Exhibit 10.1

 

NON-QUALIFIED STOCK OPTION

AWARD AGREEMENT

 

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT, entered into as of the Grant
Date, is by and between the Participant and Caraustar Industries, Inc. (the
“Company”).

 

BACKGROUND STATEMENT

 

The Company maintains the Caraustar Industries, Inc. 2003 Long-Term Equity
Incentive Plan (the “Plan”), which is incorporated into and forms a part of this
Agreement, and the Participant has been selected by the Compensation and
Employee Benefits Committee of the Company’s Board of Directors, which
administers the Plan (the “Committee”), to receive an award of a non-qualified
stock option under the Plan.

 

NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as
follows:

 

1. Terms of Award. The following terms used in this Agreement shall have the
meanings set forth in this paragraph 1:

 

(a) The “Participant” is «Participant» «Last Name».

 

(b) The “Grant Date” is «NQs Grant Date».

 

(c) The number of “Covered Option Shares” subject to the Option awarded under
this Agreement shall be «NQs» shares of the Company’s common stock.

 

(d) The “Exercise Price” is $             per Covered Option Share.

 

Other terms used in this Agreement are defined in paragraph 8 or elsewhere in
this Agreement.

 

2. Award and Exercise Price. This Agreement specifies the terms of the option
(the “Option”) granted to the Participant to purchase the number of Covered
Option Shares of the Company’s common stock at the Exercise Price per share as
set forth in paragraph 1. The Option is not intended to constitute an “incentive
stock option” as that term is used in Section 422 of the Internal Revenue Code,
as amended.

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3. Period of Exercise. Subject to the limitations of this Agreement, the Option
shall be exercisable according to the following schedule, with respect to each
installment shown in the schedule on and after the “Vesting Date” applicable to
such installment:

 

Installment

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Vesting Date

Applicable to Installment

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¼ of Covered Shares

   first anniversary of Grant Date

¼ of Covered Shares

   second anniversary of Grant Date

¼ of Covered Shares

   third anniversary of Grant Date

¼ of Covered Shares

   fourth anniversary of Grant Date

 

An installment shall not become exercisable on the otherwise applicable Vesting
Date if the Participant’s Date of Termination (as defined in paragraph 8) occurs
on or before such Vesting Date for any reason other than the Participant’s
Retirement. Notwithstanding the foregoing provisions of this paragraph 3, the
Option shall become exercisable with respect to all of the Covered Shares (to
the extent it is not then otherwise exercisable) as follows:

 

(a) The Option shall become fully exercisable upon the Participant’s death or
Disability.

 

(b) The Option shall become fully exercisable as of the date of a Change in
Control unless the Participant’s Date of Termination, other than by reason of
Retirement, occurs before the date of the Change in Control.

 

Except as otherwise provided in this paragraph 3 with respect to death,
Disability and Retirement, the Option may be exercised on or after the Date of
Termination only as to that portion of the Covered Shares as to which it was
exercisable immediately prior to the Date of Termination.

 

4. Expiration. The Option shall not be exercisable after the Company’s close of
business on the last business day that occurs prior to the Expiration Date. The
“Expiration Date” shall be the earliest to occur of:

 

(a) the 10-year anniversary of the Grant Date;

 

(b) if the Participant’s Date of Termination occurs by reason of death or
Disability, the one-year anniversary of such Date of Termination; or

 

(c) if the Participant’s Date of Termination occurs for reasons other than
death, Disability, or Retirement, the 90-day anniversary of such Date of
Termination.

 

5. Exercise of Option. Subject to the terms of this Agreement and the Plan, the
Option may be exercised in whole or in part by filing a written notice with the
Secretary of the Company at its corporate headquarters prior to the Company’s
close of business on the last business day that occurs prior to the Expiration
Date. Such notice shall specify the number of shares of the Company’s common
stock that the Participant elects to purchase, and shall be accompanied by
payment of the Exercise Price for such shares of common stock indicated by the

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Participant’s election. Payment shall be by cash or by check payable to the
Company. Except as otherwise provided by the Committee before the Option is
exercised: (i) all or a portion of the Exercise Price may be paid by the
Participant by delivery of shares of common stock owned by the Participant and
acceptable to the Committee having an aggregate Fair Market Value (valued as of
the date of exercise) that is equal to the amount of cash that would otherwise
be required; and (ii) the Participant may pay the Exercise Price by authorizing
a third party to sell shares of the Company’s common stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise. The Option shall not
be exercisable if and to the extent the Company determines that such exercise
would violate applicable state or federal securities laws or the rules and
regulations of any securities exchange on which the Company’s common stock is
traded. If the Company makes such a determination, it shall use all reasonable
efforts to obtain compliance with such laws, rules and regulations. In making
any determination hereunder, the Company may rely on the opinion of counsel for
the Company.

 

6. Withholding Taxes. All deliveries and distributions under this Agreement are
subject to withholding of all applicable taxes. At the election of the
Participant, and subject to such rules and limitations as may be established by
the Committee from time to time, such withholding obligations may be satisfied
through the surrender of shares of the Company’s common stock that the
Participant already owns, or to which the Participant is otherwise entitled
under the Plan.

 

7. Transferability. Except as otherwise provided in this paragraph 7, the Option
is not transferable other than as designated by the Participant by will, the
laws of descent and distribution or a qualified domestic relations order.
However, the Participant, with the approval of the Committee, may transfer the
Option for no consideration to or for the benefit of:

 

(i) any Family Member of the Participant;

 

(ii) a trust in which either the Participant or the Participant’s Family Members
have more than 50% of the beneficial interest;

 

(iii) a foundation in which the Participant or the Participant’s Family Members
control the management of assets; or

 

(iv) any other entity in which the Participant or the Participant’s Family
Members own more than 50% of the voting interests.

 

Each such transferee shall remain subject to all the terms and conditions
applicable to the Option prior to such transfer. The foregoing right to transfer
the Option shall apply to the right to consent to amendments to this Agreement
and, in the discretion of the Committee, shall also apply to the right to
transfer ancillary rights associated with the Option. The term “Family Member”
shall mean the Participant’s child, stepchild, grandchild, parent, stepparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including in each
case adoptive relationships.

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8. Definitions. For purposes of this Agreement, the terms used in this Agreement
shall be subject to the following:

 

(a) Date of Termination. The Participant’s “Date of Termination” shall be the
first day occurring on or after the Grant Date on which the Participant is not
employed by the Company or any Subsidiary, regardless of the reason for the
termination of employment; provided that a termination of employment shall not
be deemed to occur by reason of a transfer of the Participant between the
Company and a Subsidiary or between two Subsidiaries; and provided, further,
that the Participant’s employment shall not be considered terminated while the
Participant is on a leave of absence from the Company or a Subsidiary approved
by the Participant’s employer. If, as a result of a sale or other transaction,
the Participant’s employer ceases to be a Subsidiary (and the Participant’s
employer is or becomes an entity that is separate from the Company), and the
Participant is not, at the end of the 30-day period following the transaction,
employed by the Company or an entity that is then a Subsidiary, then the
occurrence of such transaction shall be treated as the Participant’s Date of
Termination caused by the Participant being discharged by the employer.

 

(b) Disability. Except as otherwise provided by the Committee, the Participant
shall be considered to have a “Disability” during the period in which the
Participant is unable, by reason of a medically determinable physical or mental
impairment, to engage in any substantial gainful activity, which condition, in
the opinion of a physician selected by the Committee, is expected to have a
duration of not less than 180 days.

 

(c) Retirement. “Retirement” of the Participant shall mean, with the approval of
the Committee, the occurrence of the Participant’s Date of Termination on or
after the date the Participant attains the earliest age at which the Participant
is eligible to retire under the Caraustar Industries, Inc. Defined Benefit
Pension Plan.

 

(d) Plan Definitions. Except where the context clearly implies or indicates the
contrary, a word, term, or phrase defined in the Plan is similarly used in this
Agreement.

 

9. Heirs and Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company’s assets and business. If any rights
exercisable by the Participant or benefits deliverable to the Participant under
this Agreement have not been exercised or delivered, respectively, at the time
of the Participant’s death, such rights shall be exercisable by the Designated
Beneficiary, and such benefits shall be delivered to the Designated Beneficiary,
in accordance with the provisions of this Agreement and the Plan. The
“Designated Beneficiary” shall be the beneficiary or beneficiaries designated by
the Participant in a writing filed with the Committee in such form and at such
time as the Committee shall require. If a deceased Participant fails to
designate a beneficiary, or if the Designated Beneficiary does not survive the
Participant, any rights that would have been exercisable by the Participant and
any benefits distributable to the Participant shall be exercised by or
distributed to the legal representative of the estate of the Participant. If a
deceased Participant designates a beneficiary and the

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Designated Beneficiary survives the Participant but dies before the Designated
Beneficiary’s exercise of all rights under this Agreement or before the complete
distribution of benefits to the Designated Beneficiary under this Agreement,
then any rights that would have been exercisable by the Designated Beneficiary
shall be exercised by the legal representative of the estate of the Designated
Beneficiary, and any benefits distributable to the Designated Beneficiary shall
be distributed to the legal representative of the estate of the Designated
Beneficiary.

 

10. Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the
Committee shall have all powers with respect to this Agreement as it has with
respect to the Plan. Any interpretation of the Agreement by the Committee and
any decision made by it with respect to the Agreement is final and binding on
all persons.

 

11. Plan Governs. Notwithstanding anything in this Agreement to the contrary,
the terms of this Agreement shall be subject to the terms of the Plan, a copy of
which may be obtained by the Participant from the office of the Secretary of the
Company; and this Agreement is subject to all interpretations, amendments, rules
and regulations promulgated by the Committee from time to time pursuant to the
Plan.

 

12. Not An Employment Contract. The Option shall not confer on the Participant
any right with respect to continuance of employment or other service with the
Company or any Subsidiary, nor shall it interfere in any way with any right the
Company or any Subsidiary would otherwise have to terminate or modify the terms
of such Participant’s employment or other service at any time.

 

13. Notices. Any written notices provided for in this Agreement or the Plan
shall be in writing and shall be deemed sufficiently given if either hand
delivered or if sent by fax or overnight courier, or by postage paid first-class
mail. Notices sent by mail shall be deemed received three business days after
mailing but in no event later than the date of actual receipt. Notices shall be
directed, if to the Participant, at the Participant’s address indicated by the
Company’s records, or if to the Company, at the Company’s principal executive
office.

 

14. No Rights As Shareholder. The Participant shall not have any rights of a
shareholder with respect to the shares subject to the Option until a stock
certificate has been duly issued following exercise of the Option as provided
herein.

 

15. Amendment. This Agreement may be amended by written agreement of the
Participant and the Company, without the consent of any other person.

 

16. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.

 

17. Revocation for Failure to Return. This Agreement will be null and void, the
Option offered hereby will be automatically revoked and the Participant will
have no rights under this Agreement or in connection with such Option, unless
the Company receives a copy of this Agreement bearing the Participant’s original
signature, in the space provided below, on or before             , 20    .