**Exhibit 10.98**

 

 

 

RussBerrie and Company, Inc.

111Bauer 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 tooffer 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 employmentwith the Company will consist of the following:

 

1.               COMPENSATION.

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

b.                                 *Incentive Compensation*.  Your2006 incentive compensation (“IC”) program, and eligibility therefor, is setforth on Exhibit A attached hereto and incorporated herein.  Payment of the IC (or portion thereof) ispredicated upon meeting both objective (corporate) and subjective (individual) performancestandards established for the applicable year. The IC is generally paid in February of the year following theapplicable year.  In order to receive theIC payment (or any portion thereof), you must be actively employed by theCompany at the time of the IC payment.  Forthe year 2006, U.S. $100,000 of your IC is guaranteed to be paid and it will bepaid quarterly in 4 equal installments of U.S. $25,000 each, as soon asreasonably 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-timeSuper-Incentive Bonus (“SIB”) of a maximum of U.S. $100,000 payable in two partsas 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 GiftDivision are at least U.S. $65,000,000. If at least U.S. $65,000,000 of net sales in the U.S. Specialty GiftDivision 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 2SIB will be calculated on the basis of a sliding scale as follows:  if 2006 EBITDA for the U.S. Specialty GiftDivision is within U.S. $2,000,000 of the break-even point, then you willreceive one-half of the Part 2 SIB; if 2006 EBITDA for the U.S. Specialty GiftDivision is within U.S. $1,000,000 of the break-even point, then you willreceive three-fourths of the Part 2 SIB, and; if 2006 break-even EBITDA for theU.S. Specialty Gift Division is achieved, then you will receive the entire Part2 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.  Employeesare eligible to participate in the Company’s group health plan (medical anddental insurance coverage), life insurance plan and long term disabilityinsurance plan after 90 days of continuous employment.  Because you are currently employed by theCompany’s global organization, the 90 day waiting period will be waived for youand, immediately upon your date of hire, you will be eligible to participatein:

 

a.               The Company’s contributory Group Health Plan and GroupDental 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 TravelInsurance Plan.  This is provided at nocost to you.

d.              The Company’s non-contributory Accidental Death andDismemberment Plan.  This is provided atno cost to you.

e.               The Company’s non-contributory Long Term DisabilityPlan.  This is provided at no cost toyou.

 

3.               VOLUNTARY BENEFITS.  Employees areeligible to participate in the Company’s voluntary benefit program after 90days of continuous employment.  Becauseyou are currently employed by the Company’s global organization, the 90 daywaiting 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 AccidentInsurance Plans.

 

4.               STOCK OPTIONS.  On December1, 2005, you shall receive 75,000 stock options.  These options will vest ratably over a periodof 5 years.  These options will begranted under and pursuant to the Company’s 2004 Stock Option, Restricted andNon-Restricted Stock Plan.  Such optionswill be Non-Qualified Stock Options. Possible future grants of stock options shall be at the sole discretionof the Compensation Committee of the Board of Directors of the Company.

 

5.               401(k) Plan.  Employees areeligible to participate in the Company’s 401(k) plan after 6 months ofcontinuous employment. Because you are currently employed by the Company’sglobal 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 theCompany’s 401(k) plan based on its current provisions.  Under the current plan terms, the Companymatches a portion of your contribution to your 401(k) account.  The Company’s contribution vests over aperiod of 4 years of employment.

 

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

 

7.     VACATION.  TheCompany’s vacation policy provides that after 6 months of employment, employeesare eligible for one week paid vacation. The Company’s vacation policy further provides that thereafter, beginningwith the following calendar year, employees are eligible for two weeks paidvacation and, upon their fifth anniversary with the Company, employees areeligible for three weeks paid vacation. You will be eligible for vacation above and beyond the aforementionedpolicy.  Beginning with calendar year2006, 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 timein accordance with Company policy. Because you are currently employed by theCompany’s global organization, the 44 accrued and unused sick days which youcurrently have as an employee of RUSS Australia will be credited to youraccrued and unused sick days at the Company and debited from your accrued andunused sick days as an employee of RUSS Australia (to the extent permitted bylaw in Australia).

 

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

 

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10.         SEVERANCE.  In the eventthat you are terminated from the Company for reason other than cause or otherthan your own voluntary resignation, you will be eligible to receive severancein 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 tothe Company’s policy, the movement of your household good will be paid as adirect expense of the Company to the applicable vendor.  Three estimates are required.  Company policy reimburses eligible executivesfor documented expenses up to U.S. $27,500 relating to relocation.  However, such policy amount will be increasedfor you due to your relocation from Australia. The Company will reimburse you for up to U.S. $100,000 of documentedexpenses relating to relocation.

 

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

 

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

 

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

 

You areresponsible for any and all tax obligations on the compensation and benefitspackage outlined above (other than the withholding and other requireddeductions that the Company will make from your paychecks).  In addition, this offer of employment issubject to presentation of appropriate documentation to the effect that you areeligible to work in the United States.

 

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

 

Keith, I want towelcome you to the U.S. Specialty Gift Division and wish you much success inyour 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

 

 

**KEITHSCHNEIDER’S****INCENTIVE COMPENSATION PROGRAM**

**(effectiveJanuary 1, 2006)**

 

**ICFactor:  50% of Base Salary (2006 BaseSalary 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**

 

**TheCompany’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:**

 

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

 

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

 

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

 

•                     **VPs with at least 2 years of servicebut less than 6 years of service with the Company would receive 8 months ofseverance pay**

 

•                     **VPs with at least 6 years of servicebut less than 10 years of service with the Company would receive 10 months ofseverance pay**

 

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

 

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

 

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

 

**As acondition to receiving the aforementioned severance payment and benefits, theeligible terminated VP must sign and deliver to the Company the Company’s formof General Release of Claims, Non-Compete, Non-Hire and Non-DisparagementAgreement.**

 

**This amended severance policysupercedes any other agreement between the Company and a VP that provides forlesser benefits with respect to the type of termination covered hereby ineffect on the effective date of this amendment or thereafter.**

 

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