Exhibit 10.98

 

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Russ Berrie and Company, Inc.

111 Bauer Drive, Oakland, NJ 07436

(201) 337-9000   (800) 631-8465

 

                                                                                                               
                                November 3, 2005

 

Mr. Keith Schneider

P.O. Box 624

Double Bay, NSW 1360

Australia

 

Dear Keith:

 

                I am pleased to offer you the position of Executive Vice
President and General Sales Manager — U.S. Specialty Gift Division of Russ
Berrie and Company, Inc. (the “Company”) effective November 7, 2005.

 

                Your employment with the Company will consist of the following:

 

1.               COMPENSATION.

a.                                  Base Salary.  Your base salary will be at an
annual rate of U.S. $350,000.

b.                                 Incentive Compensation.  Your 2006 incentive
compensation (“IC”) program, and eligibility therefor, is set forth on Exhibit A
attached hereto and incorporated herein.  Payment of the IC (or portion thereof)
is predicated upon meeting both objective (corporate) and subjective
(individual) performance standards established for the applicable year.  The IC
is generally paid in February of the year following the applicable year.  In
order to receive the IC payment (or any portion thereof), you must be actively
employed by the Company at the time of the IC payment.  For the year 2006, U.S.
$100,000 of your IC is guaranteed to be paid and it will be paid quarterly in 4
equal installments of U.S. $25,000 each, as soon as reasonably practicable after
the end of each of the Company’s fiscal quarters.

c.                                  Super-Incentive Bonus.  For 2006, you shall
be eligible for a one-time Super-Incentive Bonus (“SIB”) of a maximum of U.S.
$100,000 payable in two parts as follows:

(i)                                                       Part 1 SIB: one-half
of the SIB (i.e., U.S. $50,000) is payable to you if 2006 net sales in the U.S.
Specialty Gift Division are at least U.S. $65,000,000.  If at least U.S.
$65,000,000 of net sales in the U.S. Specialty Gift Division are not achieved in
2006, then no part of the Part 1 SIB will be paid; and

 

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(ii)                                                    Part 2 SIB: one-half of
the SIB (i.e., U.S. $50,000) is payable to you if, in 2006 (as compared to
2005), the U.S. Specialty Gift Division breaks even in its EBITDA.  Your
eligibility for payment of the Part 2 SIB will be calculated on the basis of a
sliding scale as follows:  if 2006 EBITDA for the U.S. Specialty Gift Division
is within U.S. $2,000,000 of the break-even point, then you will receive
one-half of the Part 2 SIB; if 2006 EBITDA for the U.S. Specialty Gift Division
is within U.S. $1,000,000 of the break-even point, then you will receive
three-fourths of the Part 2 SIB, and; if 2006 break-even EBITDA for the U.S.
Specialty Gift Division is achieved, then you will receive the entire Part 2 SIB
(namely, the full one-half of the SIB or U.S. $50,000).  If 2006 EBITDA does not
reach within U.S. $2,000,000 of the break-even point, then no part of the Part 2
SIB will be paid.

 

2.               GROUP HEALTH AND DISABILITY.  Employees are eligible to
participate in the Company’s group health plan (medical and dental insurance
coverage), life insurance plan and long term disability insurance plan after 90
days of continuous employment.  Because you are currently employed by the
Company’s global organization, the 90 day waiting period will be waived for you
and, immediately upon your date of hire, you will be eligible to participate in:

 

a.               The Company’s contributory Group Health Plan and Group Dental
Plan.

b.              The Company’s non-contributory Life Insurance Plan. This is
provided at no cost to you.

c.               The Company’s non-contributory Business Travel Insurance Plan. 
This is provided at no cost to you.

d.              The Company’s non-contributory Accidental Death and
Dismemberment Plan.  This is provided at no cost to you.

e.               The Company’s non-contributory Long Term Disability Plan.  This
is provided at no cost to you.

 

3.               VOLUNTARY BENEFITS.  Employees are eligible to participate in
the Company’s voluntary benefit program after 90 days of continuous employment. 
Because you are currently employed by the Company’s global organization, the 90
day waiting period will be waived for you and, immediately upon your date of
hire, you will be eligible to participate in the following voluntary benefits
plans:

 

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a.   Healthcare Flexible Spending Account.

b.   Dependent Care Flexible Spending Account.

c.   Supplemental Disability and Accident Insurance Plans.

 

4.               STOCK OPTIONS.  On December 1, 2005, you shall receive 75,000
stock options.  These options will vest ratably over a period of 5 years.  These
options will be granted under and pursuant to the Company’s 2004 Stock Option,
Restricted and Non-Restricted Stock Plan.  Such options will be Non-Qualified
Stock Options.  Possible future grants of stock options shall be at the sole
discretion of the Compensation Committee of the Board of Directors of the
Company.

 

5.               401(k) Plan.  Employees are eligible to participate in the
Company’s 401(k) plan after 6 months of continuous employment. Because you are
currently employed by the Company’s global organization, the 6 month waiting
period will be waived for you and, immediately upon your date of hire, you will
be eligible to participate in the Company’s 401(k) plan based on its current
provisions.  Under the current plan terms, the Company matches a portion of your
contribution to your 401(k) account.  The Company’s contribution vests over a
period of 4 years of employment.

 

6.               EXECUTIVE DEFERRED COMPENSATION PLAN.  Within the first 30 days
of your date of hire, you will be eligible to participate in the Company’s
Executive Deferred Compensation Plan.

 

7.     VACATION.  The Company’s vacation policy provides that after 6 months of
employment, employees are eligible for one week paid vacation.  The Company’s
vacation policy further provides that thereafter, beginning with the following
calendar year, employees are eligible for two weeks paid vacation and, upon
their fifth anniversary with the Company, employees are eligible for three weeks
paid vacation.  You will be eligible for vacation above and beyond the
aforementioned policy.  Beginning with calendar year 2006, you will be
immediately eligible for the maximum paid vacation level (namely, three weeks
paid vacation per year).

 

8.               HOLIDAY/SICK. You will be eligible for paid holidays and sick
time in accordance with Company policy. Because you are currently employed by
the Company’s global organization, the 44 accrued and unused sick days which you
currently have as an employee of RUSS Australia will be credited to your accrued
and unused sick days at the Company and debited from your accrued and unused
sick days as an employee of RUSS Australia (to the extent permitted by law in
Australia).

 

9.               CAR ALLOWANCE  You will receive an allowance of U.S. $1,100 per
month to cover the cost of an automobile, automobile insurance, automobile
maintenance and repair, gasoline and any and all other costs and expenses
relating to such automobile. 

 

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10.         SEVERANCE.  In the event that you are terminated from the Company
for reason other than cause or other than your own voluntary resignation, you
will be eligible to receive severance in accordance with the Company’s severance
policy for Domestic Vice Presidents (and above), a copy of which is attached
hereto as Exhibit B.

 

11.         RELOCATION.  Pursuant to the Company’s policy, the movement of your
household good will be paid as a direct expense of the Company to the applicable
vendor.  Three estimates are required.  Company policy reimburses eligible
executives for documented expenses up to U.S. $27,500 relating to relocation. 
However, such policy amount will be increased for you due to your relocation
from Australia.  The Company will reimburse you for up to U.S. $100,000 of
documented expenses relating to relocation.

 

12.         TRAVEL AND EXPENSE ALLOWANCE.  The Company shall reimburse you, on a
dollar-for-dollar basis, for your documented business-related expenses.

 

12.         SUPPLEMENTAL ALLOWANCE.  The Company will reimburse you for up to
U.S. $30,000 per year of documented expenses related to your Eligible Family
travel between the United States and Australia.  Eligible Family consist of your
spouse, your children, your parents and your parents-in-law.

 

13.         CHANGE IN CONTROL SEVERANCE PLAN.  You have previously received the
Company’s Change in Control Severance Plan.

 

You are responsible for any and all tax obligations on the compensation and
benefits package outlined above (other than the withholding and other required
deductions that the Company will make from your paychecks).  In addition, this
offer of employment is subject to presentation of appropriate documentation to
the effect that you are eligible to work in the United States.

 

The Company reserves the right to change or modify these programs.  In addition,
employment with the Company is considered “at will” and does not represent a
specific guarantee.

 

Keith, I want to welcome you to the U.S. Specialty Gift Division and wish you
much success in your new position.

 

 

 

Very truly yours,

 

 

 

 

 

/s/ Andrew R. Gatto

 

 

Andrew R. Gatto

 

 

President and Chief Executive Officer

 

 

 

cc: B. Landman

 

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

 

 

/s/ Keith Schneider

 

 

Keith Schneider

 

 

 

 

 

Date:

November 9, 2005

 

 

 

 

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EXHIBIT A

 

 

KEITH SCHNEIDER’S INCENTIVE COMPENSATION PROGRAM

(effective January 1, 2006)

 

IC Factor:  50% of Base Salary (2006 Base Salary is U.S. $350,000; 50% is U.S.
$175,000)

 

 

 

2006 CORPORATE OBJECTIVES:

 

 

The IC Target for the U.S. Specialty Gift Division

 

Value: 50%* of IC Factor

 

will be established by management and approved by

 

(U.S. $87,500)

 

the Board of Directors (or appropriate committee

 

 

 

thereof)

 

 

 

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     *Value could be up to 100% of the IC Factor if the Maximum Target is
reached.

 

 

 

2005 INDIVIDUAL OBJECTIVES:

 

 

 

 

Value: 30% of IC Factor

 

 

 

(U.S. $52,500)

 

To Be Determined

 

 

 

 

 

 

 

 

 

2005 INDIVIDUAL INITIATIVES:

 

 

 

 

Value: 20% of IC Factor

 

 

 

(U.S. $35,000)

 

 

 

 

 

To Be Determined

 

 

 

 

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EXHIBIT B

 

SEVERANCE POLICY FOR DOMESTIC VICE PRESIDENTS (AND ABOVE)

OF RUSS BERRIE AND COMPANY, INC.,  Effective February 11, 2003

 

The Company’s severance policy is amended for domestic Vice Presidents (and
above; collectively referred to herein as “VPs”) and is effective February 11,
2003, as follows:

 

Domestic VPs, if terminated by the Company without cause and not in connection
with a change in control of the Company (namely, more than 6 months prior to or
more than 2 years after such Change in Control), are eligible, based on tenure
with the Company, for the following severance payment:

 

•                     VPs with less than 1 year of service with the Company
would receive 4 months of severance pay

 

•                     VPs with at least 1 year of service but less than 2 years
of service with the Company would receive 6 months of severance pay

 

•                     VPs with at least 2 years of service but less than 6 years
of service with the Company would receive 8 months of severance pay

 

•                     VPs with at least 6 years of service but less than 10
years of service with the Company would receive 10 months of severance pay

 

•                     VPs with 10 or more years of service with the Company
would receive 12 months (i.e., one year) of severance pay

 

The severance is to be paid at the salary rate (base pay not including bonus(es)
or commissions) in effect on the termination date.  The severance will be paid
over the course of the severance period in accordance with the Company’s normal
pay schedule (not in a lump sum).  During the severance period, the terminated
VP is also entitled to remain on the Company’s (1) health and dental insurance
plan (making the same payroll contribution as he/she made, on the date of
termination, as an active employee), and (2) all other insurance plans for which
he/she was eligible on the date of termination.  In addition, for a period of 60
days, the terminated VP is entitled to use of the Company automobile (or payment
of an automobile allowance) or reimbursement of certain automobile expenses, as
the case may be, in accordance with the nature and type of automobile perk that
the VP had in effect on the date of termination.   If the terminated VP obtains
gainful employment during his/her severance period, then the severance payments
will be terminated effective on the date that he/she begins new employment.

 

“Change-in-control” and “cause” shall have the meanings assigned thereto in the
Company’s Change in Control Severance Plan.

 

As a condition to receiving the aforementioned severance payment and benefits,
the eligible terminated VP must sign and deliver to the Company the Company’s
form of General Release of Claims, Non-Compete, Non-Hire and Non-Disparagement
Agreement.

 

This amended severance policy supercedes any other agreement between the Company
and a VP that provides for lesser benefits with respect to the type of
termination covered hereby in effect on the effective date of this amendment or
thereafter.

 

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