**Exhibit 10.90**

 

**RUSS BERRIE AND COMPANY, INC.STOCK OPTION AGREEMENTDate of Grant:  June 1, 2004**

 

Inaccordance with the Employment Agreement (the “Employment Agreement”) dated asof April 9, 2004, between Russ Berrie and Company, Inc., a New Jersey corporation(together with its successors and assigns, the “Company”) and Andrew R. Gatto(the “Executive”), the Company does hereby grant to the Executive, as of thegrant date set forth above, a stock option (the “Option”) to purchase anaggregate of 150,000 shares of its Common Stock (stated value $.10 per share)(“Shares”) at the price of $19.53 per share (the “Option Price”), upon thefollowing terms and conditions. Capitalized terms used but undefined herein shall have the meaningsascribed to them in the Employment Agreement.

 

1.                                       (a)                                  ThisOption is intended to be a non-qualified stock option.

 

(b)                                 Except as provided in Sections 2 and 4 below,this Option shall vest and become exercisable ratably over five years (20% peryear) from the Date of Grant and have a term of ten years from the Date ofGrant, provided, however, the term of exercisability of a vested portion of theOption shall be subject to the provisions of Section 2 below.

 

2.                                       (a)                                  If the employment of the Executive under theEmployment Agreement is terminated by the Company without Cause or by reason ofthe Disability of the Executive, or by the Executive for Good Reason, whetheror not in connection with a change in control, or by reason of the Executive’sdeath, any outstanding unexercised portion of this Option, whether or notvested and/or exercisable on the Termination Date, shall be deemed fully vestedand exercisable and may be exercised for two years after the Termination Dateor the remainder of the ten-year term of the Option, whichever period isshorter.  The “Termination Date” is thedate on which the Executive’s employment under the Employment Agreement ceases.

 

(b)                                 Upon any Change in Control (as defined in thedefinition of Good Reason in the Employment Agreement), any outstanding unexercisedportion of this Option, whether or not vested and/or exercisable on the date ofsuch Change in Control, shall be deemed fully vested and exercisable.  In the event that holders of Shares receivecash, securities or other property in respect of their Shares in connectionwith a Change in Control, the Company shall use reasonable efforts to enablethe Executive (if he so elects) to exercise this Option at a time and in afashion that will entitle him to receive in exchange for any Shares thusacquired the same consideration as is received in such Change in Control byother holders of Shares.

 

(c)                                  If the employment of the Executive under theEmployment Agreement is terminated by the Company for Cause or by the Executivewithout Good Reason, and not due to death or Disability, any outstandingunexercised unvested portion of this Option will be cancelled and deemedterminated as of the Termination Date and any unexercised, vested portion ofthis Option may be exercised through the earlier of (x) 30 days after theTermination Date or (y) the 10th anniversary of the Date of Grant.

 

3.               This Option shall be exercised by givingwritten notice of exercise to the Company at 111 Bauer Drive, Oakland, NJ  07430 (Attention: Chief Financial Officer)as follows:

 

(a)                                  Method of Exercise.  In order to exercise this Option in whole or in part, theExecutive shall submit to the Company a writing specifying the whole number ofShares in respect of which the Option is being exercised and accompanied bypayment in full (or an arrangement for payment in full) in accordance withSection 3(b) below of the aggregate Option Price of the Shares in respect ofwhich the Option is being exercised. The number of Shares for which the Option has thus been exercised shallthen promptly be issued by the Company (the “Option Shares”) and a certificatefor such Shares shall be promptly delivered to the Executive.

 

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(b)                                 Method of Payment.  Payment of the aggregate Option Price for Option Shares may bemade (i) by delivery to the Company of cash or a check to the order of theCompany and backed by sufficient funds in an amount equal to the aggregateOption Price of such Shares; (ii) to the extent that use of this procedure willnot result in any incremental accounting charges to the Company, by authorizingthe Company to withhold Shares that would otherwise be delivered to theExecutive having an aggregate Market Price on the date of exercise equal to theaggregate Option Price of the Option Shares; (iii) by delivery to the Companyof Shares then owned by the Executive having an aggregate Market Price on thedate of delivery equal to the aggregate Option Price of the Option Shares; or(iv) by any combination of (i), (ii) or (iii). The Company shall also from time to time make available to the Executiveany “cashless exercise” procedure that it then makes available to other optionholders who are directors and executive officers of the Company.

 

(c)                                  Delivery of Shares in Payment of OptionPrice.  Payment by delivery of Sharesmay be effected by delivering one or more stock certificates or by otherwisedelivering Shares to the Company’s reasonable satisfaction, in each caseaccompanied by such endorsements, stock powers, signature guarantees or otherdocuments or assurances as may reasonably be required by the Company.  If a certificate or certificates or otherdocumentation representing Shares in excess of the amount required aredelivered, a certificate (or other satisfactory evidence of ownership)representing the excess number of Shares shall be returned by the Company.  The Company need not accept fractionalShares.

 

4.               The number and type of securities (orother property) subject to this Option, the price to be paid therefor, and theother terms of this Agreement, shall be subject to adjustment as follows:

 

(a)                                  In the event of any dissolution orliquidation of the Company, sale of all or substantially all of the assets ofthe Company, merger or consolidation of the Company with or into any othercorporation if the Company is the surviving corporation, statutory shareexchange involving capital stock of the Company, reorganization,recapitalization, reclassification, stock dividend, extraordinary dividend,stock split, reverse stock split, stock combination, rights offering, spin-offor other relevant change, the Committee (as defined in the Company’s 2004 StockOption, Restricted and Non-Restricted Stock Plan (the “2004 Plan”)) may adjustthe Option Price of the Option and may make any or all other adjustments deemedappropriate by the Committee in good faith, including, without limitation,accelerating the vesting and/or exercise period pertaining to the Option; suchadjustment shall be made on a basis that is no less favorable to the Executivethan the adjustment, if any, made in respect of such event to options held bypersons who are directors and executive officers of the Company is to suchholders.

 

(b)                                 In connection with a Business Combination (asdefined in the 2004 Plan), the Committee (as defined in the 2004 Plan), in itssole discretion, may provide for (i) the assumption of the Option by asuccessor corporation (or a parent or subsidiary thereof), (ii) thesubstitution for the Option of new awards covering the stock of a successorcorporation (or a parent or subsidiary thereof), with appropriate adjustmentsas to the number and kind of shares and exercise prices, (iii) upon 10 days’advance notice from the Committee to the Executive, the acceleration of thevesting and/or exercise period pertaining to the Option or (iv) upon 10 days’advance notice from the Committee to the Executive, (x) the cancellation of anyoutstanding portion of the Option that is then exercisable and the payment tothe holder thereof, in cash or stock, or any combination thereof, of the valueof such portion based upon the price per share of Stock received or to bereceived by other stockholders of the Company in connection with the BusinessCombination, and (y) the cancellation of the portion of the Option that is notthen exercisable.  In the event of anycontinuation, assumption or substitution contemplated by the foregoing clauses,the Option shall continue in the manner and under the terms so provided.

 

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(c)                                  If, by reason of any adjustment to the Optionpursuant to the provisions described above, the Executive shall be entitled tonew, additional or different shares of stock or securities of the Company orany other corporation in respect of the Option, such new, additional ordifferent shares shall thereupon be subject to all of the conditions andrestrictions which were applicable to the Shares subject to the Option prior tosuch adjustment.

 

5.               This Option shall not be assignable ortransferable except by will or by the laws of descent or distribution provided,however, that the Executive may transfer all or any portion of the Option to amember of his Immediate Family (as defined under the 2004 Plan), a trust forthe benefit of the Executive or any member of his Immediate Family,partnerships in which the Executive or his Immediate Family members and/ortrusts are the only partners, and/or any organization exempt under Section501(c) of the Internal Revenue Code of 1986, as amended (the “Code”).  Subject to the provisions of Section 2, thisOption shall be exercisable only by the Executive or his permitted assignee ortransferee.

 

6.               Nothing contained in this Agreement shallconfer upon the Executive any right with respect to continuance of employmentby the Company nor limit in any way the right of the Company to terminate ormodify his employment at any time, with or without Cause.

 

7.               Any determination of the Committee as toany adjustments pursuant to Section 4 hereof shall be final, conclusive andbinding upon the Executive and any person claiming under or through theExecutive, to the extent made by the Committee in good faith.

 

8.               If the Company is for any reason requiredto withhold any amount under the tax laws or regulations of the United States,any jurisdiction thereof or local government with respect to the transfer ofOption Shares upon exercise of the Option (“Withholding Taxes”), the Executiveor other person receiving such Shares shall be required to pay the Company theamount of any such Withholding Taxes, such payment to be made in any of the fashionsauthorized under Section 3(b) above.

 

9.               The Company shall not be required toissue or deliver a certificate for Option Shares unless the issuance anddelivery of such certificate complies with all applicable legal requirementsincluding, without limitation, compliance with the provisions of applicablestate securities laws, the Securities Act of 1933, as amended (the “SecuritiesAct”), the Securities Exchange Act of 1934, as amended, and the requirements ofthe exchanges, if any, on which the Company’s shares of Common Stock may, atthat time, be listed; provided, however, that the Company shall use reasonableefforts to satisfy, as promptly as possible, any condition (other than those inthe Executive’s control) that would permit such issuance or delivery.

 

10.         Notwithstanding anything contained hereinto the contrary, in the event that the disposition of Option Shares is notcovered by a then current registration statement under the Securities Act, andis not otherwise exempt from such registration, such Option Shares shall berestricted against transfer to the extent required by the Securities Act andRule 144 or other regulations thereunder. The certificates evidencing any of such Option Shares shall be appropriatelyamended or have an appropriate legend placed thereon to reflect their status asrestricted securities as aforesaid.

 

11.         The provisions of Sections 9, 10, 11(A),12, 14, 16, and 19 of the Employment Agreement shall be deemed incorporatedinto this Agreement as if fully set forth herein.  Any claims or disputes arising out of, or relating to, thisAgreement shall be deemed “Disputes” to which Section 11(B) of the EmploymentAgreement applies.

 

12.         The Executive shall not be, nor have anyof the rights or privileges of, a stockholder of the Company in respect of anyShares purchasable upon exercise of the Option granted hereunder unless anduntil certificates representing such shares shall have been issued by theCompany.

 

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13.         The Company shall, upon and to the extentof any written request from the Executive, use reasonable efforts to assurethat all Option Shares shall upon issuance and delivery, be (i) fullyregistered (at the Company’s expense) under the Securities Act, for both issuanceand resale, (ii) registered or qualified (at the Company’s expense) under suchstate securities laws as the Executive may reasonably request, for issuance andresale and (iii) listed on a national securities exchange or eligible for saleon the NASDAQ National Market and that all such shares, upon issuance, shall bevalidly issued, fully paid and nonassessable. The Company shall at all times reserve and keep available sufficientShares to satisfy the requirements of this Agreement and shall pay all originalissue taxes with respect to the issuance of Option Shares upon exercise of theOption and all other fees and expenses incurred in connection therewith.

 

14.         “Market Price”, when used with respect tothe price of a Share on a particular day, shall mean the closing price forwhich a Share is purchased that day (or, if no purchases have been made on suchday, on the most recent preceding day on which such a purchase occurred) on theprincipal national securities exchange or national market system on which Sharesare then listed or eligible for sale (or, if Shares are not then listed oreligible for sale on any such exchange or market system, the price asdetermined by agreement between the Parties or, in the absence of suchagreement, the price as determined reasonably, and in good faith, by theBoard).

 
|   | RUSS  BERRIE AND COMPANY, INC. |
|--------|--------------------------------|
|   |                           |   |
|   | **BY**:                        |  /s/ John Wille |   |
|   | **Name**:                      | John Wille |
|   | **Title**:                     | Vice President and  Chief Financial Officer |

 

AGREED TO AND ACCEPTED AS OF THEDATE OF GRANT SET FORTH ABOVE:
| /s/ Andrew Gatto |   |
|------------------|--------|
| ANDREW R. GATTO  |

 

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