EXHIBIT 10.2
CSS INDUSTRIES, INC.
2004 EQUITY COMPENSATION PLAN
NONQUALIFIED STOCK OPTION GRANT
This NONQUALIFIED STOCK OPTION GRANT, dated as of                      (the
“Date of Grant”), is delivered by CSS Industries, Inc. (the “Company”) to
                     (the “Grantee”).
RECITALS
WHEREAS, the Human Resources Committee of the Board of Directors of the Company
(the “Committee”) has determined to grant the Grantee an equity award (the
“Equity Award”) for shares of Common Stock of the Company, par value $0.10 per
share (the “Company Stock”);
WHEREAS, the Equity Award is comprised of two separate grants, a nonqualified
stock option and a stock bonus award; and
WHEREAS, the Committee has determined that the nonqualified stock option portion
of the Equity Award shall be issued under the CSS Industries, Inc. 2004 Equity
Compensation Plan, as amended (the “Plan”) and the terms and conditions of such
nonqualified stock option shall be memorialized in this Nonqualified Stock
Option Grant (the “Grant”).
NOW, THEREFORE, the parties to this Grant, intending to be legally bound hereby,
agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth in this Grant
and in the Plan, the Company hereby grants to the Grantee a nonqualified stock
option (the “Option”) to purchase                      shares of Company Stock
at an exercise price of $                     per share. The Option shall become
vested and exercisable according to Paragraphs 2 and 3 below.
2. Vesting of Option.
(a) Unless a Change of Control (as defined below) occurs prior to the end of the
Performance Period (as defined below), the vesting and exercisability of the
Option is contingent upon achievement of the Performance Goal (as described in
subparagraph (b) below) at any time during the Performance Period and the
Grantee satisfying the continuing employment condition described in Paragraph 3
below.
(b) The Option will become vested if the Company’s Total Stockholder Return
(“TSR”) (as described in subparagraph (c) below) at any time during the
Performance Period is _____% or more as certified by the Committee (the
“Performance Goal”). The Committee may determine whether the Performance Goal
has been achieved at any time after it has been achieved; provided however, that
the Committee will determine whether the Performance Goal has been achieved
prior to the anniversary of the Date of Grant next following the earliest date
on which the Performance Goal is achieved, and provided further that if such
earliest date occurs within the thirty (30) day period immediately preceding an
anniversary date of the Date of Grant, then the Committee will determine whether
the Performance Goal has been achieved as soon as administratively practicable
following, and in any event not later than 30 days following, the date of
achievement of the Performance Goal. Upon making a determining that the
Performance Goal has been achieved, the Committee will certify that the
Performance Goal has been so achieved. The date, if any, on which the Committee
certifies that the Performance Goal has been achieved is referred to herein as
the “Certification Date”.

 

 

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(c) TSR represents stock price performance and dividend accumulation during the
Performance Period for the Company. For purposes of this calculation, the
initial stock price is equal to the closing stock price for the Company Stock on
the last trading day prior to the Date of Grant, and the ending stock price is
determined using the thirty (30) day average stock price for each day during
Performance Period. The thirty (30) day average stock price is the average of
the closing stock prices for the thirty (30) trading days that end on the
applicable date. To determine stock price performance, a dividend adjustment
factor will be determined. The dividend adjustment factor takes into account
each per share dividend paid during the Performance Period through the
applicable measurement date, as well as the effect of any appreciation in stock
price by reason of deeming the dividend to be reinvested in the stock. TSR is
determined on each measurement date by adjusting the ending stock price on such
date as determined above by the dividend adjustment factor and comparing it to
the initial stock price. The initial Company Stock price is
$                     per share.
(d) Unless a Change of Control occurs prior to the end of the Performance
Period, if the Performance Goal is not achieved at any time during the
Performance Period no portion of the Option may become vested, the Grantee may
not exercise any portion of the Option, and the Option shall terminate.
(e) In order to become vested in any portion of the Option, the Grantee must be
Employed by the Employer (as defined in the Plan) on the Certification Date or
date of a Change of Control, if earlier. If the Grantee ceases to be Employed by
the Employer for any reason or no reason prior to the Certification Date or
Change of Control, if earlier, no portion of the Option shall become vested and
the Option shall be forfeited immediately following the date the Grantee ceases
to be Employed by the Employer.
(f) If a Change of Control occurs prior to the end of the Performance Period and
prior to achievement of the Performance Goal, then the Performance Period will
end on the date of the Change of Control, the Performance Goal will be deemed
achieved as of the date of the Change of Control, and the Option will be fully
vested as of the date of the Change of Control, provided that the Grantee is
Employed by the Employer on the date of the Change of Control. For purposes of
this Grant, the term “Change of Control” shall mean as such term is defined in
the Plan.
(g) For purposes of this Grant, the term “Performance Period” shall mean the
                     year period beginning on the Date of Grant and ending on
                    .

 

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3. Exercisability of the Option. If the Option becomes vested as described in
Paragraph 2 above, the Option will become exercisable according to the
applicable schedule described in this Paragraph 3, provided that the Grantee is
Employed by the Employer on the applicable exercisability date:
(a) Performance Goal Achieved by First Anniversary of Date of Grant. Except as
provided in subparagraph (e) below, if, as certified by the Committee, the
Performance Goal is first achieved at any time prior to, or on, the first
anniversary of the Date of Grant, the Option will become exercisable according
to the following schedule:

              Shares for Which the Option is   Exercisability Date   Exercisable
on the Exercisability Date  
 
       
The Certification Date or the first anniversary of Date of Grant, whichever is
later
    25 %
 
       
Second anniversary of Date of Grant
    25 %
 
       
Third anniversary of Date of Grant
    25 %
 
       
Fourth anniversary of Date of Grant
    25 %

(b) Performance Goal Achieved After First Anniversary of Date of Grant, but by
Second Anniversary of the Date of Grant. Except as provided in subparagraph
(e) below, if, as certified by the Committee, the Performance Goal is first
achieved at any time after the first anniversary of the Date of Grant, but not
later than the second anniversary of the Date of Grant, the Option will become
exercisable according to the following schedule:

              Shares for Which the Option is   Exercisability Date   Exercisable
on the Exercisability Date  
 
       
The Certification Date or the second anniversary of Date of Grant, whichever is
later
    50 %
 
       
Third anniversary of Date of Grant
    25 %
 
       
Fourth anniversary of Date of Grant
    25 %

 

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(c) Performance Goal Achieved After Second Anniversary of Date of Grant, but by
Third Anniversary of the Date of Grant. Except as provided in subparagraph
(e) below, if, as certified by the Committee, the Performance Goal is first
achieved at any time after the second anniversary of the Date of Grant, but not
later than the third anniversary of the Date of Grant, the Option will become
exercisable according to the following schedule:

              Shares for Which the Option is   Exercisability Date   Exercisable
on the Exercisability Date  
 
   
The Certification Date or the third anniversary of Date of Grant, whichever is
later
    75 %
Fourth anniversary of Date of Grant
    25 %

(d) Performance Goal Achieved After Third Anniversary of Date of Grant, but by
Fourth Anniversary of the Date of Grant. Except as provided in subparagraph
(e) below, if, as certified by the Committee, the Performance Goal is first
achieved at any time after the third anniversary of the Date of Grant, but not
later than the fourth anniversary of the Date of Grant, the Option will become
exercisable according to the following schedule:

              Shares for Which the Option is   Exercisability Date   Exercisable
on the Exercisability Date  
 
       
The Certification Date or the fourth anniversary of Date of Grant, whichever is
later
    100 %

(e) Change of Control Prior to Fourth Anniversary of the Date of Grant. If a
Change of Control occurs prior to the fourth anniversary of the Date of Grant,
the Option will be fully exercisable as of the date of the Change of Control.
(f) Performance Goal Not Achieved by Fourth Anniversary of the Date of Grant.
Except in the event of a Change of Control prior to the end of the Performance
Period, if the Performance Goal is not achieved by the fourth anniversary of the
Date of Grant, no portion of the Option will become exercisable and the Option
shall be forfeited.
The exercisability of the Option is cumulative, but shall not exceed 100% of the
shares of Company Stock subject to the Option. If the applicable schedule would
produce fractional shares, the number of shares for which the Option becomes
exercisable shall be rounded up to the nearest whole Share. The Committee may
accelerate the period over which the Option becomes exercisable based upon the
Grantee’s individual performance.
4. Term of Option.
(a) The Option shall have a term of                      (_) years from the Date
of Grant and shall terminate at the expiration of that period, unless it is
terminated at an earlier date pursuant to the provisions of this Grant or the
Plan.
(b) The Option shall automatically terminate upon the happening of the first of
the following events:
(i) The expiration of the 90-day period after the Grantee ceases to be Employed
by the Employer, if the termination is for any reason other than death,
termination for Cause (as defined in the Plan), or the Grantee’s sole
determination to terminate his or her employment (other than by reason of
retirement approved by the Committee).

 

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(ii) The expiration of the 180-day period after the Grantee ceases to be
Employed by the Employer, if the Grantee dies while Employed by the Employer or
retires from such employment with the consent of the Committee.
(iii) The date on which the Grantee ceases to be Employed by the Employer on
account of a termination for Cause by the Employer (as defined in the Plan) or
the Grantee’s voluntary termination (other than by reason of retirement approved
by the Committee). In addition, notwithstanding the prior provisions of this
Paragraph 4, if the Grantee engages in conduct that constitutes Cause after the
Grantee’s employment or service terminates, the Option shall immediately
terminate.
Notwithstanding the foregoing, in no event may the Option be exercised after the
date that is immediately before the seventh anniversary of the Date of Grant.
Any portion of the Option that is not exercisable at the time the Grantee ceases
to be Employed by the Employer shall immediately terminate.
5. Exercise Procedures.
(a) Subject to the provisions of Paragraphs 2, 3 and 4 above, the Grantee may
exercise part or all of the vested and exercisable portion of the Option by
giving the Company written notice of intent to exercise in the manner provided
in this Grant, specifying the number of shares of Company Stock as to which the
Option is to be exercised and the method of payment. Payment of the exercise
price shall be made in accordance with procedures established by the Committee
from time to time based on type of payment being made but, in any event, prior
to issuance of the shares of Company Stock. The Grantee shall pay the exercise
price (i) in cash, (ii) by delivering shares of Company Stock owned by the
Grantee and having a Fair Market Value (as defined in the Plan) on the date of
exercise at least equal to the exercise price or by attestation (on a form
prescribed by the Committee) to ownership of shares of Company Stock having a
Fair Market Value on the date of exercise at least equal to the exercise price,
(iii) by payment through a broker in accordance with procedures permitted by
Regulation T of the Federal Reserve Board, or (iv) by such other method as the
Committee may approve, to the extent permitted by applicable law. The Committee
may impose from time to time such limitations as it deems appropriate on the use
of shares of Company Stock to exercise the Option.
(b) The obligation of the Company to deliver shares of Company Stock upon
exercise of the Option shall be subject to all applicable laws, rules, and
regulations and such approvals by governmental agencies as may be deemed
appropriate by the Committee, including such actions as Company counsel shall
deem necessary or appropriate to comply with relevant securities laws and
regulations.
(c) All obligations of the Company under this Grant shall be subject to the
rights of the Employer as set forth in the Plan to withhold amounts required to
be withheld for any taxes, if applicable. Unless Committee determines otherwise,
the Grantee may elect to satisfy any tax withholding obligation of the Employer
with respect to the Option by having shares of Company Stock withheld up to an
amount that does not exceed the minimum applicable withholding tax rate for
federal (including FICA), state and local tax liabilities.

 

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6. Change of Control. Except as set forth above, the provisions of the Plan
applicable to a Change of Control shall apply to the Option, and, in the event
of a Change of Control, the Committee may take such actions as it deems
appropriate pursuant to the Plan.
7. Restrictions on Exercise. Except as the Committee may otherwise permit
pursuant to the Plan, only the Grantee may exercise the Option during the
Grantee’s lifetime and, after the Grantee’s death, the Option shall be
exercisable (subject to the limitations specified in the Plan) solely by the
legal representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution, to the
extent that the Option is exercisable pursuant to this Grant.
8. Acknowledgement By Grantee. By accepting this Grant, the Grantee hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by the terms
of the Plan and this Grant. The Grantee further agrees to be bound by the
determinations and decisions of the Committee with respect to this Grant and the
Plan and the Grantee’s rights to benefits under this Grant and the Plan, and
agrees that all such determinations and decisions of the Committee shall be
binding on the Grantee, his or her beneficiaries and any other person having or
claiming an interest under this Grant and the Plan on behalf of the Grantee. The
Grantee further hereby acknowledges and agrees that the Grantee will indemnify
the Employer and hold the Employer free and harmless of, from and against any
and all losses, damage, obligation or liability, and all costs and expenses
(including reasonable attorneys’ fees) incurred in connection therewith, which
may be suffered or incurred on account or by reason of any act or omission of
the Grantee or the Grantee’s heirs, executors, administrators, personal
representatives, successors and assigns in breach or violation of the provisions
of the Plan or the agreements of the Grantee set forth herein.
9. Grant Subject to Plan Provisions. This Grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan. The grant and exercise of the
Option are subject to interpretations, regulations and determinations concerning
the Plan established from time to time by the Committee in accordance with the
provisions of the Plan, including, but not limited to, provisions pertaining to
(a) rights and obligations with respect to withholding taxes, (b) the
registration, qualification or listing of the shares of Company Stock,
(c) changes in capitalization of the Company and (d) other requirements of
applicable law. The Committee shall have the authority to interpret and construe
the Option pursuant to the terms of the Plan, and its decisions shall be
conclusive as to any questions arising hereunder.
10. No Employment or Other Rights. The grant of the Option shall not confer upon
the Grantee any right to be retained by or in the employ or service of the
Employer and shall not interfere in any way with the right of the Employer to
terminate the Grantee’s employment or service at any time. The right of the
Employer to terminate the Grantee’s employment or service at any time for any
reason is specifically reserved.

 

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11. No Stockholder Rights. Neither the Grantee, nor any person entitled to
exercise the Grantee’s rights in the event of the Grantee’s death, shall have
any of the rights and privileges of a stockholder with respect to the shares of
Company Stock subject to the Option, until certificates for shares of Company
Stock have been issued upon the exercise of the Option.
12. Assignment and Transfers. Except as the Committee may otherwise permit
pursuant to the Plan, the rights and interests of the Grantee under this Grant
may not be sold, assigned, encumbered or otherwise transferred except, in the
event of the death of the Grantee, by will or by the laws of descent and
distribution. In the event of any attempt by the Grantee to alienate, assign,
pledge, hypothecate, or otherwise dispose of the Option or any right hereunder,
except as provided for in this Grant, or in the event of the levy or any
attachment, execution or similar process upon the rights or interests hereby
conferred, the Company may terminate the Option by notice to the Grantee, and
the Option and all rights hereunder shall thereupon become null and void. The
rights and protections of the Company hereunder shall extend to any successors
or assigns of the Company and to the Company’s parents, subsidiaries, and
affiliates. This Grant may be assigned by the Company without the Grantee’s
consent.
13. Applicable Law; Entire Agreement. The validity, construction, interpretation
and effect of this instrument shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without giving effect to the
conflicts of laws provisions thereof. This Grant, together with the
Non-Disclosure and Non-Competition Agreement (or, if applicable, the
Non-Disclosure Agreement) provided to the Grantee herewith, the provisions of
which are incorporated herein by reference, sets forth the entire agreement of
the parties with respect to the subject matter hereof and may not be changed or
terminated except by a writing signed by the Grantee and the Company. This Grant
and any undertakings and indemnities delivered hereunder shall be binding upon
and shall inure to the benefit of the Grantee and the Grantee’s heirs,
distributees and personal representatives and to the Company, its successors and
assigns.
14. Notice. Any notice to the Company provided for in this instrument shall be
addressed to the Company in care of the Secretary at the corporate headquarters
of the Company, and any notice to the Grantee shall be addressed to such Grantee
at the current address shown on the payroll of the Employer, or to such other
address as the Grantee may designate to the Employer in writing. Any notice
shall be delivered by hand, sent by telecopy or enclosed in a properly sealed
envelope addressed as stated above, registered and deposited, postage prepaid,
in a post office regularly maintained by the United States Postal Service.
[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute and attest this Grant, and the Grantee has executed this Grant,
effective as of the Date of Grant.

              ATTEST       CSS INDUSTRIES, INC.
 
           
(Corporate Seal)
           
 
           
 
      By:     
 
         

I hereby accept the Option described in this Grant, and I agree to be bound by
the terms of the Plan and this Grant. I hereby further agree that all the
decisions and determinations of the Committee shall be final and binding.

                  ACCEPTED:    
 
           
 
  By:        
 
     
 
   

 

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