Document:

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                      JANUARY 1, 2000 SETTLEMENT AGREEMENT
                      ------------------------------------

         This Settlement Agreement ("Agreement") is effective as of the 1st day
of January 2000, by and between Berwick Industries LLC, a Pennsylvania limited
liability company, ("Berwick") and a wholly-owned subsidiary of The Paper Magic
Group, Inc., which in turn is a wholly-owned subsidiary of CSS Industries, Inc.,
a Delaware corporation ("CSS"), and Henry T. Doherty ("Doherty").

         WHEREAS, Doherty was formerly the principal shareholder of Berwick
Industries, Incorporated, a then Florida corporation, ("Old Berwick").

         WHEREAS, on or about April 8, 1993, Doherty and certain minority
shareholders (the latter being "Minority Shareholders") entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") with Berwick Acquisition
Corp. ("BAC") pursuant to which Doherty and the Minority Shareholders (the
"Stockholders") sold all the shares of Old Berwick to BAC on May 3, 1993;

         WHEREAS, as part of the sale of the stock of Old Berwick, BAC delivered
to Doherty a Non-Transferable Promissory Note in the original principal amount
of $3,000,000 dated May 3, 1993 , which Promissory Note Doherty thereafter
represented was lost and was thus replaced pursuant to an Affidavit of Loss and
Indemnity Agreement dated July 6, 1995 (both the original promissory note and
the replacement thereof are herein referred to as the "Note");

         WHEREAS, in the Stock Purchase Agreement, the Stockholders made certain
representations, warranties and covenants to BAC and agreed to indemnify BAC
under certain circumstances;

         WHEREAS, on or about May 4, 1993, BAC was merged with and into Old
Berwick and thereafter on or about August 27, 1996, Old Berwick was merged with
and into Berwick Industries, Inc., a Pennsylvania corporation ("Berwick PA") and
thereafter on or about August 31, 1999 Berwick PA was merged with and into
Berwick, which in turn succeeded by operation of law to all of the rights of BAC
and its above-named successors in interest under the Stock Purchase Agreement
and the Note; and

         WHEREAS, Berwick's predecessor in interest, Berwick PA has made
additional claims under the Stock Purchase Agreement in Claim Notices dated
March 3, 1998, August 13, 1998, December 3, 1998, February 18, 1999, May 12,
1999 and June 10, 1999, which claims were not previously resolved (such claims
being herein jointly and severally referred to as the "Submitted Claims");

         WHEREAS, Berwick has additional current claims which have not yet been
submitted, of which Doherty's portion is $2,239.85 and Berwick has also
indicated that it would be willing to settle all future claims against Doherty
relating to reimbursement of the monthly cost to supply drinking water to an
individual whose residence is adjacent to Berwick's so-called Fulton facility in
consideration of Doherty's agreement to make a current payment to Berwick of
$2,804.78 and relating to Berwick's estimated cost in capping certain test wells
at its so-called Main Plant in consideration of Doherty's agreement to make a
current payment to Berwick of $2,804.78 (all such additional claims and
enumerated future potential claims being herein jointly and severally referred
to as "New Claims");

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         WHEREAS, Berwick and Doherty desire to avoid the cost and expense of
litigation, and, without any admission of fault or liability by either party,
the parties desire to resolve their outstanding dispute with respect to the
Submitted Claims and the New Claims as provided in paragraph "1" below and for
Berwick to thereafter pay Doherty the then remaining balance due on the Note and
in exchange therefor to have such Note marked "Paid" by Doherty, initialed by
him and returned to Berwick as provided in paragraph "2" below.

         NOW, THEREFORE, in consideration of the promises set forth herein,
Berwick and Doherty, for themselves, their employees, agents, servants,
predecessors, successors, assigns, privies, beneficiaries, heirs, executors,
administrators, affiliates, subsidiaries, parents, officers, directors,
shareholders, trustees, divisions, representatives, and any person or entity
acting on their behalf, with intent to be legally bound, agree as follows:

         1. Doherty's Payment. Doherty agrees to pay Berwick $475,246.96 in
settlement of the claims made in the Submitted Claims and the New Claims.
Berwick and Doherty, in consideration of good and valuable consideration
received, hereby settle and resolve all such claims covered by such Submitted
Claims and New Claims. The payment from Doherty shall be effected by subtracting
$475,246.96 from the remaining principal balance currently due Doherty on the
Note.

         2. Payment of Note Balance and Note Disposition. The remaining
principal balance of the Note following the payment and deduction set forth in
paragraph "1" above is $653,395.60. Berwick shall pay such remaining principal
amount plus $230,455.21 (the sum of an amount mutually agreed upon by the
parties hereto as full payment of all unpaid interest on the Note to November 1,
1999 and $11,912.80 in unpaid interest on the Note from November 1, 1999 to
December 31, 1999) totaling $883,850.81 to Doherty either by check or if Berwick
in fact receives written wire transfer instructions from Doherty simultaneous
with Doherty's delivery to Berwick of both a counterpart of this Agreement
executed by him and his executed and acknowledged "Affidavit of Loss and
Indemnity Agreement" referred to hereafter, then by wire transfer. If such
payment is made by check, then at Doherty's direction, such check shall be made
payable to the order of "Douglas E. Ede, Esq., as attorney for Henry T. Doherty"
(herein referred to as the "Note Payment") and shall be transmitted to Mr. Ede
by reputable overnight carrier. Upon receipt of the Note Payment by either
Doherty or Mr. Ede, Doherty authorizes and directs Douglas E. Ede, Esq. to
either immediately deliver such Note marked "Paid" and initialed by Doherty or
if such Note is then in fact lost and cannot then be located to immediately
deliver an "Affidavit of Loss and Indemnity Agreement" in form and substance as
set forth in Exhibit "A" hereto executed by Doherty before a Notary Public or
other official authorized to take oaths to Berwick to the attention of Stephen
V. Dubin, Esq., by reputable overnight carrier transmitted to the address for
notice to Berwick set forth hereafter.

         3. New York City Tax Refund Claim. In response to an objection
heretofore made by Doherty as to a portion of the Submitted Claims relating to
payment by Berwick of an assessment of the City of New York for Commercial Rent
or Occupancy Tax (and interest thereon) pertaining to an apartment located at 5
East 22nd Street, New York, New York, Berwick agrees that to the extent it in
fact receives any refund thereof in response to its refund claim in the amount
of $87,221.06, that it will remit by check Doherty's portion of any such refund
in the manner provided in paragraph "2" above.

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         4. No Limitation; No Waiver. Nothing in this Agreement is intended to
limit any party's rights against the Minority Shareholders in connection with
the claims raised in the Submitted Claims and New Claims or otherwise (including
but not limited to any claims that may be raised in any future claim notices).
The parties acknowledge that nothing herein shall be deemed to be a waiver of
the Stockholders' obligations pursuant to Article VI of the Stock Purchase
Agreement except to the extent expressly addressed in this Agreement.

         5. Expenses. Each party to this Agreement shall be responsible for the
fees and expenses incurred by it incidental to the negotiation and execution of
this Agreement (including, without limitation, fees and disbursements of its
attorneys and accountants in connection with their respective services on behalf
of each party).

         6. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties shall use commercially reasonable efforts to take,
or cause to be taken, such action to execute and deliver, or cause to be
executed and delivered, such additional documents and instruments and to do, or
cause to be done, all things necessary, proper or advisable under the provisions
of this Agreement and under applicable laws to consummate and make effective the
transactions contemplated by this Agreement.

         7. Advice of Counsel. Each of the parties confirms that it is entering
into this Agreement based upon legal advise of its attorney, that such party has
been afforded the opportunity to discuss the contents of this Agreement with its
attorney and that each of these terms is fully understood and voluntarily
accepted. The parties agree that any rule of construction to the effect that
ambiguities are resolved against the drafting party shall not apply to the
interpretation of this Agreement.

         8. Entire Agreement. This Agreement sets forth the entire understanding
of the parties with respect to the subject matter hereof. No change or
termination hereof shall be effective unless in writing and signed by the
parties. All representations, warranties, covenants and agreements of the
parties contained in this Agreement shall survive the closing hereunder. Any and
all previous agreements and understandings between the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement.

         9. Assignment and Binding Effect. This Agreement may not be assigned by
any party hereto without the prior written consent of the other party; provided,
that no such written assignment shall be required in connection with the sale of
the business or any business unit of CSS or Berwick (whether by sale of assets,
stock or merger) or any assignment by Berwick or CSS by operation of law. All of
the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective permitted heirs, successors
and assigns of the parties. No such assignment shall release the assigning party
from its obligations hereunder.

         10. Waiver. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof, but only by a written
instrument executed by such party or a duly authorized officer of any such party
hereto.

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         11. Notices. Unless otherwise specifically provided herein, any notice,
request, demand, waiver, consent, approval, or other communication which is
required or permitted hereunder shall be sufficiently given if sent by telecopy
or facsimile transmission (with hard copy to follow), registered or certified
mail, postage prepaid, or Federal Express or similar reputable overnight carrier
addressed in the case of Berwick, to it at:

                                            c/o CSS Industries, Inc.
                                            1845Walnut Street
                                            Suite 800
                                            Philadelphia, PA  19103-4755
                                            Attn:  Stephen V. Dubin, Esq.

or, in the case of Doherty, at the following address:

                                            c/o Douglas E. Ede, Esq.
                                            Salas, Ede, Peterson & Lage, L.L.C.
                                            6361 Sunset Drive
                                            South Miami, FL  33143

or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date so delivered in case of personal delivery or by reputable overnight
carrier or otherwise five calendar days after being so transmitted.

         12. Governing Law. This Agreement shall be interpreted in accordance
with the laws of the Commonwealth of Pennsylvania.

         13. No Benefit to Others. The covenants and agreements contained in
this Agreement are for the sole benefit of the parties and their successors and
assigns, and they shall not be construed as conferring and are not intended to
confer any rights on any other persons.

         14. Section Headings and Gender. All section headings and the use of a
particular gender are for convenience only and shall in no way modify or
restrict any of the terms or provisions hereof.

         15. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, and each of the parties may become a
party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.

         16. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision in any other jurisdiction.

         17. Reservation of Rights. All parties to this Agreement reserve all
rights not expressly addressed in this Agreement. All parties agree that if any
ambiguity exists in this Agreement, it shall not be construed against Berwick on
the basis that it is the drafter of this Agreement.

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         IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement as of the day and year first written
above.

                                              Berwick Industries LLC

                                              By: /s/ David J. M. Erskine
                                                  ------------------------
                                                   David J. M. Erskine
                                                   Chairman

                                                  /s/ Henry T. Doherty
                                                  ------------------------
                                                   Henry T. Doherty

The provisions of paragraph "2" of
the aforementioned Agreement to the
extent pertaining to delivery of
the Note to Berwick are agreed to
and accepted:

/s/ Douglas E. Ede
------------------------
Douglas E. Ede, Esq.

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                                                                       Exhibit A

                    AFFIDAVIT OF LOSS AND INDEMNITY AGREEMENT
                    -----------------------------------------

STATE OF:  NEW YORK
                                                     ss:
COUNTY OF: NEW YORK

         The undersigned, Henry T. Doherty ("Doherty"), being duly sworn,
deposes and says as follows:

         1. Doherty is the holder of a non-transferable promissory note, dated
May 3, 1993 ("Original Note") of Berwick Industries, Inc., formerly known as BAC
Acquisition Corp. (the "Company") originally in the principal amount of
$3,000,000. Doherty has averred that the Original Note was lost or mislaid and
in reliance upon an Affidavit of Loss and Indemnity Agreement dated July 6, 1995
executed by Doherty, a replacement of the Original Note was delivered to Doherty
("Replacement Note"). (The Original Note and the Replacement Note are
hereinafter jointly and severally referred to as the "Note").

         2. The Note has been lost of mislaid.

         3. Doherty has made a diligent search for the Note and has been unable
to find or recover the same.

         4. Doherty has not sold, negotiated, discounted, delivered, assigned,
pledged, transferred, deposited under any agreement or hypothecated the Note, or
any interest therein, signed any power of attorney, endorsement or authorization
with respect thereto, or otherwise disposed of the Note, or any interest
therein. No person, corporation, partnership, firm or association other than
Doherty had or has asserted any right, title, claim or interest in, to or
respecting the Note, or the proceeds thereof. Doherty is entitled to the full
and exclusive possession of the Note.

         5. Doherty and a successor in interest to the Company, Berwick
Industries LLC ("Berwick") have entered into a Settlement Agreement effective
January 1, 2000 ("Settlement Agreement") pertaining in pertinent part to
Berwick's payment in full of the then remaining balance of principal and
interest on the Note to Doherty and the concomitant surrender of the Note to
Berwick marked "Paid" and initialed by Doherty. However, since the Note has been
lost or mislaid, Doherty hereby requests, and this Affidavit of Loss and
Indemnity Agreement is made for the purpose of inducing Berwick to make such
payment in full of the then remaining balance of principal and interest on the
Note to Doherty in accordance with the Settlement Agreement even though Doherty
has not presently satisfied the condition of concomitant surrender of the Note
to Berwick. If Doherty at any time recovers the Note, Doherty will immediately
surrender such Note to Berwick, its successors and assigns, marked "Paid" and
initialed by Doherty as provided in the Settlement Agreement without requiring
any consideration or other payment therefor.

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         6. In consideration of Berwick making such payment on the Note as
requested by Doherty in "5" above, Doherty will indemnify and hold harmless
Berwick and its successors and assigns (including CSS Industries, Inc. and its
subsidiaries), from and against any and all claims, actions, suits or other
proceedings brought or alleged, whether groundless or otherwise, and from and
against any and all liabilities, losses, damages, judgments, costs, charges,
expenses (including, without limitation, attorneys' fees and disbursements) and
payments of every nature and character suffered or incurred, by reason of any
claim or demand with respect to the Note, the making of payment on or refusing
to honor the Note or any contest or litigation brought by any person seeking
payment on the Note, subject to Berwick providing notice to Doherty of any such
claim or demand of a third party with respect to the Note and with such notice
being transmitted c/o Douglas E. Ede, Esq., 6361 Sunset Drive, South Miami,
Florida 33143.

         IN WITNESS WHEREOF, I have duly executed and delivered this Affidavit
of Loss and Indemnity Agreement on January 17, 2000.

                                                  /s/ Henry T. Doherty
                                                  ------------------------------
                                                  Henry T. Doherty

         Sworn and subscribed before me this 17 day of January, 2000.

                                                  ------------------------------
                                                  Notary Public

My commission expires:                        (Print, type or stamp Commissioned
                                               Name of Notary Public)<PAGE>

               CSS INDUSTRIES, INC. ANNUAL INCENTIVE COMPENSATION
              ADMINISTRATIVE GUIDELINES, DATED AS OF MARCH 15, 1993

                  (AS UPDATED EFFECTIVE AS OF JANUARY 1, 2000)

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                              CSS INDUSTRIES, INC.

                    ANNUAL INCENTIVE COMPENSATION ARRANGEMENT
                            ADMINISTRATIVE GUIDELINES

                                 MARCH 15, 1993
                  (as updated effective as of January 1, 2000)

I.       Purpose.

         The annual incentive compensation arrangement ("AIC Arrangement") is
intended to motivate, encourage and reward achievement and excellence in
performance.

II.      Participants.

         All corporate level officers and managers are eligible to participate
in the AIC Arrangement.

III.     Administration.

         The Human Resources Committee of the Board of Directors (the
"Committee") determines the amount of the bonus under the AIC Arrangement to be
paid to the Chairman and the President and Chief Executive Officer and
determines the amount of the bonus under the AIC Arrangement for the Company's
other officers and managers following receipt of the recommendations of the
President and Chief Executive Officer.

IV.      Basis Assumptions.

         The assumptions to the AIC Arrangement are as follows:

                  1. Base salary levels are fair and adequate for the position.

                  2. The AIC Arrangement relates to officers and managerial
personnel only. Staff personnel receive a formulary bonus based on salary
levels.

                  3. To be effective, bonuses should be meaningful in relation
to salaries.

                  4. Management has important equity ownership or options
relating thereto.

                  5. Management has modest profit-sharing-pension contributions
and reasonable but basic and modest perks.

                  6. The Company is well positioned financially,
organizationally and as to physical assets of subsidiaries, in accordance with
management strategies and goals.

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                  7. The Company is fully and well staffed.

                  8. The primary functions of the corporate group relate to the
guidance and direction of the operating companies. The management style allows
operating autonomy with broad discretion with a goal of long-term growth as
opposed to annual short-term maximization of profits.

         If any of the foregoing assumptions are not true in a given fiscal
year, the amount of the bonus paid for such year may be modified accordingly.

V.       Determination of Bonus Thresholds.

         At the beginning of each fiscal year, performance goals are established
by the Committee based upon (1) the attainment of a specific threshold level of
earnings per common share during such year and, (2) for certain individual
officers and managers, specifically defined individual goals and objectives
consistent with such individual's position with the Company.

VI.      Determination of Bonus.

         Participants should be employed at the time bonuses are paid under the
AIC Arrangement. A participant whose employment is terminated for any reason
prior to the payment date will not be entitled to a bonus under the AIC
Arrangement for the relevant fiscal year, unless otherwise determined by the
Committee. Participants who were hired during the relevant fiscal year may have
their bonus opportunity prorated based on the ratio of days employed divided by
365 days if so determined by the Committee.

         Following the end of the fiscal year, annual performance bonuses for
each participant under the AIC Arrangement are determined based upon the
achievement of the threshold target level of earnings per common share and the
attainment of any specifically defined individual goals and objectives.

VII.     Payment of Bonus.

         Bonuses are paid as soon as practicable following their determination
by the Committee. The Company deducts from all bonus payments made under the AIC
Arrangement all applicable federal, state or other taxes required by law to be
withheld.

VIII.    Amendment or Termination.

         The Board of Directors of the Company or the Committee may, without
prior notice, amend or terminate the AIC Arrangement at any time.

IX.      Employment Not Guaranteed.

         Neither the AIC Arrangement nor any action taken in accordance with the
AIC Arrangement shall be construed as giving any participant a right to remain
as an employee of the Company at any time or for any period.

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