CSS INDUSTRIES, INC.
1995 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose. The purpose of this 1995 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 Non-Employee Directors whose services
are considered essential to the Company's continued progress and to provide a
further incentive to serve as a Director of the Company.
2. The Plan. The Plan shall consist of options to acquire Shares of the Common
Stock of the Company, $.10 par value (the "Shares").
3. Administration. The Plan shall be administered by a Committee of the Board of
Directors consisting of Directors who are not eligible to participate in the
Plan (the "Committee"). Subject to the provisions of the Plan, the Committee
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; providing, however,
that the Committee 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, other than by reason of an adjustment pursuant to
Section 8
hereof, or the purchase price of options or the frequency of option grants
thereunder, and provided further that the Committee 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 determination of the
Committee 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. 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 Three Hundred Thousand (300,000) 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
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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").
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
Committee shall from time to time approve, which agreements 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 other national securities exchange upon which the shares are
traded or if the Shares are not then listed on a national securities exchange
and are not traded over-the-counter on the date of the last trade as reported by
NASDAQ or, if not reported by NASDAQ, the last trade which was
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reported, in each November through 2000, except that any such grant shall be
subject to and contingent upon approval of the Plan by the stockholders of the
Company at the 1996 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; provided, however, if on such date the Shares were traded on more
than one national securities exchange, then the closing price on the exchange on
which the greatest volume of Shares were traded on such day; (ii) if the Shares
are not then listed on a national securities exchange and are traded
over-the-counter, the last sale price of the Shares on such date as reported by
NASDAQ or, if not reported by NASDAQ, the average of the closing bid and asked
prices for the Shares on such date; and (iii) if the Shares are neither then
listed on a national securities exchange nor traded in the over-the-counter
market, such value as the Committee shall in good faith determine. If the Shares
are then listed on a national securities exchange or are traded over-the-counter
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
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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 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 holders
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, each of the then outstanding options of such holder will immediately
mature in full and become exercisable by the holder's legal representative at
any time within a period of six months after death, 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 and having a fair market value (as
defined in Section 7(ii)) on the date
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immediately preceding the date of exercise equal to the option price, or a
combination of (a) and (b). Notwithstanding the foregoing, the Committee
reserves the right not to permit such payment to be made by delivering Shares
already owned by the holder if it determines that the same would not be in the
best interests of the Company.
8. Adjustment upon Changes in Shares; Acceleration and Cancellation of Options.
(i) In the event of any reclassification, recapitalization,
merger, consolidation, reorganization, issuance of warrants, rights or
debentures, stock dividend, stock split or reverse stock split, extraordinary
cash dividend, property dividend, combination or exchange of shares, repurchase
of shares or any other change in corporate structure which in the judgment of
the Committee materially affects the value of Shares, the Committee may
determine the appropriate adjustments, if any, to the number and class of Shares
available for issuance upon the exercise of options granted under the Plan, the
number and class of Shares and the exercise price per Share set forth in any
option theretofore granted.
(ii) In the event of (a) the disposition of all or
substantially all of the assets of the Company, (b) the dissolution of the
Company, (c) the merger or consolidation of the Company with or into any other
entity or the merger or consolidation of any other entity into the Company in
each case whereby the Company is not the surviving entity, or (d) the
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making of a tender offer or exchange offer to purchase all or substantially all
of the Shares of the Company, all outstanding options awarded under the Plan
shall become exercisable in full immediately prior to such event and such
options shall be canceled by the Company, which shall remit to each Eligible
Director a cash payment equal to the difference between (y) the aggregate fair
market value of all Shares subject to the unexercised portion of such options
less (z) the aggregate exercise price of such unexercised options above.
9. Options Non-Assignable and Non-Transferable. Each option and all rights
thereunder shall be non-assignable and non-transferable other than by will or
the laws of descent and distribution and shall be exercisable during the
holder's lifetime only by the holder or the holder's guardian or legal
representative.
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
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shall have no rights as a stockholder with respect to the Shares covered by
options granted hereunder until the date of the issuance of a stock certificate
therefor, and no adjustment will be made for any cash dividend distributions for
which the record date is prior to the date such certificate is issued.
11. Effective Date and Duration of Plan. The Plan is effective upon its adoption
by the Board of Directors, subject to approval by the stockholders of the
Company at the 1996 Annual Meeting of Stockholders. The period during which
option grants shall be made under the Plan shall terminate on December 31, 2000
(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.
12. Amendment, Suspension or Termination of the Plan. Subject to the limitations
described in this Section, the Committee 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 Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, shall be obtained in the manner required therein. Amendments to
Sections 4 and 7(i) and (ii) shall not be effected more than once every six
months, unless such amendments are implemented to comport with changes in the
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Code or regulations thereunder.
13. 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.
14. Use of Proceeds. Proceeds from the sale of Shares pursuant to options
granted under the Plan shall constitute general funds of the Company.
15. No Fractional Shares. No fractional Shares shall be issued pursuant to
options granted hereunder.
16. Expenses of the Plan. All of the expenses of administering the Plan shall be
paid by the Company.
17. Compliance with Applicable Law. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause 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 or governmental authority and the requirements of any
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exchange upon which Shares are traded. 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, regulations or requirement. The Committee 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 Committee, in its sole discretion, deems necessary or desirable. Each option
shall be subject to the further requirement that if at any time the Committee
shall determine in its discretion that the listing or qualification of the
Shares subject to such option, is required under any securities exchange or
association requirements or under any applicable law, or that the consent or
approval of any governmental regulatory body 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 Committee.
18. 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.
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