exv10w38






EXHIBIT 10.38




CSS INDUSTRIES, INC.

1845 WALNUT STREET

SUITE 800

PHILADELPHIA, PA 19103-4755

(215) 569-9900

FAX (215) 569-9979



EXECUTIVE OFFICE




March 25, 2010



Personal and Confidential




Mr. Vincent A. Paccapaniccia

1721 Meetinghouse Lane

Yardley, PA 19067




Dear Vince:




     We are pleased to extend an offer of employment to you as Vice President – Finance of CSS
Industries, Inc. (“CSS”). You acknowledge and agree that there are no other valid oral or written
agreements relating to the terms and conditions of your employment with CSS as its Vice President -
Finance. You further represent and covenant to CSS that you are not subject or a party to any
employment agreement, non-competition covenant, understanding or restriction which would prohibit
or restrict you from executing this letter and performing all duties and responsibilities
incidental to the position of Vice President – Finance of CSS.



     1. Contract Term – The term of your employment will be three (3) years, commencing
March 31, 2010 and ending March 31, 2013, unless terminated earlier by you or by CSS at any time as
provided herein. Thereafter, your employment status with CSS will continue to be that of an
employee at-will, subject to termination by either you or CSS at any time.



     2. Compensation — The compensation package for this position will be as follows:



          A. Base Salary – A base salary in the gross amount of Three Hundred Twenty Thousand
Dollars ($320,000) per annum payable at such times as CSS pays its executives. There will be an
annual performance review thereafter and you will then be considered for an increase in base
salary, commencing April 1, 2011, consistent with the then current CSS policy.




          B. Incentive Compensation – For CSS’ current fiscal year ending March 31, 2010, you
will be not eligible to participate in the Management Incentive Plan (“MIP”). For CSS’ fiscal year
ending March 31, 2011, you will be eligible to participate in the MIP. For purposes of calculating
your potential 2011 fiscal year incentive compensation, and depending on the extent of achievement
of certain individual and CSS objectives, you will have the potential of earning incentive
compensation based upon 80% of your base salary specified in Section 2.A. above. The amount of
such 2011 fiscal year bonus opportunity will be guaranteed at a minimum of Forty Thousand Dollars
($40,000).






 









 








Vincent A. Paccapaniccia

March 25, 2010

Page 2




          For CSS’ subsequent fiscal years, depending on the extent of achievement of certain individual
and CSS objectives, you will have the potential of earning for a full fiscal year period incentive
compensation with a target opportunity of up to 80% of your then base salary. The financial target
objectives of your potential subsequent fiscal year incentive compensation will be determined based
upon the applicable actual full fiscal year financial results of CSS.




          C. Equity Grants – We will recommend that you be granted a stock option to acquire
10,000 shares of CSS Common Stock and a time-vested stock bonus award of 10,000 restricted stock
units of CSS Common Stock (2,500 of which will vest on the third anniversary of the grant, 2,500 of
which will vest on the fourth anniversary of the grant, and 5,000 of which will vest on the fifth
anniversary of the grant), which recommendation will be provided to the Human Resources Committee
(the “Committee”) of the Board of Directors of CSS for consideration at the next available date
upon which the Committee considers equity grant recommendations after the date upon which you
commence employment with CSS. These grants will in all respects be subject to and in accordance
with the provisions of the CSS 2004 Equity Compensation Plan, and the terms of the grant letters to
be provided to you at the time of the grants.




          D. Company Automobile – You will be provided for your use a CSS-owned or leased
automobile comparable to the owned or leased automobiles then made available by CSS to its Vice
President-level officers.




          E. Vacation —  You will be eligible to accrue four (4) weeks vacation each calendar
year, in accordance with the applicable terms of CSS’ then current vacation policy.




     3. Benefits Coverage –You will be entitled to participate in those CSS benefit
programs available to its officer level personnel in accordance with the applicable terms of these
programs.



     4. Employment Status; Severance Payments — Your employment status with CSS is subject
to termination by either you or CSS at any time. However, in the event that CSS terminates your
employment without cause at any time prior to March 31, 2013, and subject to your compliance with
the terms and conditions of this letter agreement, CSS will pay you an amount equal to the greater
of (i) eighteen (18) months of your then-current annual base salary (less applicable tax
withholdings and payroll deductions) or (ii) an amount equal to your then-current annual base
salary (less applicable tax withholdings and payroll deductions) for the period from the effective
date of such termination to March 31, 2013, such amount reduced by and to the extent of any
earnings and other compensation received by you or accrued for your benefit for your services
(whether as an employee or as an independent contractor) during the period commencing on the day
following the one year anniversary of your termination. For purposes of this letter agreement,
termination “without cause” means termination other than termination resulting from or related to
your breach of any of your obligations under this letter agreement, your failure to comply with any
lawful directive of CSS’ Chairman and Chief Executive Officer within the normal scope of your
duties, your failure to comply with CSS’ Code of Ethics, your conviction of a felony or of any
moral turpitude crime, or your willful or intentional engagement in conduct injurious to CSS or any
of its affiliates.



     The foregoing payment obligation is contingent upon (x) receipt by CSS of a valid and fully
effective release (in form and substance reasonably satisfactory to CSS) of all claims of any
nature



 









 





Vincent A. Paccapaniccia

March 25, 2010

Page 3



which you might have at such time against CSS, its affiliates and their respective officers,
directors and agents, excepting therefrom only any payments due to you from CSS pursuant to this
Section 4, and (y) your resignation from all positions of any nature which you may then hold with
CSS and its affiliates. If you are eligible to receive the foregoing payment, such amount will be
paid to you in equal installments, with such installments being paid on the then-applicable paydays
for CSS executives, commencing on or about the first such payday following the termination of your
employment by CSS without cause and your satisfaction of the conditions specified in the
immediately preceding sentence.




     Further, if you are eligible to receive the payment set forth in the first paragraph of this
Section 4, you covenant and agree that commencing with the one year anniversary of the date of your
termination you will promptly advise CSS in writing on a bi-weekly basis of any earnings and other
compensation received by you or accrued for your benefit for your services (whether as an employee
or as an independent contractor) during the period commencing on the day following the one year
anniversary of your termination through the end of the severance period.



     5. Confidential Information. You recognize and acknowledge that by reason of
employment by and service to CSS, you have had and will continue to have access to confidential
information of CSS and its affiliates, including, without limitation, information and knowledge
pertaining to products and services offered, inventions, innovations, designs, ideas, plans, trade
secrets, proprietary information, computer systems and software, packaging, advertising,
distribution and sales methods and systems, sales and profit figures, customer and client lists,
and relationships between or among CSS and its affiliates and dealers, distributors, wholesalers,
customers, clients, suppliers and others who have business dealings with CSS and such affiliates
(“Confidential Information”). You acknowledge that such Confidential Information is a valuable and
unique asset of CSS and/or its affiliates, and covenant that you will not, either during or at any
time after your employment with CSS, disclose any such Confidential Information to any person for
any reason whatsoever (except as your duties described herein may require) without the prior
written consent of the Committee, unless such information is in the public domain through no fault
of you or except as may be required by law.



     6. Non-Competition. During your employment with CSS, and for a period of one year
thereafter, you will not, without the prior written consent of the Committee, directly or
indirectly, own, manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise with or use or permit your name
to be used in connection with, any business or enterprise engaged within any portion of the United
States or Canada (collectively, the “Territory”) (whether or not such business is physically
located within the Territory) that is engaged in the creation, design, manufacture, distribution or
sale of any products or services that are the same or of a similar type then manufactured or
otherwise provided by CSS or by any of its affiliates during your employment with CSS (the
“Business”). You recognize that you will be involved in the activity of the Business throughout
the Territory, and that more limited geographical limitations on this non-competition covenant (and
the non-solicitation covenant set forth in Section 7 of this letter agreement) are therefore not
appropriate. The foregoing restriction shall not be construed to prohibit your ownership of not
more than five percent (5%) of any class of securities of any corporation which is engaged in any
of the foregoing businesses having a class of securities registered pursuant to the Securities Act
of 1933, provided that such ownership represents a passive investment and that neither you nor any
group of persons including you in any way, either directly or indirectly, manages or



 









 





Vincent A. Paccapaniccia

March 25, 2010

Page 4



exercises control of any such corporation, guarantees any of its financial obligations, otherwise
takes any part in business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing. We acknowledge and agree that if CSS fails to satisfy its material obligations
to you under this letter agreement after you have provided CSS with at least thirty (30) days
written notice of such failure, then your obligation to comply with the non-competition covenant
set forth in this Section 6 shall be waived.




     7. No Solicitation. During your employment with CSS, and for a period of one year
thereafter, you agree not to, either directly or indirectly, (i) call on or solicit with respect to
the Business any person, firm, corporation or other entity who or which at the time of termination
of your employment with CSS was, or within two years prior thereto had been, a customer of CSS or
any of its affiliates, or (ii) solicit the employment of any person who was employed by CSS or by
any of its affiliates on a full or part-time basis at any time during the course of your employment
with CSS, unless prior to such solicitation of employment, such person’s employment with CSS or any
of its affiliates was terminated. We acknowledge and agree that if CSS fails to satisfy its
material obligations to you under this letter agreement after you have provided CSS with at least
thirty (30) days written notice of such failure, then your obligation to comply with the
non-solicitation covenant set forth in this Section 7 shall be waived.



     8. Equitable Relief.



          A. You acknowledge that the restrictions contained in Sections 5, 6 and 7 of this letter
agreement are reasonable and necessary to protect the legitimate interests of CSS and its
affiliates, that CSS would not have entered into this letter agreement in the absence of such
restrictions, and that any violation of any provision of those Sections will result in irreparable
injury to CSS and its affiliates. You represent that your experience and capabilities are such
that the restrictions contained in Sections 5 and 6 hereof will not prevent you from obtaining
employment or otherwise earning a living at the same general level of economic benefit as is
anticipated by this letter agreement. YOU FURTHER REPRESENT AND ACKNOWLEDGE THAT (i) YOU HAVE BEEN
ADVISED BY CSS TO CONSULT YOUR OWN LEGAL COUNSEL IN RESPECT OF THIS LETTER AGREEMENT, (ii) THAT YOU
HAVE HAD FULL OPPORTUNITY, PRIOR TO EXECUTION OF THIS LETTER AGREEMENT, TO REVIEW THOROUGHLY THIS
LETTER AGREEMENT WITH YOUR COUNSEL, AND (iii) YOU HAVE READ AND FULLY UNDERSTAND THE TERMS AND
PROVISIONS OF THIS LETTER AGREEMENT.




          B. You agree that CSS shall be entitled to preliminary and permanent injunctive relief,
without the necessity of proving actual damages, as well as any other remedies provided by law
arising from any violation of Sections 5, 6 and 7 of this letter agreement, which rights shall be
cumulative and in addition to any other rights or remedies to which CSS may be entitled. In the
event that any of the provisions of Sections 5, 6 and 7 hereof should ever be adjudicated to exceed
the time, geographic, product or service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction to the maximum
time, geographic, product or service, or other limitations permitted by applicable law.




          C. You and CSS irrevocably and unconditionally (i) agree that any suit, action or other legal
proceeding arising out of Sections 5, 6 and 7 of this letter agreement, including without
limitation,





 









 








Vincent A. Paccapaniccia

March 25, 2010

Page 5



any action commenced by CSS for preliminary or permanent injunctive relief or other equitable
relief, may be brought in the United States District Court for the Eastern District of
Pennsylvania, or if such court does not have jurisdiction or will not accept jurisdiction, in any
court of general jurisdiction in Philadelphia County, Pennsylvania, (ii) consent to the
non-exclusive jurisdiction of any such court in any such suit, action or proceeding, and (iii)
waive any objection to the laying of venue of any such suit, action or proceeding in any such
court.




          D. You agree that CSS may provide a copy of Sections 5, 6 and 7 of this letter agreement to
any business or enterprise (i) which you may directly or indirectly own, manage, operate, finance,
join, participate in the ownership, management, operation, financing, control or control of, or
(ii) with which you may be connected with as an officer, director, employee, partner, principal,
agent, representative, consultant or otherwise, or in connection with which you may use or permit
your name to be used.




     9. Governing Law. This letter agreement shall be governed by and interpreted under
the laws of the Commonwealth of Pennsylvania without giving effect to any conflict of laws
provisions.



     10. Section 409A of the Internal Revenue of 1986, as amended (the “Code”).



          A. Interpretation. Notwithstanding the other provisions hereof, this letter
agreement is intended to comply with the requirements of Section 409A of the Code, to the extent
applicable, and this letter agreement shall be interpreted to avoid any penalty sanctions under
Section 409A of the Code. Accordingly, all provisions herein, or incorporated by reference, shall
be construed and interpreted to comply with Section 409A of the Code and, if necessary, any such
provision shall be deemed amended to comply with Section 409A of the Code and regulations
thereunder. If any payment or benefit cannot be provided or made at the time specified herein
without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be
provided in full at the earliest time thereafter when such sanctions will not be imposed. All
payments to be made upon a termination of employment under this letter agreement that are deferred
compensation may only be made upon a “separation from service” under Section 409A of the Code. For
purposes of Section 409A of the Code, each payment made under this letter agreement shall be
treated as a separate payment. In no event may you, directly or indirectly, designate the calendar
year of payment. While this letter agreement is intended to comply with the requirements of
Section 409A of the Code, to the extent applicable, neither CSS nor any of its affiliates makes or
has made any representation, warranty or guarantee of any federal, state or local tax consequences
of your receipt of any benefit or payment hereunder, including but not limited to, under Section
409A of the Code, and you are solely responsible for all taxes that may result from your receipt of
the amounts payable to you under this letter agreement.




          B. Payment Delay. To the maximum extent permitted under Section 409A of the Code, the
severance benefits payable under this letter agreement are intended to comply with the “short-term
deferral exception” under Treas. Reg. §1.409A-1(b)(4), and any remaining amount is intended to
comply with the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii); provided,
however, any amount payable to you during the six (6) month period following your separation date
that does not qualify within either of the foregoing exceptions and constitutes deferred
compensation subject to the requirements of Section 409A of the Code, then such amount shall
hereinafter be referred to as the “Excess Amount.” If at the time of your separation from service,
CSS’ (or any entity required to be aggregated with CSS under Section 409A of the Code) stock is
publicly-traded on an established





 









 








Vincent A. Paccapaniccia

March 25, 2010

Page 6



securities market or otherwise and you are a “specified employee” (as defined in Section 409A
of the Code and determined in the sole discretion of CSS (or any successor thereto) in accordance
with CSS’ (or any successor thereto) “specified employee” determination policy), then CSS shall
postpone the commencement of the payment of the portion of the Excess Amount that is payable within
the six (6) month period following your separation date with CSS (or any successor thereto) for six
(6) months following your separation date with CSS (or any successor thereto). The delayed Excess
Amount shall be paid in a lump sum to you within thirty (30) days following the date that is six
(6) months following your separation date with CSS (or any successor thereto). If you die during
such six (6) month period and prior to the payment of the portion of the Excess Amount that is
required to be delayed on account of Section 409A of the Code, such Excess Amount shall be paid to
the personal representative of your estate within sixty (60) days after your death.




          C. Reimbursements. All reimbursements provided under this letter agreement shall be
made or provided in accordance with the requirements of Section 409A of the Code, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred during your
lifetime (or during a shorter period of time specified in this letter agreement), (ii) the amount
of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible
for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will
be made on or before the last day of the taxable year following the year in which the expense is
incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another
benefit.




     Please confirm your understanding of the foregoing provisions by executing the enclosed
counterpart of this letter and returning this executed counterpart to me.



	 	 	 	 	 	 	 

	 

	 	 	 	Sincerely yours,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Christopher J. Munyan
 

Christopher J. Munyan
	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 

	 	 	 	CSS Industries, Inc.	 	 






The aforementioned is confirmed as of this 25th day of March, 2010:




	 	 	 

	/s/ Vincent A. Paccapaniccia
 

Vincent A. Paccapaniccia

	 	 






cc:      William G. Kiesling