Issued: 05/27/2009
Effective: 05/27/2009
CSS INDUSTRIES, INC.
CHANGE OF CONTROL SEVERANCE PAY PLAN
FOR EXECUTIVE MANAGEMENT
AND
SUMMARY PLAN DESCRIPTION
The purpose of the CSS Industries, Inc. Change
of Control Severance Pay Plan for Executive Management (the
“Plan”) is to provide payments to certain key employees
of CSS Industries, Inc. (“CSS”) and its subsidiaries
whose employment is terminated for a reason covered by the Plan
following a change of control of CSS. This document is designed to
serve as both the Plan document and the summary plan description
for the Plan. The legal rights and obligations of any person having
an interest in the Plan are determined solely by the provisions of
the Plan.
The Plan is intended to alleviate some of the
financial hardship that eligible employees may experience when
their employment is terminated for a reason covered by the Plan
following a change of control. In essence, benefits under the Plan
are intended to be supplemental unemployment benefits. The benefits
under the Plan are not intended as deferred compensation and no
individual shall have a vested right in such benefits.
CSS, as the Plan sponsor, has the sole
discretion to determine whether an employee may be considered
eligible for benefits under the Plan. All actions taken by CSS
shall be in its role as the sponsor of the Plan, and not as a
fiduciary. Nothing in the Plan will be construed to give any
employee the right to receive severance payments or to continue in
the employment of CSS and any of its subsidiaries. The Plan is
unfunded, has no trustee, and is administered by the Plan
Administrator. The Plan is intended to be an “employee
welfare benefit plan” within the meaning of section 3(1) of
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), and 29 C.F.R. § 2510.3-2(b) and is to
be administered as a “top-hat” welfare plan exempt from
the substantive requirements of ERISA. Please review the section
entitled “Amendment and Termination of the Plan”
regarding CSS’ reservation of future rights.
The Plan shall be effective as of May 27,
2009, and supersedes all prior severance pay plans, policies,
agreements or practices, whether formal or informal, written or
unwritten, of CSS and its subsidiaries under which CSS or any of
its subsidiaries would have provided severance benefits with
respect to a change of control prior to the effective date of this
Plan, with the exception of any individual employment contract that
contains a severance pay provision that provides severance in
excess of the amount an employee would be eligible to receive under
this Plan. The Plan will continue until terminated as provided
herein.
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1.
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Plan Name: CSS Industries, Inc. Change of
Control Severance Pay Plan for Executive Management
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3.
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Plan Sponsor:
CSS Industries,
Inc.
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1845 Walnut
Street, Suite 800
Philadelphia, PA 19103
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4.
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Employer Identification
Number: 13-1920657
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1
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5.
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Type of Plan:
Welfare Benefit —
Severance Pay Plan
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6.
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Plan Administrator:
Change of Control
Severance Pay Plan Administrator
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CSS Industries,
Inc.
1845 Walnut Street, Suite 800
Philadelphia, PA 19103
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7.
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Agent for Service of Legal
Process: The
Plan Administrator at the address above.
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8.
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Sources of Contributions:
The Plan is unfunded and
CSS and the Participating Subsidiaries pay all Plan benefits from
their assets.
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9.
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Type of Administration:
The Plan is administered
by the Plan Administrator with benefits provided in accordance with
the provisions of this Plan document.
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10.
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Recordkeeping:
The Plan and its records
are kept on a fiscal year basis, April 1 through March 31. For
the first plan year, the records are kept on the short plan year
for the period between May 27, 2009 and March 31,
2010.
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11.
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Participating
Subsidiaries: The subsidiaries and affiliates of
CSS that participate in the Plan are identified in the attached
Exhibit A .
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Adjusted Compensation
: The sum of (i) your annual rate of base
salary in effect as of the Employment Termination Date, excluding
all extra pay, such as, but not limited to, incentive bonuses,
overtime pay, commissions, car allowances or other allowances,
Employer contributions to the Employer’s 401(k) plan and
other deferred compensation arrangements elected by Plan
participants and other Employer paid benefits; and (ii) the
average of the annual bonus earned by you during the three
(3) fiscal years prior to the fiscal year in which your
Employment Termination Date occurs (or, if fewer, the period of
fiscal years during which you were employed by the Employer prior
to the Employment Termination Date).
Cause : You
have: (i) been convicted of a felony; (ii) willfully and
grossly neglected your job responsibilities; (iii) willfully
engaged in misconduct in connection with the performance of your
job responsibilities, which results in material damage to the
Employer; or (iv) willfully failed to perform substantially
your duties with the Employer (other than any such failure
resulting from incapacity due to physical or mental illness) which
has continued after a written demand for substantial performance is
delivered to you by CSS’ Board of Directors which
specifically identifies the manner in which such Board believes
that you have not substantially performed your duties.
2
Change of
Control : A
“Change of Control” shall be deemed to have occurred
if:
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(i)
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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”)) becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of CSS representing
more than 50% of the voting power of the then outstanding
securities of CSS; provided that a Change of 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 of Control shall not be
deemed to occur as a result of a transaction in which CSS becomes a
subsidiary of another corporation and in which the stockholders of
CSS, 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 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);
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(ii)
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the
consummation of a merger or consolidation of CSS with another
corporation where the stockholders of CSS, 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);
or
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(iii)
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the
consummation of a sale or other disposition of all or substantially
all of the assets of CSS.
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Code : Internal Revenue Code of 1986, as
amended.
Committee : The
Human Resources Committee of the Board of Directors of
CSS.
CSS : CSS
Industries, Inc.
Employer : CSS
and any subsidiary of CSS that is designated by the Committee as a
participating employer in the Plan and is listed on the attached
Exhibit A .
Employment Termination Date
: The date on which your employment relationship
with the Employer is involuntarily terminated by the Employer or
voluntarily terminated by you for Good Reason.
Executive Management Employee
: For purposes of this Plan, (A) any employee
of CSS who has the title of Chief Executive Officer, President,
Chief Financial Officer, Chief Information Officer or General
Counsel; and (B) any employee of Cleo Inc, Berwick Offray LLC,
C.R. Gibson, LLC or Paper Magic Group, Inc. who has the title of
President of such entity.
Good Reason : A
“Good Reason” shall be deemed to have occurred if any
of the following circumstances occurs upon the occurrence of, or
within the two (2) year period following, a Change of
Control:
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(i)
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a
material diminution in your authority, duties or
responsibilities;
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(ii)
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a
material diminution in your base compensation;
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(iii)
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a
material diminution in the authority, duties or responsibilities of
the supervisor to whom you are required to report; or
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3
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(iv)
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a
material change in the geographic location at which you must
provide services.
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provided,
however, that for you to terminate employment on account of Good
Reason, you must provide written notice to us within ninety
(90) days following the initial existence of the condition
that constitutes Good Reason, and your Employer will have a thirty
(30) day period to remedy the condition that constitutes Good
Reason. If your Employer does not remedy the event constituting
Good Reason within such thirty (30) day period, your
employment will automatically terminate on the first business day
immediately the expiration of such thirty (30) day cure
period, unless your Employer determines to provide for an earlier
Employment Termination Date.
Plan Administrator
: The Committee, or such other person, committee
or entity as may be designated by the Committee to administer the
Plan in accordance with its terms.
Release : The
release and discharge of the Employer and all affiliated persons
and entities from any and all claims, demands and causes of action
relating to your employment with the Employer, other than as to any
vested benefits to which you may be entitled under any Employer
benefit plan, which will be in such form as may be proscribed by
the Employer, acting as plan sponsor and as a fiduciary, from time
to time and with such modifications as the Employer deems
appropriate for your individual situation. The foregoing Release
also shall include a one (1) year non-competition covenant, a
one (1) year non-solicitation covenant, and a perpetual
confidentiality/non-disparagement covenant, all of which will be in
such form as may be prescribed by the Employer, acting as plan
sponsor and as a fiduciary, from time to time and with such
modifications as the Employer deems appropriate for your individual
situation.
Severance Pay : The
severance benefits that will be offered to you if you incur a
termination of employment with the Employer for a reason set forth
in the Plan.
You will be eligible to participate in this Plan
if you are an Executive Management Employee on your Employment
Termination Date or you were an Executive Management Employee prior
to the occurrence of a Change of Control but your status as an
Executive Management Employee was changed by the Employer in
contemplation of the Change of Control
You are eligible for Severance Pay under
this Plan if (A) during the two (2) year period on or
after the occurrence of a Change of Control either (i) your
employment with your Employer has been terminated by the Employer
for any reason other than on account of Cause or you are not
otherwise ineligible for Severance Pay as set forth in section B.
below; or (ii) you terminate your employment with your
Employer for Good Reason and you are not otherwise ineligible for
Severance Pay as set forth in section B. below; and (B) you
sign and do not revoke the Employer’s standard
Release.
4
The foregoing in no way limits the right of the
Employer to (i) terminate your employment and
(ii) provide severance under other circumstances, in each
case, as determined by the Employer in its sole and absolute
discretion.
B. When
You Are Not Eligible
You are not
eligible for Severance Pay under this Plan in any of the
following circumstances:
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1.
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You
voluntary resign, including retirement, for any reason other than
Good Reason.
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2.
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You
are discharged involuntarily for Cause, or the Employer discovers
following your Employment Termination Date that you engaged in
conduct that constitutes Cause during or after your Employment
Termination Date.
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3
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You
have an individual employment contract that contains a severance
pay provision that provides severance in excess of the amount you
would be eligible to receive under the Plan.
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4.
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Prior to or on your last day of
scheduled employment, you die.
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5.
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Prior to notification of an
Employment Termination Date, you would be entitled to benefits
under any then applicable Employer-sponsored long-term disability
plan if you were a participant in such plan, subject to the
expiration of applicable waiting period.
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6.
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Your Employment Termination Date
occurs prior to a Change of Control or your Employment Termination
Date occurs after the second anniversary of the Change of Control,
except in the event in which the occurrence of the Good Reason
condition first occurs prior to the second anniversary of the
Change of Control.
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7.
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You
do not execute, or you revoke, the Release.
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8.
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You
elect in writing to receive severance benefits under another
severance pay plan then in effect and under which you may be
eligible to receive severance benefits.
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Notwithstanding any provision of the Plan to the
contrary, the Committee, in its sole discretion and acting on
behalf of the Employer as the Plan sponsor and not as a fiduciary,
reserves the right to determine whether an employee satisfies the
eligibility requirements for Severance Pay.
5
If you are selected to receive Severance Pay
under the Plan, as determined by the Committee, you will be
eligible to receive payment of the following:
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(i)
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any
accrued and unpaid base pay and benefits due and owing to you for
the period prior to your Employment Termination Date;
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(ii)
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an
amount equal to your Adjusted Compensation multiplied by 1.5 (2.0
in the case of CSS’ Chief Executive Officer); and
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(iii)
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a
pro rata bonus, based upon the period of time you were employed by
the Employer during the Employer’s fiscal year in which the
Employment Termination Date occurs, which payment shall be based
upon 100% achievement of your target annual bonus opportunity for
such fiscal year.
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The foregoing amounts will be paid from the
general assets of the Employer and will be paid to you in a cash
lump sum payment within sixty (60) days after your Employment
Termination Date, unless delay or a different form is required as
described below. Your entitlement to Severance Pay under this Plan
is expressly conditioned on your execution and non-revocation of
the Release. If you do not execute the Release or you revoke the
Release you will not be entitled to Severance Pay under this Plan.
Severance Pay will be subject to all applicable federal, state and
local tax withholding requirements.
All fringe benefits, including health and
welfare, pension, life insurance, vacation and personal days, will
cease on your Employment Termination Date, regardless of whether
Severance Pay is made after that date.
If you receive Severance Pay under this Plan and
elect health care continuation coverage under the Consolidated
Omnibus Reconciliation Act (“COBRA”) following
termination of your employment, the Employer will pay for a portion
of the monthly COBRA premium, on the same basis as the Employer
pays for a portion of such coverage for active employees, for a
period of eighteen (18) months following your Employment
Termination Date; provided, that in order to receive such continued
coverage, you must pay to your Employer, at the same time that
premium payments are due for the month, an amount equal to the full
monthly premium payments required for such monthly coverage and
your Employer will reimburse to you the amount of such monthly
premium, less the amount that you would have
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