Exhibit 10.89


 


RUSS BERRIE AND COMPANY, INC.

STOCK OPTION AGREEMENT


 


Date of Grant:  June 1, 2004


 


In
accordance with the Employment Agreement (the “Employment Agreement”), dated as
of 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 the
grant date set forth above, pursuant to the 2004 Russ Berrie and Company, Inc.
Stock Option, Restricted and Non-Restricted Stock Plan (the “Plan”), a stock
option (the “Option”) to purchase an aggregate of 100,000 shares of its Common
Stock (stated value $.10 per share) (the “Shares”) at the price of $19.53 per
share (the “Option Price”), upon the following terms and conditions.  Unless otherwise indicated, capitalized
terms used but undefined herein shall have the meanings ascribed to them in the
Plan.


 


1.                                       (a)                                  This Option 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% per year) from the Date of Grant, and have a term of ten
years from the Date of Grant, provided, however, the term of exercisability of
a vested portion of the Option shall be subject to the provisions of Section 2
below.


 


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


 


(b)                                                                                 Upon
any Change in Control (as defined in the definition of Good Reason in the
Employment Agreement), any outstanding unexercised portion of this Option,
whether or not vested and/or exercisable on the date of such Change in Control,
shall be deemed fully vested and exercisable. 
In the event that holders of Shares receive cash, securities or other
property in respect of their Shares in connection with a Change in Control, the
Company shall use reasonable efforts, to the extent permissible under the Plan,
to enable the Executive (if he so elects) to exercise this Option at a time and
in a fashion that will entitle him to receive in exchange for any Shares thus
acquired the same consideration as is received in such Change in Control by
other holders of Shares.


 


(c)                                                                                  If
the employment of the Executive under the Employment Agreement is terminated by
the Company for Cause or by the Executive without Good Reason (each as defined
in the Employment Agreement), and not due to death or Disability, any
outstanding unexercised unvested portion of this Option will be cancelled and
deemed terminated as of the Termination Date and any unexercised, vested
portion of this Option may be exercised through the earlier of (x) 30 days
after the Termination Date or (y) the 10th anniversary of the Date of Grant.


 


3.               This Option shall be exercised by giving
written 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, the Executive shall submit to the Company a writing
specifying the whole number of Shares in respect of which the Option is being
exercised and accompanied by payment in full (or an arrangement for payment in
full) in accordance with Section 3(b) below of the aggregate Option Price of
the Shares in respect of which the Option is being exercised.  The number of Shares for which the Option
has thus been exercised shall then promptly be issued by the Company (the
“Option Shares”) and a certificate for such Shares shall be promptly delivered
to the Executive.


 


(b)                                                         Method
of Payment.  Payment of the aggregate
Option Price for Option Shares may be made (i) by delivery to the Company of
cash or a check to the order of the Company and backed by sufficient funds in
an amount equal to the aggregate Option Price of such Shares; (ii) to the
extent that use of this procedure will not result in any incremental accounting
charges to the Company, by authorizing the Company to withhold Shares that
would otherwise be delivered to the Executive having an aggregate Market Price
on the date of exercise equal to the aggregate Option Price of the Option
Shares; (iii) by delivery to the Company of Shares then owned by the Executive
having an aggregate Market Price on the date of delivery equal to the aggregate
Option Price of the Option Shares; or (iv) by any combination of (i), (ii) or
(iii), in each case to the fullest extent permissible under the Plan.  The Company shall also from time to time
make available to the Executive any “cashless exercise” procedure that it then
makes available to other option holders who are directors and executive
officers of the Company.


 


(c)                                                          Delivery
of Shares in Payment of Option Price. 
Payment by delivery of Shares may be effected by delivering one or more
stock certificates or by otherwise delivering Shares to the Company’s
reasonable satisfaction, in each case accompanied by such endorsements, stock
powers, signature guarantees or other documents or assurances as may reasonably
be required by the Company.  If a
certificate or certificates or other documentation representing Shares in
excess of the amount required are delivered, 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 fractional Shares.


 


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


 


(a)                                                          In
the event of any dissolution or liquidation of the Company, sale of all or
substantially all of the assets of the Company, merger or consolidation of the
Company with or into any other corporation if the Company is the surviving
corporation, statutory share exchange involving capital stock of the Company,
reorganization, recapitalization, reclassification, stock dividend,
extraordinary dividend, stock split, reverse stock split, stock combination,
rights offering, spin-off or other relevant change, the Committee may adjust
the aggregate number of shares of Stock available for awards of options under
the Plan, the Option price of the Option, and any or all other matters deemed
appropriate by the Committee in good faith, including, without limitation,
accelerating the vesting and/or exercise period pertaining to the Option; such
adjustment shall be made on a basis that is no less favorable to the Executive
than the adjustment, if any, made in respect of such event to options held by
persons who are directors and executive officers of the Company is to such
holders.


 

















 


(b)                                                         In
connection with a Business Combination, the Committee, in its sole discretion,
may provide for (i) the continuation of the Plan and/or the assumption of the
Option by a successor corporation (or a parent or subsidiary thereof), (ii) the
substitution for the Option of new awards covering the stock of a successor
corporation (or a parent or subsidiary thereof), with appropriate adjustments
as 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 the
vesting 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 any
outstanding portion of the Option that is then exercisable and the payment to
the holder thereof, in cash or stock, or any combination thereof, of the value
of such portion based upon the price per share of Stock received or to be
received by other stockholders of the Company in connection with the Business
Combination, and (y) the cancellation of the portion of the Option that is not
then exercisable.  In the event of any
continuation, assumption or substitution contemplated by the foregoing clauses,
the Option shall continue in the manner and under the terms so provided.


 


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


 


5.               This Option shall not be assignable or
transferable 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 a
member of his Immediate Family, a trust for the benefit of the Executive or any
member of his Immediate Family, partnerships in which the Executive or his
Immediate Family members and/or trusts are the only partners, and/or any
organization exempt under Section 501(c) of the Internal Revenue Code of 1986,
as amended (the “Code”).  Subject to the
provisions of Section 2, this Option shall be exercisable only by the Executive
or his permitted assignee or transferee.


 


6.               Subject to the limitations set forth in
the Plan, the Committee is vested with absolute discretion and authority to
interpret the Plan and make all determinations necessary or advisable for the
administration thereof.  Any
determination of the Committee in the administration of the Plan, as described
therein, shall be final, conclusive and binding upon the Executive and any
person claiming under or through the Executive, including, without limitation,
as to any adjustments pursuant to Section 4 hereof.


 


7.               Nothing contained in the Plan or this
Agreement shall confer upon the Executive any right with respect to continuance
of employment by any Participating Company nor limit in any way the right of
the Company to terminate or modify his employment at any time, with or without
cause.


 


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


 


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


 

















 


10.         Notwithstanding anything contained in the Plan
or herein to the contrary, in the event that the disposition of Option Shares
is not covered by a then current registration statement under the Securities
Act, and is not otherwise exempt from such registration, such Option Shares
shall be restricted against transfer to the extent required by the Securities
Act and Rule 144 or other regulations thereunder.  The certificates evidencing any of such Option Shares shall be
appropriately amended or have an appropriate legend placed thereon to reflect
their status as restricted securities as aforesaid.


 


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


 


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


 


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


 


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


 


	
   

  	
  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 THE

DATE OF GRANT SET FORTH ABOVE:




	
  /s/ Andrew Gatto

  	
   

  
	
  ANDREW R. GATTO