Exhibit 10.1
CSS INDUSTRIES, INC.
2011 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose. The purpose of this 2011 Stock Option Plan for Non-Employee
Directors (the “Plan”) of CSS Industries, Inc. (the “Company”) is to increase
the ownership interest in the Company of the Company’s Non-Employee Directors
and to provide a further incentive to the Company’s Non-Employee Directors to
serve as Directors of the Company.
2. The Plan. The Plan shall consist of options to acquire Shares of the Common
Stock of the Company, $0.10 par value (the “Shares”).
3. Administration. The Plan shall be administered by the Board of Directors of
the Company (the “Board”). Subject to the provisions of the Plan, the Board
shall be authorized to interpret the Plan, to establish, amend and rescind any
rules and regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan; provided, however,
that, except as set forth in the Plan, the Board shall have no discretion with
respect to the eligibility or selection of Directors to receive options under
the Plan, the number of Shares subject to any such options, exercisability or
termination of such options, the purchase price of options or the frequency of
option grants thereunder, and provided further that the Board shall not have the
authority to take any action to make any determination that would materially
increase the benefits accruing to participants under the Plan. The
determinations of the Board in the administration of the Plan, as described
herein, shall be final and conclusive and binding upon all persons including,
without limitation, the Company, its stockholders and persons granted options
under the Plan. All options granted under the Plan shall be made conditional
upon the Non-Employee Director’s acknowledgement, in writing or by acceptance of
the option, that all decisions and determinations of the Board shall be final
and binding on the Non-Employee Director, his or her beneficiaries, and any
other person having or claiming an interest under such option. The Secretary of
the Company shall be authorized to implement the Plan in accordance with its
terms and to take such actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof. The validity, construction and
effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Delaware.
4. Participation in the Plan. Directors of the Company who are not employees of
the Company or any subsidiary or affiliate of the Company shall be eligible to
participate in the Plan (“Eligible Directors”).
5. Shares Subject to the Plan. Subject to adjustment as provided in Section 8,
an aggregate of 150,000 Shares shall be available for issuance upon the exercise
of options granted under the Plan. The Shares deliverable upon the exercise of
an option may be made available from unissued Shares not reserved for any other
purpose or Shares reacquired by the Company, including Shares purchased in the
open market or in private transactions. If any option granted under the Plan
shall expire or terminate for any reason without having been exercised in full,
the Shares subject to, but not delivered under, such option may again become
available for the grant of other options under the Plan.
6. Non-Statutory Stock Options. All options granted under the Plan shall be
non-statutory options not intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”).

 

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7. Terms, Conditions and Forms of Options. Each option granted under this Plan
shall be evidenced by a written agreement with the Company in such form as the
Board shall from time to time approve, which agreement shall comply with and be
subject to the following terms and conditions:
(i) Option Grant Dates. Options to purchase 4,000 Shares (as adjusted pursuant
to Section 8) shall be granted automatically to each Eligible Director on the
last day that the Company’s Shares are traded on the New York Stock Exchange, or
if the Shares are not then listed on the New York Stock Exchange, on such other
national securities exchange upon which the shares are traded, or if the Shares
are not then listed on a national securities exchange, on the last day that
transactions in the Company’s Shares are reported on the OTC Bulletin Board or
pinksheets.com, or if Shares are not so traded or subject to such transaction
reporting, on the last day on which the Company’s offices are open, in each
November commencing November 2011 and ending November 2015, except that any such
grant shall be subject to and contingent upon approval of the Plan by the
stockholders of the Company at the 2011 Annual Meeting of Stockholders.
(ii) Purchase Price. The purchase price of Shares upon exercise of an option
shall be 100% of the fair market value of the Shares on the date of grant of an
option; which shall be: (i) if the Shares are then listed on a national
securities exchange, the closing price of the Shares on such date as reported on
the consolidated tape or, if not so reported, as reported by such exchange;
(ii) if the Shares are not then listed on a national securities exchange, the
last sale price of the Shares on such date as reported by the OTC Bulletin Board
or, if not reported by the OTC Bulletin Board, the last sale price of the Shares
as reported by pinksheets.com, or if not so reported, the average of the closing
bid and asked prices for the Shares on such date as reported by a nationally
recognized quotation service selected by the Board in good faith; or (iii) if
the Shares are neither then listed on a national securities exchange nor subject
to bid and ask quotations disseminated by a nationally recognized quotation
service, such value as the Board shall in good faith determine. If the Shares
are then listed on a national securities exchange or are subject to transaction
reporting on the OTC Bulletin Board or pinksheets.com, but are not traded on the
date of grant, then the purchase price of such shares shall be the closing price
on the last day prior thereto on which such Shares were traded.
(iii) Exercisability and Term of Options. Each option granted under the Plan
will become exercisable and mature in four equal installments, commencing on the
first anniversary of the date of grant and annually thereafter. Each option
granted under the Plan shall expire five (5) years from the date of the grant,
and shall be subject to earlier termination as hereinafter provided.
(iv) Termination of Service. In the event of the termination of service on the
Board by the holder of any option, other than by reason of death as set forth in
Paragraph (v) hereof or by reason of such holder’s commencement of employment
with the Company, the then outstanding options of such holder may be exercised
only to the extent that they were exercisable on the date of such termination
and shall expire three months after such termination, or on their stated
expiration date, whichever occurs first.
(v) Death. In the event of the death of the holder of any option while a member
of the Board, each of the then outstanding options of such holder will
immediately become fully exercisable. In addition, if the holder of any option
dies while a member of the Board, or within the three month period after such
cessation as a member of the Board, the holder’s legal representative may
exercise such options at any time within a period of six months after the date
on which the holder ceases to be a member of the Board, but in no event after
the expiration date of the term of the option.
(vi) Payment. Options may be exercised only upon payment to the Company in full
of the purchase price of the Shares to be delivered. Such payment shall be made
(a) in cash or check at the time of purchase; (b) by delivering Shares already
owned by the holder, or attestation to ownership of such Shares on such form as
prescribed by the Board, and having a fair market value (as defined in
Section 7(ii)) equal to the purchase price; (c) payment through a broker in
accordance with procedures

 

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permitted by Regulation T of the Federal Reserve Board, to the extent permitted
by applicable law; or (d) by such other method as permitted by the Board, to the
extent permitted by applicable law. Notwithstanding the foregoing, the Board
reserves the right not to permit such payment to be made under the terms of
subsection (b) if it determines that the same would not be in the best interests
of the Company. Moreover, any Shares used to exercise the option pursuant to
subsection (b) shall have been held by the holder of the option for the
requisite period of time to avoid adverse accounting consequences to the Company
with respect to the exercise of the option.
8. Adjustment upon Changes in Shares; Acceleration and Cancellation of Options.
(i) If there is any change in the number or kind of Shares outstanding by reason
of (a) a stock dividend, spinoff, recapitalization, stock split, or combination
or exchange of Shares; (b) a merger, reorganization or consolidation; (c) a
reclassification or change in par value; or (d) any other extraordinary or
unusual event affecting the outstanding Shares as a class without the Company’s
receipt of consideration, or if the value of outstanding Shares is substantially
reduced as a result of a spinoff or the Company’s payment of an extraordinary
dividend or distribution, the maximum number of Shares available for issuance
under the Plan, the number Shares of subject to the annual option grant, the
kind and number of Shares covered by outstanding options, the kind and number of
Shares issued and to be issued under the Plan, and the exercise price per Share
for outstanding options shall be equitably adjusted by the Board to reflect any
increase or decrease in the number of, or change in the kind or value of, the
issued Shares to preclude, to the extent practicable, the enlargement or
dilution of rights and benefits under the Plan and such outstanding options;
provided, however, that any fractional Shares resulting from such adjustment
shall be eliminated. In addition, in the event of a Change in Control of the
Company, the provisions of subsection 8(ii) of the Plan shall apply. Any
adjustments to outstanding Grants shall be consistent with section 409A of the
Code, to the extent applicable. Any adjustments determined by the Board shall be
final, binding and conclusive.
(ii) In the event of a Change in Control (as defined below), all outstanding
options awarded under the Plan shall become exercisable in full immediately
prior to such event. Upon a Change in Control where the Company is not the
surviving corporation (or survives only as a subsidiary of another corporation),
unless the Board determines otherwise, all outstanding options that are not
exercised shall be assumed by, or replaced with comparable options by, the
surviving corporation (or a parent or subsidiary of the surviving corporation).
Notwithstanding the foregoing, in the event of a Change in Control, the Board
may take one or both of the following actions with respect to any or all
outstanding options: (x) require that the holders of options surrender their
outstanding options in exchange for a payment by the Company, in cash or Shares
as determined by the Board, in an amount equal to the amount by which the fair
market value of the Shares subject to the holder’s unexercised options exceeds
the exercise price of the option, or (y) after giving holders of options an
opportunity to exercise their outstanding options, terminate any and all
unexercised options at such time as the Board deems appropriate. Such surrender
or termination shall take place as of the date of the Change in Control or such
other date as the Board may specify. The Board making the determinations
described above following a Change in Control must be comprised of the same
members as those on the Board immediately before the Change in Control. For
purposes of the Plan, a “Change in Control” shall be deemed to have occurred if:
(a) any “person” (as such term is used in sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than
persons who are stockholders on the effective date of the Plan) becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing more than 50% of the
voting power of the then outstanding securities of the Company; provided that a
Change in Control shall not be deemed to occur as a result of a change of
ownership resulting from the death of a stockholder, and a Change in Control
shall not be deemed to occur as a result of a transaction in which the Company
becomes a subsidiary of another corporation and in which the stockholders of the
Company, immediately prior to the transaction, will beneficially own,
immediately after the transaction, shares entitling such stockholders to more
than 50% of all votes to which all stockholders of the parent

 

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corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote); or (b) the consummation of (x) a merger or consolidation
of the Company with another corporation where the stockholders of the Company,
immediately prior to the merger or consolidation, will not beneficially own,
immediately after the merger or consolidation, shares entitling such
stockholders to more than 50% of all votes to which all stockholders of the
surviving corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote); (y) a sale or other disposition of all or substantially
all of the assets of the Company; or (z) a liquidation or dissolution of the
Company.
9. Transferability of Options.
(i) Nontransferability of Options. Except as provided below, only the Eligible
Director may exercise rights under his or her option during the Eligible
Director’s lifetime. An Eligible Director may not transfer those rights except
(i) by will or by the laws of descent and distribution or (ii) if permitted in
any specific case by the Board, pursuant to a domestic relations order or
otherwise as permitted by the Board. When the Eligible Director dies, the
personal representative or other person entitled to succeed to the rights of the
Eligible Director may exercise such rights. Any such successor must furnish
proof satisfactory to the Company of his or her right to receive the option
under the Eligible Director’s will or under the applicable laws of descent and
distribution.
(ii) Transfer of Options. Notwithstanding the foregoing, the Board may provide
that an Eligible Director may transfer his or her options to family members, or
one or more trusts or other entities for the benefit of or owned by family
members, consistent with applicable securities laws, according to such terms as
the Board may determine; provided that the Eligible Director receives no
consideration for the transfer of an option and the transferred option shall
continue to be subject to the same terms and conditions as were applicable to
the option immediately before the transfer.
10. Limitations of Rights.
(i) No Right to Continue as a Director. Neither the Plan nor the granting of an
option nor any other action taken pursuant to the Plan, shall constitute or be
evidence of any agreement or understanding, express or implied, that an Eligible
Director has a right to continue as a Director for any period of time, or at any
particular rate of compensation.
(ii) No Stockholders’ Rights for Holders of Options. A holder of options shall
have no rights as a stockholder with respect to the Shares covered by options
granted hereunder until the date of the issuance of the underlying Shares, and
no adjustment will be made for any cash dividend distributions for which the
record date is prior to the date such Shares are issued.
11. No Repricing Without Stockholder Approval. Notwithstanding anything in the
Plan to the contrary, the Board may not reprice options, nor may the Board amend
the Plan to permit repricing of options, unless the stockholders of the Company
provide prior approval for such repricing. An adjustment to an option pursuant
to subsection 8(i) above shall not constitute a repricing of the option. For
this purpose, a “repricing” shall mean (i) as such term is defined in the New
York Stock Exchange listing rules, or (ii) the cancellation of an option for
cash (other than in connection with a Change in Control) when the per Share
purchase price of the option exceeds the fair market value per Share.
12. Effective Date and Duration of Plan. The Plan is effective on August 3,
2011, subject to approval by the stockholders of the Company at the 2011 Annual
Meeting of Stockholders. The period during which option grants shall be made
under the Plan shall terminate on December 31, 2015 (unless the Plan is extended
or is terminated on an earlier date by action of the stockholders), but such
termination shall not affect the terms of any then outstanding options.

 

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13. Amendment, Suspension or Termination of the Plan. Subject to the limitations
described in this Section, the Board may amend, suspend or terminate the Plan;
provided, however, that no such action shall adversely affect the rights of
Directors who hold outstanding options previously granted hereunder and,
provided further, however, that any stockholder approval necessary or desirable
in order to comply with applicable federal securities laws or the applicable
rules of any self-regulatory organization, shall be obtained in the manner
required therein. Amendments to Section 7(i) shall not be effected more than
once every six months, unless such amendments are implemented to comport with
changes in the Code or regulations thereunder.
14. Notice. Any notice to the Company required by any of the provisions of this
Plan shall be in writing and addressed to the Secretary of the Company at the
Company’s then Executive Offices and shall become effective when it is received.
Any notice to an Eligible Director required by any of the provisions of this
Plan shall be in writing and addressed to such Eligible Director at the current
address shown in the records of the Company, or to such other address as the
Eligible Director may designate to the Company in writing and shall become
effective when it is received.
15. Use of Proceeds. Proceeds from the sale of Shares pursuant to options
granted under the Plan shall constitute general funds of the Company.
16. No Fractional Shares. No fractional Shares shall be issued pursuant to
options granted hereunder.
17. Expenses of the Plan. All of the expenses of administering the Plan shall be
paid by the Company.
18. Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause Shares to be issued or any
certificate for Shares to be delivered pursuant to the exercise of an option
unless and until the Company is advised by its counsel that the issuance and
delivery of such certificate is in compliance with all applicable laws,
regulations of a governmental authority and the requirements of any
self-regulatory organization. The Company shall in no event be obligated to
register any securities pursuant to the Securities Act of 1933 (as now in effect
or as hereafter amended) or to take any other action in order to cause the
issuance and delivery of any such certificate to comply with any such law,
regulation or requirement. The Board may require, as a condition of the issuance
and delivery of any such certificate and in order to insure compliance with such
laws, regulations and requirements, such representations as the Board, in its
sole discretion, deems necessary or desirable. Each option shall be subject to
the further requirement that if at any time the Board shall determine in its
discretion that the listing or qualification of the Shares subject to such
option is required under any self-regulatory organization requirements or under
any applicable law or regulation, or that the consent or approval of any
governmental regulatory body or self-regulatory organization is necessary as a
condition of, or in connection with, the granting of such option or the issuance
of Shares thereunder, such option may not be exercised in whole or in part
unless such listing, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Board.
19. Governing Law. Except to the extent pre-empted by federal law, this Plan
shall be construed and enforced in accordance with, and governed by, the laws of
the State of Delaware, without giving effect to the conflict of laws principles.

 

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