Exhibit 10.38
(RUSS LOGO) [y75694y7569400.gif]
Russ Berrie and Company, Inc.
111 Bauer Drive, Oakland, NJ 07436
(201) 337-9000 (800) 631-8465
March 12, 2008
Michael Levin
Kids Line, LLC
2601 Sequoia Drive
South Gate, CA 90280
Dear Michael:
     I am pleased to extend your current employment as President and Chief
Executive Officer of Kids Line, LLC (the “Company”) pursuant to the terms set
forth herein.
     Your employment with the Company will include the following:
     1. COMPENSATION. (a) Your base salary will be at an annual rate of
$400,000; provided, that, at the discretion of the Compensation Committee of the
Board of Directors (the “Committee”) of Russ Berrie and Company, Inc., your base
salary may be increased to $475,000.
     (b) You shall be eligible to participate in the Company’s Incentive
Compensation (“IC”) program with an Applicable Percentage of 75% (and an
opportunity to earn up to an Applicable Percentage of 130%). Your participation
shall be per the terms set forth on Addendum I hereto. Amounts achieved for
results in between (i) the Minimum Target and the Target and (ii) the Target and
the Maximum Target will in each case be determined by a straight line
interpolation. No amounts will be paid for achievement of results below the
Minimum Target, and no additional amounts will be paid for achievement of
results in excess of the Maximum Target.
     2. TERM. The term of this agreement shall be from January 1, 2008 through
December 31, 2010 (the “Term”). Either party may elect, upon at least 180 days
prior written notice, to terminate this agreement prior to the expiration of the
Term, in which event, this Agreement shall terminate upon the date specified in
such notice; provided, that the Company shall be entitled to relieve you of your
duties at any time during this 180 day period, provided that Company continues
to pay you your base salary and continues your participation in the IC program
and all other benefits and perquisites for the remainder of such period. Except
for the 180 day notice period, you agree that the Company shall have no
severance obligation to you, irrespective of the reason for the termination of
your employment, nor shall you have any mitigation duties or obligations. If
your employment is terminated due to death or disability, your IC Bonus will be
prorated based on the number of days that you were employed during the year
based on actual performance through the remainder of the relevant year.

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     3. BENEFITS AND PERQUISITES. You will be eligible to participate in all
benefit programs made generally available to executives of the Company,
including all benefit programs in which you currently participate, as the same
may be modified from time to time with the approval of the Committee. Further,
you shall throughout the period of your employment be entitled to the same
perquisites as you presently enjoy.
     4. PROTECTIVE COVENANTS. You acknowledge and agree that (i) that the
Company has long term, near-permanent relationships with its customers and
suppliers, and that those relationships were developed at great expense and
difficulty to the Company over several years of close and continuing
involvement; and (ii) that the Company’s relationships with its customers and
suppliers are and will continue to be valuable, special and unique assets of the
Company.
     Accordingly, you agree that, while employed by Company and for a period of
one (1) year thereafter (the “Restricted Period”), you agree that you will not,
anywhere in the United States of America or in any other place or venue where
the Company now conducts or operates, or may conduct or operate, its business
prior to the date of your termination of employment (the “Territory”), directly
or indirectly, contact, solicit or accept if offered to you, or direct any
person, firm, corporation, association or other entity to contact, solicit or
accept if offered to it, any of the Company’s customers, prospective customers,
or suppliers for the purpose of providing any products and/or services that are
the same as or similar to the products and services provided by the Company to
its customers during the term hereof.
     You also agree that, during the Restricted Period, you agree that you will
not, anywhere in the Territory, solicit, directly or indirectly, on your own
behalf or on behalf of any other person, the services of any person who is then
a current employee of the Company (or was an employee of the Company during the
year preceding such solicitation), nor solicit any of the Company’s then current
employees (or an individual who was employed by or engaged by the Company during
the year preceding such solicitation) to terminate employment or an engagement
with the Company for any purpose.
     You further agree that both during your employment and thereafter you will
not, for any reason whatsoever, use for yourself or disclose (except when such
disclosure is made by you in your capacity as an executive of Company) to any
person (other than a person who is then employed by the Company or who is a
party to any confidentiality undertaking in favor of Company), any “Confidential
Information” of the Company acquired by you during your relationship with the
Company, both prior to and during the term of this Agreement. You further agree
to use Confidential Information solely for the purpose of performing duties
with, or for, the Company and further agree not to use Confidential Information
for your own private use or commercial purposes or in any way detrimental to the
Company. You agrees that “Confidential Information” includes but is not limited
to: (i) any financial, engineering, business, planning, operations, services,
potential services, products, potential products, technical information and/or
know-how, organization charts, formulas, business plans, production, purchasing,
marketing, pricing, sales, profit, personnel, customer, broker, supplier, or
other lists or information of the Company; (ii) any papers, data, records,
processes, methods, techniques, systems, models, samples, devices, equipment,
compilations, invoices, customer lists, or documents of the

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Company; (iii) any confidential information or trade secrets of any third party
provided to the Company in confidence or subject to other use or disclosure
restrictions or limitations; and (iv) any other information, written, oral, or
electronic, whether existing now or at some time in the future, whether
pertaining to current or future developments, and whether previously accessed
during your tenure with the Company or to be accessed during your future
employment with the Company, which pertains to the Company’s affairs or
interests or with whom or how the Company does business. The Company
acknowledges and agrees that Confidential Information does not include
(x) information properly in the public domain, or (y) information in your
possession prior to the date of your original employment with the Company, or
any predecessor company, except to the extent that such information is or has
become a trade secret of the Company or is or otherwise has become the property
of the Company.
     You acknowledge and agree that all customer lists, supplier lists, and
customer and supplier information, including, without limitation, addresses and
telephone numbers, are and shall remain the exclusive property of the Company,
regardless of whether such information was developed, purchased, acquired, or
otherwise obtained for the Company by you.
     It is agreed that any breach or anticipated or threatened breach of any of
your covenants contained in this Paragraph 4 will result in irreparable harm and
continuing damages to the Company and its business and that the Company’s remedy
at law for any such breach or anticipated or threatened breach will be
inadequate and, accordingly, in addition to any and all other remedies that may
be available to the Company at law or in equity in such event, any court of
competent jurisdiction may issue a decree of specific performance or issue a
temporary and permanent injunction, without the necessity of the Company posting
bond or furnishing other security and without proving special damages or
irreparable injury, enjoining and restricting the breach, or threatened breach,
of any such covenant, including, but not limited to, any injunction restraining
you from disclosing, in whole or part, any Confidential Information.
     If any provision of this Agreement shall be found invalid or unenforceable
for any reason, in whole or in part, then such provision shall be deemed
modified, restricted, or reformulated to the extent and in the manner necessary
to render the same valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law, as if such provision had been
originally incorporated herein as so modified, restricted, or reformulated or as
if such provision had not been originally incorporated herein, as the case may
be. The parties further agree to seek a lawful substitute for any provision
found to be unlawful; provided, that, if the parties are unable to agree upon a
lawful substitute, the parties desire and request that a court or other
authority called upon to decide the enforceability of this Agreement modify
those restrictions in this Agreement that, once modified, will result in an
agreement that is enforceable to the maximum extent permitted by the law in
existence at the time of the requested enforcement.
     5. During the Term, the Company reserves the right to change or modify any
bonus, benefit or, subject to paragraph 3 hereof, perquisite programs, provided
that such changes apply to all participants.

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     6. This letter supersedes in full the Employment Agreement between you and
Company, dated December 15, 2004, except that you agree to comply with the
covenants set forth in Section 8.2 thereof until the expiration of such
covenants in accordance with their respective terms pursuant to said Section 8.2
on the same basis as if your employment terminated on December 15, 2007. Solely
with respect to this paragraph 6, you agree that the provisions of Section 8.2
were required by Russ Berrie and Company, Inc. as a condition to the Sale (as
defined in the Employment Agreement), with respect to which you received
substantial consideration.
     Michael, if you agree with the foregoing, please sign in the space provided
below.
Very truly yours,
/s/ Bruce G. Crain
Bruce G. Crain
President and CEO
Russ Berrie and Company, Inc.
ACCEPTED AND AGREED:

     
/s/ Michael Levin
   
 
   
 
Michael Levin
   

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