the Company's fiscal year ended December 31, 1996 except for
Kenneth Gestal who filed a Form 3 after the date specified therefor.
OTHER PROPOSED ACTION
The Board of Directors knows of no matters which may come before the Meeting
other than the election of directors and the proposal to amend the Certificate
of Incorporation. However, if any other matters should properly be presented
to the Meeting, the persons named as proxies shall have discretionary
authority to vote the shares represented by the accompanying proxy in
accordance with their own judgment.
STOCKHOLDER PROPOSALS
Proposals which stockholders intend to present at the Company's 1998 Annual
Meeting of Stockholders and wish to have included in the Company's proxy
materials must be received by the Company no later than January 2, 1998.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
the sections of the Proxy Statement entitled "Compensation Committee, Stock
Option Committee and Board of Director Report" and "Performance Graph" shall
not be deemed to be so incorporated, unless specifically otherwise provided in
any such filing.
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ARE
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED TO
INVESTOR RELATIONS, UFP TECHNOLOGIES, INC. AT 172 EAST MAIN STREET,
GEORGETOWN, MASSACHUSETTS 01833.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
12
<PAGE>
UFP TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 6, 1997
SOLICITED BY MANAGEMENT
The undersigned hereby appoints R. Jeffrey Bailly and Paul J. Greenler, and
each of them, acting singly, with full power of substitution, attorneys and
proxies to represent the undersigned at the 1997 Annual Meeting of Stockholders
of UFP Technologies, Inc. to be held on June 6, 1997, and at any adjournment or
adjournments thereof, with all power which the undersigned would possess if
personally present, and to vote all shares of stock which the undersigned may be
entitled to vote at said meeting upon the matters set forth in the Notice of and
Proxy Statement for the Meeting in accordance with the following instructions
and with discretionary authority upon such other matters as may come before the
Meeting. All previous proxies are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED
AS DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS INDICATED, IT WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES AS DIRECTORS.
Continued, and to be signed, on reverse side
(Please fill in the reverse side and mail in enclosed envelope)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF THE NOMINEES AS DIRECTORS.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. Election of Directors:
Nominees:
R. JEFFREY BAILLY, WILLIAM H. SHAW,
RICHARD L. BAILLY, WILLIAM C. CURRY,
DAVID L. FRIEDMAN, T. GORDON RODDICK
AND KENNETH L. GESTAL
[_] FOR ALL NOMINEES (except as marked to the contrary)
[_] WITHHOLD AUTHORITY to vote for all nominees
FOR except vote withheld from the following nominee(s):
____________________________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED ABOVE.)
MARK HERE FOR
ADDRESS CHANGE
AND NOTE AT LEFT [_]
(Signatures should be the same as the name printed hereon. Executors,
administrators, trustees, guardians, attorneys, and officers of corporations
should add their titles when signing.)
Signature:________________________ Date:_____________
Signature:________________________ Date:_____________
